20/11/2024
The answer to this question is a two-way street. First, according to the client request, a property management company can consider the possibility to increase rent. Second, when we are talking about the possibility here, we are talking about legal rights to set the higher price in the contract with the current tenant. If these rent changes comply with the law, a property management company proceeds further for a new contract price.
While in some other countries it's completely up to a landlord to decide whether and how much to change the price, in Dubai, you will come across one nuance. To clarify, the rent increase is under strict governing by RERA. Of course, RERA does not dictate when landlords must raise your price. And does not prescribe the exact amount they must raise your rental price by. Instead, it calculates the rental index for various property types and areas. In turn, this rental serves as a basis for calculating the maximum rent increase a landlord is allowed to apply in their exact case.
To make things easier for both landlords and tenants, RERA developed their Rental Increase Calculator. With this calculator, one can easily understand what amount of the increase can be applicable by law for each exact case. To get the numbers, choose a tab that corresponds to your property (residential, commercial, industrial, or staff accommodation). Then, enter the following information:
Well, it depends. To clarify, when the landlord increases the rent, they shall follow the rule that the Government of Dubai stipulated in Decree No. 43 of 2013. The Decree sets different rental increase caps for different cases:
Note, for calculating your exact rent increase cap, you shall consider the current average unit prices. In other words, you shall consider the rental of similar units in your area. For example, if you lease a studio in Dubai Sport, you shall compare it with an average rental of the studio in Dubai Sport. If you lease a one-bedroom apartment in Down Town, you shall compare it with an average rental of one-bedroom apartments in Down Town. And if you lease a two-bedroom villa in Emirate Hills, you shall compare it with an average rental of the two-bedroom villa in Emirate Hills. Ok, now you are familiar with the rule. The next question that must arise in your head is how to learn what an average rental is? The answer is that you shall consider only the numbers officially published by RERA.
To answer this question, we need to touch on three aspects, at least:
And now we are coming to the third aspect. Amendments. It is said, the Government has drafted their plans to introduce a rent-freeze period. And not less than for three years. Unfortunately, no one knows when this plan to be executed and whether it will touch leases entered a year or two ago. At BSO, our expert opinion is that this is a rather significant change in tenancy relationships. Thus, we are closely monitoring the situation. On the one hand, we all remember that Law No 33 of 2008 replaced Law No 26 of 2007 on the date of its publishing in the Gazette. On the other hand, significant changes typically have a postponed date of entering into force. So, for our clients, we have some valuable ideas on how to hedge themselves. When you became our client, you will be able to take full advantage of our hedge policy. Sign a property management contract and stay updated and hedged.
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