Can Dubai landlords demand higher rent than the index?

Question: I wanted to understand how binding Dubai’s rental index is. If a proposed rent increase does not align with the index, can a landlord still demand a higher amount? What options are available to file a complaint or dispute this?

Answer: Pursuant to your query, the provisions of the Dubai land laws and it’s amendment are applicable.

In the emirate of Dubai, the percentage increase in rent may depend on average rent increases of the rented properties in a designated area.  This is in accordance with the Article 1 of Decree No. (43) of 2013 Determining Rent Increase for Real Property in the Emirate of Dubai (the “Dubai Rent Increase Law”).

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“When renewing Real Property Rent Contracts, the maximum percentage of Rent increase for Real Property in the Emirate of Dubai shall be as follows:

a. no Rent increase, where the Rent of the Real Property unit is up to 10 per cent less than the average rental value of similar units;

b. five percent of the Rent of the Real Property unit, where the Rent is 11 per cent to 20 per cent less than the average rental value of similar units;

c. ten per cent of the Rent of the Real Property unit, where the Rent is 21 per cent to 30 per cent less than the average rental value of similar units;

d. 15 per cent of the Rent of the Real Property unit, where the Rent is 31 per cent to 40 per cent less than the average rental value of similar units;

e. 20 per cent of the Rent of the Real Property Unit, where the Rent is more than 40 per cent less than the average rental value of similar unit.”

The average rental value refers to the average rent for similar properties in Dubai. The average is determined in accordance with, the "Rent Index of the Emirate of Dubai," which is approved by the Real Estate Regulatory Agency (RERA). This is in accordance with the Article 3 of the Dubai Rent Increase Law.

“For the purposes of application of Article (1) of this Decree, the average rental value of similar units shall be determined in accordance with the “Rent Index of the Emirate of Dubai” approved by the Real Estate Regulatory Agency.”

Further, RERA has the authority to determine and set the rules governing how much rent may be increased in the emirate of Dubai, considering the current economic conditions. Article 10 of the Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai states that “RERA shall have the authority to establish criteria relating to the percentage of Rent increase in the Emirate in line with the requirements of the prevailing economic situation in the Emirate.”

At the time of renewing a rent contract, both the landlord and tenant may discuss and amend the terms, including the rent. If they can’t agree, the tribunal may decide what the fair rent should be, based on specific criteria. Additionally, if either party wants to make changes to the rent terms, they are required to notify the other party at least 90 days before the rent contract ends, unless they have agreed otherwise. This is in accordance with the Article 13 and 14 of the Law No. 33 of 2008 Amending Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai (the ‘Amended Dubai Tenancy Law’)

“Article 13

For the purposes of renewing a Rent Contract, the Landlord and Tenant may, prior to the expiry of the Rent Contract, amend any of its terms or reconsider increasing or reducing the Rent. If the Landlord and Tenant fail to reach an agreement in this regard, the Tribunal may determine the fair Rent, taking into account the criteria stipulated in Article (9) of this Law.”

“Article 14

Unless otherwise agreed by the parties to a Rent Contract, where either party wishes to amend any of its terms pursuant to Article (13) of this Law, that party must notify the other party of this intent no less than ninety (90) days before the date on which the Rent Contract expires.”

The Smart Rent Index, introduced by the Dubai Land Department (DLD) for the year 2025, stabilizes rental prices and mitigates inflation by regulating rent increases and enhancing market transparency. Utilizing Artificial Intelligence, the Smart Rent Index provides standardized rental assessments across all residential areas. Rent increases are based on factors such as contract values and building classification, with landlords required to notify tenants 90 days before contract expiry for increases to be valid. If the Smart Rent Index does not support the increase, or if the notification requirement is not met, the previous index applies depending on the contract renewal date.

In cases where the landlord provided the required 90-day notice and the previous index supported the increase, but the new index does not, the renewal date will determine which index applies:

• The previous index will be applied if the contract was renewed before 2025.

• The new index will be enforced if the contract is renewed during 2025.

Based on the above, a landlord may only increase the rent of a rented property if the RERA index permits increment of rent. Further, a landlord may only increase the rent by giving written notice at least 90 (ninety) days prior to renewal of rental period. In the event of a dispute with reference to the increase in rent, you may have to approach the Rental Dispute Centre to decide on an increment of rent of the rented property.

Applicable law:

1.     Decree No. (43) of 2013 Determining Rent Increase for Real Property in the Emirate of Dubai

2.     Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai

3.     Law No. 33 of 2008 Amending Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai

 Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.

Disclaimer: The information provided above is intended for general guidance and does not constitute legal advice. It is recommended to seek formal legal counsel.