The updated RERA rental index allows you to significantly increase rental rates for existing contracts. Let’s figure out what this means for the Dubai rental market.
The content of the article
- What is the RERA Rental Index?
- What has changed in 2024?
- How will this affect the Dubai rental and real estate market?
- How much will the rent increase?
What is the RERA Rental Index?
The rental system and interaction between tenant and landlord in Dubai is regulated by RERA (Real Estate Regulatory Authority). To ensure transparent and fair rental conditions, the Ejari service was created under the auspices of RERA. You can enter information about the extension, cancellation, transfer and termination of lease agreements.
The limits of acceptable rental rates for contract renewal are calculated based on a rental calculator, which compares rates in similar units by area and calculates the market value of the lease.
What has changed in 2024?
Previously, the calculator included many old contracts (long-term contracts from the time of the pandemic). The median rates for the district were lower than the real market indicators.
In the last three years, the amount of rent allowed tenants to stay in their apartments or houses without significantly increasing payments. However, now that the rent index has been revised, more landlords will be able to increase contract renewal fees by a higher percentage than before.
In 2024, the calculator index was updated — old contracts were removed, as a result of which the median rates increased and began to reflect current prices.
How will this affect the Dubai rental and real estate market?
The revision of the RERA index will allow more landlords to increase fees when renewing contracts.
A significant increase in rents may force current tenants to start looking for new housing right now. Some of them may move to a more affordable area or reduce the area of rented housing. Others may consider buying their own real estate.
The increase in rental rates is likely to affect all areas of Dubai: an increase in the cost of even several contracts in a single area will trigger a chain reaction and rates will rise immediately throughout the location.
How much will the rent increase?
Landlords can only increase the rent if the lease is extended. This means that many tenants will not face a rent increase until the end of this year or until the end of the current lease agreement.
The amount of rent under the current contract may increase if it is less than the average for the area in similar projects:
|
Lagging behind the average rate for the district |
Permitted increase in the rental price |
|
11–20% |
+5% |
|
21–30% |
+10% |
|
31–40% |
+15% |
|
40% |
+20% |
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