Dubai rents: How can tenants negotiate unfair rental hikes?

Question: I am a Dubai-based tenant who has just been given a rent hike notice, and I think it is unfair. Dubai recently launched a smart rental index. How do I use this to negotiate a better rate? Please advise.  

Answer: In Dubai, the percentage increase in rent may depend on the average rent increase of rented properties in the designated area. This is under the Article 1 of Decree No. (43) of 2013 Determining Rent Increase for Real Property in the Emirate of Dubai, which states,

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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:

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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 per cent of the rent of the real property unit, where the rent is eleven per cent to twenty 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 twenty-one per cent to thirty per cent less than the average rental value of similar units;

d. Fifteen per cent of the rent of the real property unit, where the rent is thirty-one per cent to forty per cent less than the average rental value of similar units;

e. Twenty per cent of the rent of the real property unit, where the rent is more than forty per cent less than the average rental value of the 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 under 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.”

Furthermore, the rent increase and decrease of residential properties in Dubai is decided by the RERA. 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 Articles 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.

“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 90 days before the date on which the rent contract expires.”

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 apply if the contract is renewed during 2025.

Based on the above, your landlord may only increase the rent of the rented property if the RERA index permits an increment of rent.

In addition, your landlord may only increase the rent by giving written notice to you at least 90 days prior to the renewal of the rental period. In the event of a dispute with the landlord, you may approach the Rental Dispute Centre to decide on the dispute.

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.