Legal limit on the rental hike

Complaints regarding the increase in rents from Dubai residents are increasing due to the landlord requesting unreasonable increases. There is no federal law that determines the rent limit, each emirate has its own independent laws.

For the emirate of Dubai, Law No. 26 of 2007 regulates the relationship between the landlord and the tenant and establishes regulations regarding the rental. With regard to rent, the Supreme Court of the Union has declared that “the effect of the provisions of a lease (lease contract) as established in articles 742 et seq. Of the Civil Code is that the rent is paid in consideration of the enjoyment of the leased thing “.

(It should be noted that Dubai Law No. 26 of 2007 is applicable throughout Dubai, except in the areas that are covered by the DIFC zone as real estate in the DIFC zone is regulated by the DIFC Law No. 4 of 2007 ).

The law defines rent as a specific amount of consideration that the tenant is obligated to pay in accordance with the lease. The lease is the contract by which the lessor agrees to allow the tenant to benefit from the property for the specified purpose and period against a specified consideration, and therefore the rental amount must be specified in the contract and it will remain the same until expiration. of said contract.

In addition, the law provides for the determination of the rental value in the event that it is not provided for in the lease or when the rent is determined but it is not possible to prove it. In such cases, the Committee, that is, the Judicial Committee authorized to resolve disputes between owners and tenants, will determine the rent of the property thus rented according to the “similar rent”. The ‘similar rent’ must be specified by the committee in accordance with the specification standards for the percentage of rent increase applied by the Real Estate Regulatory Agency (RERA). In addition, the general economic circumstances in the Emirate, the condition of the property, the market rent in the same area, and the existing legislation are factors that should be taken into account when determining the similar rent. RERA will establish criteria to determine the rental increase rates in the Emirate, in accordance with its general economic conditions.

Any dispute regarding the rental of the leased premises should be referred to the committee, as the committee’s jurisdiction includes all such disputes.

Once the lease has expired, it will be renewed for a similar period and during the renewal the lessor may modify the contractual terms. You can revise the rent that you can keep at the same rent amount or you can increase or decrease it. The rent thus increased or decreased would be valid for the period of the lease. For the lease to continue in force, it is essential that the tenant consents to the terms thus modified by the landlord, if the parties do not reach an agreement, the Committee may decide a fair rent. If either party to the lease wishes to modify any of its conditions, it must notify the other party no less than 90 days before the expiration date, but this condition can be canceled by agreement of the owner and the tenant.

The law also sets a cap on landlord rent increases so that landlords do not take advantage of the vulnerable position of tenants and exploit them through unreasonable increases in rental rates. Also, the rent cannot be increased during a lease. It can be increased only after the expiration of the previous contract and therefore the rent must remain for a period of one year from the start of the lease.

In addition, Dubai Decree No. 62 of 2009 concerning rental prices in the Emirate of Dubai has set the maximum increase in property rentals in the Emirate of Dubai according to the average rental of properties in the same area and the percentage of the difference between the average income and the current income. Thus, depending on the difference, the increase can reach the following limit:

I. zero increase in rent in the event that the rent is up to 25% lower than the average rent of properties with similar characteristics;

ii. 5% of the applicable rent in the event that the rent is 26% to 35% lower than the average rent of properties with similar characteristics;

iii. 10% of the applicable rent in case the rent is 36% to 45% lower than the average rent of properties with similar characteristics;

iv. 15% of the applicable rent in case the rent is 46% to 55% lower than the average rent for properties with similar characteristics; Y

v. 20% of the rent applicable in case the rent is more than 55% lower than the average rent for properties with similar characteristics.

Apart from this, the government of Dubai has provided us with an online rent increase calculator at the following website: http://www.dubailand.gov.ae/english/Tanzeem/Rentals/Rental_Increase_Calculator.aspx

The government website mentioned above provides a service for calculating increase percentages in order to obtain the value of rents in certain areas as a guidance tool. All the user has to do to use this service is to select the website calculator and enter the required details and then they will be provided with the increase limit and average rent for the area and unit requested.

Tips to avoid an illegal rent increase:

1. Make sure the landlord has notified you in writing of the proposed rent increase no less than 90 days before the end of the rental agreement.

2. Verify that the amount of the increase matches the RERA rental calculator for your property.

3. If you cannot agree with your landlord on the amount of the rent increase, submit a request to the Rent Committee.

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