The Legal Framework Behind Rent Increases in Dubai: RERA Index vs. Market Price

CVML

Published on April 16 , 2025

Introduction: Regulating Rent Increases in Dubai

There are many factors that affect real estate rental prices in the market, including the economic environment, the supply and demand, and the characteristics and specifications related to the property such as its location, type, size, finishing, services and amenities it offers. As part of Dubai’s continuous efforts to develop the real estate sector and to protect tenants from unjustified increases of rent, Decree No. 43 of 2013 on the Determination of the Increase in the Real Estate Rent in the Emirate of Dubai (the "Decree") was issued.

Legal Basis for Rent Control: Decree No. 43 of 2013

Article 1 of the Decree clarifies the maximum percentage of increase in the rental amount that the lessor can impose on the tenant upon renewal of the lease contract, and the percentages are as follows:

a- No increase in the rent value of the real estate unit should its rent be less than 10% of the average standard rent.

b- 5% of the rent value of the real estate unit should its rent be less by a percentage varying between 11% and 20% of the average standard rent.

c- 10% of the rent value of the real estate unit should its rent be less by a percentage varying between 21% and 30% of the average standard rent.

d- 15% of the rent value of the real estate unit should its rent be less by a percentage varying between 31% and 40% of the average standard rent.

e- 20% of the rent value of the real estate unit should its rent be less by a percentage exceeding 40% of the average standard rent.

Mandatory Notification Period Under Dubai Tenancy Law

However, any increase in the rental value is conditional on notifying the tenant of the increase within a period of not less than ninety (90) days prior to the expiry of the lease contract, unless otherwise agreed, in accordance with Article 14 of Law No. 26 of 2007 On the Organization of the Relationship between the Lessors and Tenants in the Emirate of Dubai as amended by Dubai Law No. 33 of 2008 (the "Lease Law").

The Role of the RERA Rental Index in Setting Fair Rent

Further, article 3 of the Decree states that the average standard rent is determined according to Dubai Rental Index adopted at the Real Estate Regulatory Institute, more known as "RERA Rental Index".

Dispute Resolution and the Role of the Rental Committee

In addition, according to articles 9 and 13 of the Lease Law, in the event of any dispute between the landlord and the tenant in relation to the agreement on the rental value upon renewal of the lease contract, the Special Judicial Committee for the Settlement of Disputes between Landlords and Tenants (the “Committee”) shall be competent to determine the fair rental value based on the standard rent, taking into account the following factors:

the norms of specification of percentage of increase of rentals set by the Real Estate Regulatory Agency (RERA Rental Index);
General economic situation in the Emirate of Dubai;
The condition of the property;
The prevailing rental value of similar property in other similar real estate market within the same region;
The provisions of any legislations applicable in the Emirate of Dubai regarding the lease of real estates; and
Any other factors considered by said Committee.

As such, it is important to note that the Committee will take all the above factors into consideration and may not only base its decision on the RERA Rental Index.

Introduction of the Smart Rental Index 2025

In line with the introduction and use of artificial intelligence, the Dubai Land Department (DLD) launched the Smart Rental Index for 2025, which is a newer indicator than the previous index, as it provides more realistic rates that keep pace with the real estate market in the Emirate and takes into account all technical and service related characteristics of the property. In addition, the quality of finishes and maintenance, the location of the property and its spatial value, and the number of services and facilities available such as maintenance, cleanliness, and parking management are considered. Furthermore, with the implementation of AI, rental rates are now frequently updated to keep pace with the constant changes in the real estate market in Dubai unlike in previous years, where the rental rates were reviewed once a year only.

Can Parties Contract Out of the RERA Index?

However, RERA Rental Index is not binding should the parties agree to an increase or a decrease in rent that is contrary to the RERA Rental Index, as the parties are free to agree on any matter provided that it does not contradict the public order. In this regard, the parties should be aware that upon expiry of the lease, any party may request amendment of the rental value in accordance with the rental rates of RERA Rental Index provided that they comply with the notification requirements stipulated under Article 14 of the Tenancy Law above mentioned. If the parties do not reach an agreement, either party can commence legal proceedings should they consider that the rental value is unfair or arbitrary.

Enforcement and Legal Recourse in Case of Dispute

In conclusion, the new RERA Smart Rental Index keeps pace with the changes in the rental market in the Emirate of Dubai while at the same time providing a protective measure for tenants who are the weakest party in the rental relation. On the other hand, nothing prevents the parties from agreeing on a rental value contrary to the Smart RERA Rental Index when renewing the lease, however, on expiry of the lease, the parties have the right to demand compliance with the rental value established by the RERA Rental Index and to resort to the Committee to adjust the rental value in accordance with the factors outlined in Article 9 of the Tenancy Law.

Danah Mardini | Legal Analyst