The cost of renting property in Dubai is governed by RERA (Real Estate Regulatory Authority) rules on rental increases. RERA has an online Rental Index Calculator that tenants and landlords can use to determine the maximum permissible rent hike for new or renewed leases based on set economic guidelines. This ensures rental increases remain reasonable and aligned with inflation.
This article provides an easy guide for landlords on how to effectively use this RERA index calculator Dubai before entering any rental negotiations with a tenant, to know your rights and those of the tenant, to ensure fairness. It covers what the calculator is, when and how to use it, if a tenant can disallow rent hikes, and more. Read on to learn how to use the tool during rent discussions.
What is the RERA Index Calculator?
The RERA (Real Estate Regulatory Authority) Index Calculator is an online tool launched by the Dubai Land Department to help tenants and landlords determine the maximum allowable rent increase for property leases in Dubai.
The RERA calculator implements RERA Circular No. 3 of 2022 on the Executive Regulations of Law No. 26 of 2007. This circular stipulates that the rental increase in new contracts may not exceed the RERA index rate based on the economic inflation in Dubai.
The online RERA calculator allows you to input a few details like your property type, location, duration of tenancy contract, and current rent. It then outputs the maximum permissible rent based on the RERA index applicable for that month.
How to Use the RERA Index Calculator
Using the RERA index calculator is quite straightforward:
Go to the calculator page on the Dubai Land Department website.
Click the tab that applies, such as Residential, Commercial, etc.
Enter the contract end date, property type, area, and number of bedrooms.
Input the current annual rent you are paying (in AED).
The calculator will instantly display the maximum permissible rent increase percentage and amount for your new contract.
You can then use the rental increase cap highlighted by the calculator during rent renewal negotiations with your tenant.
When to Use the RERA Rental Index Calculator Dubai
As a landlord renting property in Dubai, you should use the RERA index calculator in the following scenarios:
Renewing an Existing Lease
Use the RERA index calculator to calculate the maximum rent that can be charged in the new lease.
When the current rental contract is about to expire, you can use the RERA calculator to determine the maximum permissible rent that you can charge in the new lease agreement based on the index rate for that month. Knowing this cap makes renewal negotiations easier.
For example, if the existing rent is AED 50,000 per year and the RERA calculator shows the max limit is a 5% increase, you cannot compel the tenant to renew at anything more than AED 52,500 per annum based on prevailing policy.
A New Lease Agreement
Use the RERA index calculator to determine if the quoted rent is compliant with RERA rules based on the index rate.
Landlords can use the calculator to verify if the proposed annual rental rate is legally aligned with RERA’s index calculation before proceeding further.
For instance, if you have an apartment in Greens priced at AED 70,000 per year: punching this in the RERA calculator shows the max rent should be AED 67,000 based on location, property type, and current index rates applicable. This signals you are quoting above the permitted ceiling.
When Proposing a Rental Increase
Use the RERA index calculator to verify if the proposed hike exceeds RERA's calculated cap for that month.
During an ongoing lease period, if you wish to implement a rental increase, you must cross-check this against the RERA calculator for that month first.
For example, if you seek a 3% increase mid-way through the rental contract, you can validate if 3% is overstepping what the index rate permits at that point in time before accepting.
In a nutshell, the RERA calculator should be used as a reference point in all dealings and discussions around determining or increasing property rents in Dubai.
Is a Rental Increase Allowed?
The RERA index calculator specifies the maximum percentage/amount by which rent can be increased during contract renewal based on economic inflation. However, this does NOT mean you can increase the rent or have an entitlement to do so.
Whether the rent can actually be increased or not depends on negotiations between you and the tenant. You may mutually agree to retain the rent at current levels or restrict any hikes well below the calculated RERA cap. This is something UpperKey can advise you on, while they manage your property.
Likewise, a landlord cannot unilaterally impose the maximum increase without tenant consent. The role of RERA index rates is only to stipulate upper thresholds, not enforce any mandatory hikes. So, while increases within the index rate are "allowed" per regulations, the tenant still has the discretion to disallow or limit them through mutual agreement.
When is a rent increase allowed?
Landlords can only increase rents up to 90 days before contract renewal after informing tenants; otherwise tenants can reject the hike.
What are some things to consider about the rental increase in Dubai?
Tenants and landlords should both check the Rental Price Index on the RERA calculator before finalizing or increasing rents. The calculator is updated monthly, so both parties should input the currently applicable details like location, property type, lease duration, etc. to receive the maximum rent permitted for the present month. Referring to the index rate for that specific month prevents any discrepancies compared to basing negotiations on outdated prior rates.
How can landlords use the RERA rental index 2023 calculator?
Landlords should use the calculator to confirm if their proposed rental increases comply with the maximum permissible limits set by RERA.
What are the rights of a tenant if a landlord fails to comply with the rules?
If the rent charged exceeds the maximum rate displayed on the RERA calculator, the tenant has grounds to file an official rent dispute complaint against the landlord for violating regulations. RERA can then impose penalties on non-compliant landlords like fines, blacklisting, or even refusal to register future rental contracts, compelling such landlords to adhere to the published index rates and offer tenants a fair rental amount aligned to policy.
What are the things a tenant should consider before renting a property?
Tenants should research the property, review the lease, assess affordability, and check for transparency from the landlord before renting.
The RERA index calculator is an impartial third-party tool that tenants and landlords in Dubai can independently use to determine fair rental increments aligned with existing policies. Both parties can then leverage these caps during transparent rent negotiations.