Dubai: Sudden rent hike demand in Dubai….. The residents in Dubai should not panic about these hikes instead they should check the RERA Rent Index to see if the landlord is justified in asking for an increase.
“Landlords may increase the rent only to levels as prescribed by the Law and based on the requirements set by RERA (Real Estate Regulatory Agency),” said Shishira Johny, Corporate and Commercial Associate at the law firm TLG.
For example, if the current rent being paid is 21-30 percent below the average in a particular community or neighborhood, the landlord is within his privileges to request an increase of up to 10 percent on renewal. If the existing rent is 31-40 percent lower than prevailing rates, the proposed hike can go up to 15 percent.
For now, the RERA Rent Index is as yet the best benchmark for tenants to ensure they are not confronting unjustifiable requests. Now, the Index gives a “broad” normal of rents inside some of Dubai’s popular and emerging neighborhoods. Over the most recent four years, the Index hasn’t been a central factor because of the consistent decrease in rents, with 2020 seeing drops of more than 10% in certain spaces.
But with Dubai’s property market starting to witness more action, at some point this would impact rents also. This is why the Index is again likely to figure prominently.
Are rents firming up?
Tenants in a portion of the upscale neighborhoods of Dubai – the Marina, Downtown, and Business Bay – are once again discussing likely increments when their next agreements are expected. Some buildings within these spaces have certainly seen increments or interest for a hike, particularly for duplex and three-room units.
Some tenants have reported being asked to pay 20-25% more than they have right now…. Even though those areas are yet to see any rise on the RERA Rent Index.
Even then, tenants have other rights they can exercise. “In case the landlord wants to increase, he will have to serve sufficient notice,” said Prathyusha Gurappu, Head of Research and Advisory at the property consultancy Core. “The notice period has to be no less than 90 days before the date on which the lease expires.
“Most of the established villa districts in Dubai are already seeing rent stabilization… or rent recovery.”
Landowners may raise the rent only on the levels as prescribed by the law and based on the requirements set by RERA.
That is the point – up until now, rent increments, if any, are confined to upscale neighborhoods and buildings. As per market sources, this is generally determined by existing tenants needing to move to greater premises or neighborhoods with more open spaces and conveniences.
But at some point, rents in the rest of the city could stabilize… or make their first increases since 2016. “This will be when the job market sees a full revival and where new positions are created,” said an industry source. “So far, that’s not the case. Local businesses and organizations are still by and large intent on saving costs.”