Can rent increase take place every year ?

Discussion in 'Dubai property' started by Kind, May 19, 2013.

  1. Kind

    Kind New Member

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    Can anyone please advise on following :

    Article 9 of the law previously contained a two year protection against any increase in rent for the first two years of the tenancy; the amending law removes this protection. This means that rent increases can take place every year, in accordance with the 2009 rent cap and the index of rental values.
     
  2. sajjap

    sajjap New Member

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    Are you sure?

    Hi

    Are you sure?

    I'm just in the process of renewing my tenant’s lease, according to the letting agent, I can't increase the rent for the first 2 years, after the end of the 2nd year there is a cap of 5% maximum that the landlord can increase the rent by. Also, apparently I can't not renew the lease if the tenant agrees to pay the 5% increase, the only way I can get the tenant out is by giving a 12 month notice and only if the property is to be for my own personal use.

    This all sounds ridiculous to me, but the letting agent tells me that that's how it is.

    Saj
     
  3. Kind

    Kind New Member

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    It is conditional. Please read following and visit RERA website :

    quote

    Renewing your contract
    Are landlords allowed to raise rent after just one year? If so, what’s the maximum/minimum amount?
    MV: Landlords are not permitted to raise the rent after just one year if the rent is up to 25 percent below the average rent of similar properties, according to the RERA rent calculator. If the rent is 26-35 percent less than the average, the maximum increase allowed is five percent. If the rent is 36-45 percent less than the average, then the maximum increase allowed is 10 percent. If the rent is 46-55 percent less than the average, then the maximum increase allowed is 15 percent. If the rent is more than 55 percent less than the average, then the maximum increase allowed is 20 percent. (Editor's note: the landlord should give a written notice period of rent change 90 days prior lease agreement expiration.)

    PP: Landlords may increase rent based on RERA rentals caps or what you have agreed during the signing of the tenancy contract. If no increase has been mentioned for the area in which you’re living, the landlord should keep your agreed rent.
    unquote


     
  4. Estate With Joe

    Estate With Joe New Member

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    I know this is an old topic, but I thought I'd post the correct answer as of today (laws can change overnight here).

    In Dubai, the rental increase is determined by decree No. 43 of 2013 and is easily determined by the rental increase calculator (I can't post links, google it and it will take you to a page on the RERA website). The calculator takes into consideration the apartment size, the area in which the apartment is, the current rent paid, and the current average rent of a similar unit in the area as per the rent index of the Emirate of Dubai, which is approved by the Real Estate Regulatory Agency. With those details determined, the rental increase calculator will come out with one of the following outcomes:
    • If the current rent is less than 10% below the current market price, there’s no rent increase when the contract is renewed unless mutually agreed on.
    • If the current rent is between 10% and 20% below the current market price, there’s a 5% rental increase.
    • If the current rent is between 20% and 30% below the current market price, there’s a 10% rental increase.
    • If the current rent is between 30% and 40% below the current market price, there’s a 15% rental increase.
    • If the current rent is 40% or more under the current market price, there’s a 20% rental increase, which is the maximum allowed.
     
  5. nmb

    nmb Active Member

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    If you are not able to increase rent in line with inflation on an annual basis then effectively the real value of your income is falling.
     
  6. In theory you should at least increase your rental charge by inflation each year just to maintain the true value of your income. However, there may also be opportunities to increase rent by a greater amount than inflation if there is good demand. Bear in mind, if you get your rental increases wrong then you may lose tenants and ultimately lose rental income – don’t be greedy!
     
  7. lookinginvest

    lookinginvest Member

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    An annual increase in rental rates of at least inflation will protect your capital going forward.
     
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