Clarification on rent increase beyond 20% as per RERA Rental Index

The RERA Rental Index provides a benchmark for the average market rents in different areas, including Al Qusais.

If your current rent is below the market rate as indicated by the index, the landlord has a legitimate basis for requesting a rent increase.

According to the Dubai rental laws, the 20% cap applies to situations where the rent increase based on the RERA Index exceeds this amount.

This means that the landlord can only increase the rent up to 20% of the current rent if the rent is below the market rate but must not exceed 20% of the current rent in a given year.

In general, landlords are not allowed to exceed the 20% cap unless the increase is justified by special circumstances, such as substantial improvements or changes to the property.

However, even in those cases, the increase is typically subject to the RERA guidelines.

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The RERA Index will compare your current rent to the average market rent for similar properties in your area.

The difference between your current rent and the market rent will determine the maximum allowable increase.

If your current rent is 40% below the market value, your landlord can increase the rent by up to 20%.

If your current rent is 20% below the market value, your landlord can increase the rent by up to 10%.

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Thank you for reaching out regarding your landlord's proposed rent increase for your warehouse in Al Qusais. I understand your concerns and am here to provide clarity on this matter.

According to Dubai's Decree No. 43 of 2013, which governs rent increases, the maximum permissible increase is capped at 20% of the current rent.

This cap applies regardless of how much the current rent is below the market rate as indicated by the RERA Rental Index.

Therefore, even if your current rent is significantly below the market average, the landlord cannot legally increase the rent by more than 20% upon renewal.

Additionally, landlords are required to provide tenants with a 90-day written notice prior to the lease renewal date if they intend to increase the rent.

This notice should be delivered through registered mail or any other method agreed upon in the tenancy contract.

Given your situation, it would be advisable to communicate these regulations to your landlord.

If the landlord insists on an increase beyond the legal limit, you have the right to file a complaint with the Rental Dispute Settlement Centre (RDSC) at the Dubai Land Department.

For a more detailed discussion tailored to your specific circumstances, please feel free to contact me via WhatsApp or phone. I am here to assist you in ensuring your rights are protected.

Best regards,

Suhail Rana

Thank you for reaching out with your question regarding the rent increase for your warehouse in Al Qusais.

Here’s a detailed clarification based on the RERA Rental Index and applicable laws in Dubai:

1. Understanding the RERA Rental Index:

The RERA Rental Index provides guidance on the permissible rent range for properties in specific areas, including warehouses. The rent increase a landlord can impose is based on the difference between the current rent and the market rental range defined by the index.

2. Rent Increase Rules Under RERA:

According to Decree No. 43 of 2013, rent increases in Dubai are capped based on how much the current rent deviates from the average market rent in the RERA Rental Index. The permitted increases are as follows:

No Increase: If the current rent is less than 10% below the lower limit of the index.

Up to 5% Increase: If the current rent is 11% to 20% below the lower limit of the index.

Up to 10% Increase: If the current rent is 21% to 30% below the lower limit of the index.

Up to 15% Increase: If the current rent is 31% to 40% below the lower limit of the index.

Up to 20% Increase: If the current rent is more than 40% below the lower limit of the index.

3. Application to Your Case:

Based on the range of AED 43 to 58 per square foot for warehouses in Al Qusais, here’s how the rules apply:

Current Rent Below Range: If your current rent is below AED 43, the landlord may be eligible to increase the rent up to 20% of the current rent.

Exceeding 20% Cap: Any increase beyond 20% is not allowed, even if the current rent is significantly below the market average, as the 20% limit is the absolute cap under RERA regulations.

4. Your Rights and Obligations:

Right to Challenge Excessive Increases: You have the right to dispute the proposed rent increase if it exceeds 20%, regardless of the RERA index values.

Obligation to Pay Permitted Increases: If the proposed increase aligns with the RERA guidelines and remains within the 20% cap, it would be considered lawful.

5. Recommended Actions:

Verify the Proposed Increase: Request written confirmation of the proposed rent increase from your landlord, along with their justification based on the RERA Rental Index.

Dispute via the RDC: If the proposed increase exceeds 20%, you can file a complaint with the Rental Dispute Settlement Centre (RDC) to challenge the unlawful increase.

Pay the Permitted Rent: Continue paying the current rent or the lawful adjusted rent as per RERA until the dispute is resolved.

Conclusion:

The landlord cannot increase the rent beyond 20% of the current rent, even if the rent is significantly below market rates.

Any increase must comply with the guidelines set by Decree No. 43 of 2013 and the RERA Rental Index.

If you need assistance drafting a formal response to your landlord or filing a complaint, please feel free to reach out.

Best regards,

Omar Mosaad

OS Legal