After the Dubai Real Estate Regulatory Agency (RERA) updated the rental index to allow landlords to increase rents to market rates, more and more landlords are choosing to raise rents when renewing leases with tenants.
However, industry executives also note that many tenants in Dubai will only need to start paying higher rents later this year or early next year. This is because RERA regulations only allow landlords to raise rents when renewing leases.
In March, RERA updated the rental index, anticipating a 20% increase in rents. This will affect tenants who have been renting for over 2 years.
"We've been seeing rental increases in Dubai's real estate market for some time now. However, the guidelines set by RERA severely limit landlords' ability to raise rents when tenants choose to renew their contracts. In some cases, this has resulted in a significant gap between market prices and what long-term tenants are paying."
"After several years of low rental increases, RERA's updated rental index will allow more landlords to increase rents, with many being able to do so significantly. This will result in many tenants facing the reality of higher rents when renewing, narrowing the gap between what tenants are paying and market prices."
"RERA's latest guidelines stipulate that landlords can only raise rents when renewing leases, meaning many tenants who renewed their leases after the rental index was announced are already facing higher rents. However, most tenants may only start paying higher rents later this year or in early 2025."
In the UAE, many tenants started looking for new rental properties earlier this year, so many lease agreements will be renewed later this year or early next year. Therefore, based on the new RERA rental index, higher rents will take effect later this year or early next year.
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