Dubai rent cap 2020
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Dubai rent cap and rent index
Dubai rent increase laws 2013-2014, new rent cap, rent cap applies in DIFC
The new Dubai rent increase law for 2013-2014 announced 22 Dec 2013 appears to be similar to the new law issued in 2009, but with revised ranges for differences between actual rent and average market rents used for deciding the maximum rent increase permitted. The resulting increases expected are probably still not going to be so outrageous. Don't panic ... Unless even if you live in DIFC where the rent caps don't ... might not ... do apply according to the 2013 Decree.
The rent cap law in Dubai applies to residential and commercial properties - Law No 33 of 2008 has the following definition of Property ("Real Estate" in Law No. 26 of 2007): Immovable property and its annexures rented for residential, commercial or professional purposes or any other legal activity.
- 01 Jan 2014 (GN) - Sultan Bin Mejren, Director General of the Dubai Land Department, reportedly changed his mind about the Dubai rent increase calculator. According to previous reports he said it was up to date and available. But the GN quoted him as saying "The rental index is being updated. We are working on different mechanisms for the implementation of Decree No. 43." And Mohammad Khalifa Bin Hammad, senior manager, Real Estate Relations Management at RERA was quoted as saying "The index is updated every four months." The rent increase calculator seemed to be working again when we checked, but there appear to be quite substantial variations in average market rents for properties in Dubai depending on area. For example, 1 bedroom apartment annual rent amounts in some areas according to the RERA calculator are:
- Al Barsha - AED 60,000-70,000.
- Al Garhoud (Al Garhood) - AED 55,000-60,000.
- Al Ghusais (Al Qusais) - AED 45,000-55,000.
- Al Khail Gate, Al Quoz - AED 40,000-45,000.
- Al Mankhool (Bur Dubai) - AED 60,000-75,000.
- Al Nahda (Al Nahdah, Deira) - AED 45,000-55,000.
- Al Quoz (Al Qouz) - AED 40,000-45,000.
- Burj Khalifa Tower - AED 150,000-170,000.
- Business Bay - AED 80,000-100,000.
- Discovery Gardens - AED 55,000-65,000.
- Downtown Dubai - AED 90,000-110,000.
- Dubai Marina - AED 90,000-120,000.
- Dubai Silicon Oasis - AED 50,000-60,000.
- Dubai Sports City - AED 55,000-65,000.
- International City - AED 35,000-45,000.
- Jumeirah Lake Towers - AED 80,000-100,000.
- Karama (Al Karama) - AED 55,000-70,000.
- Mirdiff (Mirdif) - AED 55,000-65,000.
- Muraqqabat (Al Murraqabat, Muraggabat) - AED 55,000-65,000.
- Satwa - AED 45,000-55,000.
- 23 Dec 2013 (E-247) - RERA Director General Sultan Butti bin Mejren said to Emirates 24-7 that "The data on the rental index is updated and accurate." The report also gave some examples of average rents from the RERA index, however when we tried the RERA online rent calculator, it still returned the same error message that it was being updated. Unknown what Emirates 24-7 did differently to be successful. The report found that average rents according to RERA were significantly below average rents advertised in the market (which might not be the same as actual rents paid).
- 23 Dec 2013 - the 7 Days newspaper also had a Q&A session with the RERA Director, and apparently also asked him about the rent calculator not working, with the comment A number of readers have complained that the rental index calculator does not work. The Land Department has not yet responded to 7DAYS with regards to this.
- 21 Dec 2013 (WAM) - maximum rent increase limits on tenancy contract renewals for Dubai emirate changed according to Decree No. 43 of 2013 issued by Sheikh Mohammed, Ruler of Dubai.
Details of new rent increase law for Dubai (21 Dec 2013)
- Maximum permitted rent increases are as follows (increase permitted is calculated based on current rent you are paying, not as a percentage of current market rent in the same area):
- 0% increase permitted if actual rent is 0%-10% lower then the average market rent for similar apartments and homes in the same area.
- 5% maximum increase if actual rent is 11-20% (stated but might be 10-20%) lower than average rent in the same area for similar units.
- 10%, 15%, and 20% caps on rent increases if actual rent 21-30%, 31-40%, and >40% below average market rent for similar properties in the same area (stated percentages, might be 20-30%, 30-40%, and 40%+).
- Presumably if current rental paid is higher than average market rent in the same property category, no increase is permitted, although that wasn't explicitly stated in the WAM report.
|Difference between market rent and your rent||0%-10%||11%-20%||21%-30%||31%-40%||40%+|
|Maximum rent increase permitted||none||5%||10%||15%||20%|
|Average market rent (AED)||100k||100k||100k||100k||100k|
|Actual rent range for rent cap||100-90k||89-80k||79-70k||69-60k||<60k|
|Your rent (AED), for example||95,000||89,000||75,000||61,000||59,000|
|Maximum rent increase allowed||0%||5%||10%||15%||20%|
|New maximum rent on contract renewal||95,000||94,500||82,500||70,150||70,800|
- All figures in italics our calculations or assumptions based on our understanding of the news release. They are not confirmed with RERA, and might be incorrect.
- The RERA Rental Increase Calculator is available at the dubailand.gov.ae website, but at the time of the new decree was being updated. When we tried, attempting to calculate a rental increase returned the message "The rental index under updating.Please contact email@example.com".
DIFC rent cap or no rent cap?
Article 2 of Decree No. 43 of 2013, issued in Dubai on 18th December 2013 (On Determining the Increase in the Real-Estate Rentals in the Emirate of Dubai) says "The present Decree shall apply to all landlords of the public and private authorities in the Emirate of Dubai, including the special development areas and the free zones, including Dubai International Financial Center."
- 06 Feb 2014 - Essa Kazim, Chairman of the DIFC Authority said "We have a rent cap in place" when asked about rental increases in the DIFC free zone (Emirates 24-7). Previous comments by the Dubai Properties CEO, Brett Schafer, were that there was no rent cap in DIFC but they pre-date the new decree which does include DIFC. Presumably Mr Kazim was referring to this.
- 23 Dec 2013 - 7 Days newspaper reported an interview with the Dubai Land Department Director General, Sultan Butti Bin Mejren, who said "Yes, this law is mandatory to all areas, including DIFC" in response to the question "Some readers say they were told the department's remit does not run to areas such as DIFC. Does the new decree apply to every residential area?" Which appears to contradict earlier reports that the DIFC area was exempt from Dubai rent cap laws. However the new decree specifically includes DIFC as an area which comes under the Dubai rent cap law..
- 21 Dec 2013 - the WAM report about the new rent increase law for Dubai appeared to contradict an earlier report in The National. The WAM article said The Decree applies to landlords from the public and private sectors in the emirate of Dubai including private development areas and free zones. DIFC was not specifically mentioned in the news release but it is one of the Dubai free zone areas, and was specifically mentioned in the new decree (#43) issued on 18 Dec 2013.
- 18 Dec 2013 - rent cap laws in Dubai don't apply in the Dubai International Financial Center (DIFC) free zone according to an explanation in The National from Mario Volpi, managing director of Prestige Real Estate in Dubai, who said Property owners in DIFC are not bound by any regulation from RERA to limit rent increases. Which conflicts with what the new decree (#43) issued on 18 December 2013 says - it specifically mentions DIFC as included in rent cap laws.
- 02-03 Sep 2013 - no rent cap in the DIFC, and Dubai property rental and rent cap laws do not apply in the DIFC zone according to comments by CEO of DIFC Properties, Brett Schafer, reported in Emirates 24-7.
Abu Dhabi rent cap abolished removal cancellation annulment 2013
- 27 Nov 2013 update: Rashed Al Zaabi, Acting Director of Planning and Statistics at the DED in Abu Dhabi was reported as reassuring residents that the removal the rent cap would not result in large rent increases in Abu Dhabi. Or at least he didn't think it would.
- Media reports quoted him as saying "There will be competition in the market between older neighbourhoods and residences in newer developments. If prices are increased in one location, there will be opportunities to move elsewhere. ... The council wouldn’t just issue it like that without studying what the impact would be. The market should be stable, I don’t think prices will increase."
- Which sounds reassuring but neglects to address the tendency of landlords in the UAE to ignore the market when setting rents. Historically, UAE landlords often seem to prefer to leave an apartment empty for long periods of time in the hope that market rents will quickly increase to the level they want, even to the extent that without a rent cap, landlords will impose a very large rent increase in an attempt to drive tenants out rather than focus on a negotiated increase that is acceptable for all parties involved.
- It is still common in the UAE for landlords to demand a year's rent payment in advance, and to use contracts which require a 1 year commitment, which introduce significant drags on the market efficiency which Mr Al Zaabi appears to refer to with his comment about residents being able to move. An added inconvenience, to put it mildly, is when landlords give insufficient notice of an impending rent increase.
- 21 Nov 2013 - the Abu Dhabi Executive Council (ADEC) removed the 5% rent cap in Abu Dhabi from 10 November 2013 according to a WAM report, and said that market forces will determine rent levels. Which is unfortunate because despite the ideal situation being that rents are determined by market forces, the recent government requirement that federal employees must live in Abu Dhabi has already distorted the market by driving up demand.
- The WAM statement said The Abu Dhabi Executive Council of Emirate of Abu Dhabi, has issued a decision pertaining to rent contracts. The decision includes the cancelation of the extension of the annual rent contracts five percent increase rate as of 10th November 2013.
Dubai rent cap 2010
According to a WAM announcement 31 December 2009, the rent cap applied in Dubai in 2009 will remain in place for 2010, i.e. the applicable rent cap will be between 0% and 20% depending on your rent relative to the Dubai rent index published by RERA - "For properties rented in 2009 and before, the maximum increase in rent value shall be set as per the previous relevant similar decree for 2009." See 2009 rent cap section below for details of rent cap levels.
Dubai rent cap 2009
Dubai rent cap and rent calculator 2009
The 2009 rent cap for Dubai was set at 0% unless your current rent is well below the RERA rent index rates. Use this calculator to calculate the rent cap that applies if your rent is below market rate, and to calculate the rent you might pay in 2009 (more detailed explanation below the calculator).
- From the RERA rent index, look up the rent band for the area and type of accommodation where you live.
- Enter upper and lower limits e.g. if band is 90-120, enter 90,000 for lower limit and 120,000 for upper limit.
- Enter the rent you were paying after last contract renewal in 2008, then press the calculate button.
Our understanding is that the 2009 Dubai rent cap is effectively 0%, 5%, 10%, 15%, or 20% depending on what the 2008 median rental price is for the area and type of accommodation in which you live, as indicated by the RERA rent index.
- Rent cap is 0% (frozen) if 2008 rent is 0% to 25% below the rent index level.
- Rent cap is 5% if 2008 rent is between 25% and 35% below the rent index level.
- Rent cap is 10% if 2008 rent is between 35% and 45% below the rent index level.
- Rent cap is 15% if 2008 rent is between 45% and 55% below the rent index level.
- Rent cap is 20% if 2008 rent is more than 55% below the rent index level.
WAM (the official UAE news agency) reported on 19 January 2009 that decree number (1) for 2009 was issued for "halting any increase in residential and non-residential property rent values in 2009 for the tenants who renew their contracts signed in 2008." The phrase "halting any increase" is probably what caused great excitement amongst tenants who thought their rents would be frozen. But the WAM report then said that applied only to rents above a rent level 25% below the RERA rent index average price for the respective property. For rents cheaper than 25% below the RERA indicator the decree "defines a new formula for lower rent values which allows a proportional increase in rents for 2009." The rent index is based on rents in the second half of 2008 which were pretty much peak rental prices in Dubai. If you have questions, ask them in the UAE rent cap forum topic and we'll do our best to answer them.
03 May 2009 - RERA rent index values were reset to 2008 H2 levels for but then set back to the 2009 Q1 updated values that first appeared 29 April 2009.
Example of possible rent increases in Dubai for 2009
You live in a two bedroom apartment in Al Garhood. The rent index has rental band as AED 125,000-135,000 per year which means the median rent is AED 130k per year. If your rent is:
- between AED 97.5k (25% below) and 130k, then your rent is frozen for 2009
- between AED 84.5k (35% below) and AED 97.5k, then your rent cap is 5%
- between AED 71.5k (45% below) and AED 84.5k, then your rent cap is 10%
- between AED 58.5k (55% below) and AED 71.5k, then your rent cap is 15%
- below AED 58.5k, then your rent cap is 20%
Previous rent caps and other UAE rent caps
|2011||5% (31 Jan 2011)|
- 23 Nov 2013 - Abu Dhabi rent cap removed as of 10 Nov 2013 (WAM news).
- 14 Nov 2012 - Abu Dhabi rent cap reported as 5% for 2013 (Gulf News).
- 31 Jan 2011 - Fujairah rent cap lowered to 5%: HH Sheikh Hamad bin Mohammed Al Sharqi, Ruler of Fujairah, issued Law No. 1/2011 amending Law No. 2/2007 on property rents in the emirate. The new law decreases the annual increase of rents to a maximum of 5% of the property rent.
- Abu Dhabi 2010 rent cap continues at 5% according to WAM report 16 November 2009, also rent contract period increased to maximum 5 years from 4 years.
- Dubai rent cap is only 5% in 2009 according to The National report 17 November 2009, seems to conflict with RERA information of 05-20% rent cap.
- Abu Dhabi 5% rent cap for 2009 confirmed 18 April 2009 (government announcement reported in the press 19 April 2009)
- Ajman 2007 no rent increases for three years after initial 20% hike.
- Dubai 2008 rent cap 0% for tenants in their second year of a contract if rent was increased in 2007 or if a new contract was signed in 2007
- Dubai 2007 rent cap 0% for tenants in their second year of a contract if rent was increased in 2006 or if a new contract was signed in 2006
- Fujairah was reported to be considering a rent cap according to the Gulf News 04 May 2009, reporting comments by Mohammad Saif Al Afkham, Deputy Director of Fujairah Municipality. There was no mention of the 2007 Fujairah rent cap.
- Ras Al Khaimah 2008 rent cap law number 8: 5% for tenancy contracts signed after January 2008, 10% rent cap for contracts signed between January 2004 and January 2008, 15% rent cap for contracts signed before January 2004.
- Sharjah rent cap is apparently 0% for first 2 or 3 years of a rental contract but that might depend on random variables (make up something). Then rent cap is possibly up to 10% but there are reports of tenants getting thrown out after 3 years or rents being increased arbitrarily anyway.
- Umm Al Quwain 2007 rent cap can be adjusted if landlord and tenant agree?
Last update Friday 07-Aug-2015
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