Dubai: Rera Rental Index or Rental Valuation Certificate – which takes precedence?
“Rental index is not the sole reference to benchmark rents,” says Dubai Land Department
Dubai: How much can a landlord increase the rent by? This is perhaps a question most often asked by tenants in Dubai. But it may also be a concern for property owners, if they believe that a property’s rent should be higher than what is being charged.
This is why Dubai Land Department (DLD) and its Real Estate Regulatory Agency (RERA) have developed tools like the Dubai Rental Index and the Rental Valuation Certificate, to help both parties – the tenant and landlord – determine what a property’s rent should be.
However, which of these services would take precedence in determining the final rent of a property? First let’s take look at what exactly these services are.
What is a rental index?
To make renting easier for tenants in Dubai, the Dubai Land Department has an online Rental Index, which has a rent increase calculator. This service gives tenants a clear idea on the rent increase they can expect if their contract is up for renewal.
You can access the Rental Index on DLD’s website – dld.gov.ae, to receive information on the current rent increase guidelines in Dubai, the current rents in your locality for your type of unit (one bedroom, studio, villa etc.); and the maximum amount of increase in rent allowed.
What is a valuation certificate?
Another service offered by DLD is the ‘rent valuation’ service.
According to DLD, the rent valuation service allows customers to request the valuation of rent for a real estate unit. Landlords or tenants can request for the service online through the official DLD website – dubailand.gov.ae, or the official DLD mobile app ‘Dubai REST’, which is available for Apple and Android devices. As reported by Gulf News earlier, this service can help finalise the rent for a unit, if there is a disagreement between the landlord and tenant on the rent of a property. To know more about how you can request for a rent valuation certificate, read our guide here.
Which takes precedence in determining the rent?
A Gulf News reader wrote in raising questions about the rent valuation service, in which type of units the service can be used and whether the rent can be increased, even if it is not established by the rental index?
He said: “My query is in reference to ‘Decree No. 43 of 2013 regarding the Determination of the Increase in Rent for Properties in the Emirate of Dubai’ and in particular its Article 3, which determines that rent increases shall be in accordance with RERA’s Rental Index. Keeping the said Article in mind, can it be safely concluded that RERA’s Rental Valuation Certificates would then solely apply to vacant, untenanted properties and not to already leased properties which fall under the purview of the above Decree and of the RERA’s Rental Index?
“Also, at the time of renewal of a tenancy contract, whenever it is established that no rental increase is justified in accordance to the decree mentioned above and the Rental Index, is there a likelihood for the Dubai Land Department’s Rental Dispute Centre [RDC] to overrule and supersede this? Can they still impose a rent increase on such a property in favour of a landlord in a disputed rental increase case? If yes, would such an RDC verdict be irrevocably biding on the parties, and could it be eventually appealed?”
Response from authority
Gulf News raised the query with Dubai Land Department, which provided the following statement: “As part of DLD’s continuous mission to ensure the rights of both landlords and tenants, every landlord, landlord representative or tenant can apply for rent valuation using the Dubai REST app. The valuation committee will study the details of the evaluated unit and benchmark it against the closest one to it, within the same community.
“Per Law 43 of the year 2013, the rental index is not the sole reference to benchmark rents; a committee or the RDC can also establish the final rent values.”
The department also guided people towards Article 13 of Law No. 26 of 2007 and Articles 9 and 13 of Law No. 33 of 2008.
These Articles cover the regulations that come into play when a landlord and tenant disagree on the rent increase when a lease is renewed. The Articles also provide details of the role of a tribunal, which may be set up by the department, to decide on the final rent, based on various factors like the overall economic situation in the Emirate, the condition of the property, and the average rent of similar properties in the area, as well as any other factors which the tribunal deems appropriate.
2. The committee shall determine the rent of an extension period according to the legislation issued on approving the criteria and rents proposed by RERA in light of the condition of the property and the rent of similar property prevailing in similar real market in same area.
1. The landlord and tenant must specify the rent in the tenancy contract. Should the parties omit or fail to specify the agreed rent, the rent must be the same as that of similar real property.
2. The tribunal will determine the rent of similar real property taking into account the criteria determining the percentage of rent increase set by RERA, the overall economic situation in the Emirate, the condition of the real property, and the average rent of similar real property in similar real property markets within the same area and in accordance with any applicable legislation in the Emirate concerning real property rent, or any other factors which the tribunal deems appropriate.
Article (13)
For the purposes of renewing the tenancy contract, the landlord and tenant may, prior to the expiry of the tenancy contract, amend any of the terms of the tenancy contract or review the rent, whether increasing or decreasing it. Should the landlord and tenant fail to reach an agreement, then the tribunal may determine the fair rent, taking into account the criteria stipulated in Article (9) of this Law.