In Dubai, the percentage of rent increase is strictly regulated by the Real Estate Regulatory Agency (RERA), which operates under the Dubai Land Department (DLD). The rent increase is determined based on the RERA Rental Index, a tool that calculates the permissible rent increase for residential and commercial properties.

Key Factors Determining Rent Increase:

1. Current Rent vs. Market Rate:

   • The RERA Rental Index compares the current rent of a property to the average market rental rates in the same area for similar properties. The allowable increase is then determined based on how the current rent aligns with these average rates.
     
     

2. RERA Rent Increase Calculator:

   • RERA provides an online Rent Increase Calculator, which landlords and tenants can use to determine whether a rent increase is justified and, if so, by how much. This tool is updated annually and reflects current market trends.
     
     

Rent Increase Guidelines According to RERA:

• No Increase: If the current rent is less than 10% below the market rate, no increase is allowed.
  
  

• Up to 5% Increase: If the current rent is between 11% and 20% below the market rate, the landlord can increase the rent by up to 5%.
  
  

• Up to 10% Increase: If the current rent is 21% to 30% below the market rate, a rent increase of up to 10% is permitted.
  
  

• Up to 15% Increase: If the current rent is 31% to 40% below the market rate, the landlord can raise the rent by up to 15%.
  
  

• Up to 20% Increase: If the current rent is more than 40% below the market rate, the landlord is allowed to increase the rent by up to 20%.
  
  

Notice Period:

Landlords must give tenants at least 90 days’ notice before the end of the tenancy contract if they intend to increase the rent. This notice must be communicated in writing, allowing tenants time to consider the increase and negotiate if necessary.

Legal Compliance:

It's important to note that any rent increase that does not comply with the RERA guidelines can be contested by the tenant through the Rental Dispute Settlement Centre (RDSC). This ensures that rent adjustments remain fair and within legal bounds.

Conclusion:

The RERA guidelines ensure a balanced approach to rent increases, protecting both landlords and tenants in Dubai’s dynamic real estate market. Understanding these regulations can help you make informed decisions whether you're a landlord considering a rent hike or a tenant evaluating your next lease renewal.