Landlords in Dubai must provide a 90-day notice period of their intention to raise annual rental charges under the updated property index launched last month, authorities said on Sunday.
The Dubai Land Department launched a Smart Rental Index on January 2 – including a star rating system for residential buildings – as part of efforts to offer greater stability to tenants and property owners as the housing market booms and the city's population surges.
The system uses artificial technology to deliver property price updates at any time, unlike its predecessor, which was updated once a year.
The old index was based on zones or districts, while the new one focuses on each building and covers all areas in Dubai including freehold and non-freehold areas.
Notice period is important
Dubai Media Office set out the procedures for triggering rent increases, which are in line with the previous index and aim to offer protection to tenants.
- If a landlord notifies the tenant of a rent increase at least 90 days before the contract’s expiration, the increase will be applied only if the Smart Rent Index confirms the property’s eligibility.
- If the landlord does not notify the tenant at least 90 days before the contract’s expiration then no increase will be applied, even if a rent increase was permitted under the index.
- In cases where the landlord provided the required 90-day notice and the previous index supported the increase, but the new index does not, the renewal date will determine which index applies.
- The terms of the previous index will be applied if the contract was renewed before 2025
- The rules of the new index will be enforced if the contract is renewed during 2025.
How rent rises are calculated
The amount a landlord can raise rents by under the index is dependent on the difference between the current rental value and the average market rent, in line with previous regulations.
- Less than 10 per cent below the market value for the area, no increase is allowed
- Between 11 per cent and 20 per cent below market value for the area, a landlord can increase by 5 per cent
- Between 21 per cent and 30 per cent below market value for the area, a landlord can increase by 10 per cent
- Between 31 per cent and 40 per cent below market value for the area, a landlord can increase rent by 15 per cent
- Forty-one per cent or more below market value will permit a 20 per cent increase in rent
New index 'helps stabilise rental market'
Dubai Media Office said the smart index has already been instrumental in “stabilising rental prices and mitigating overall inflation in Dubai for 2025".
Majid Al Marri, chief executive of the Real Estate Registration Sector at Dubai Land Department, said the index has promoted greater transparency in the rental sector.
“The Smart Rent Index helps curb inflation and enables stakeholders to make informed investment decisions based on reliable data,” he said, in remarks carried by Dubai Media Office on February 16.
In 2024, the number of registered leases rose 8 per cent annually to more than 900,000, “reflecting growing confidence in Dubai’s real estate sector”, Mr Al Marri said at a press conference unveiling the scheme in January.
Officials expect the index to reduce disputes between landlord and tenants by more than 20 per cent.
Rents have become a tug-of-war because of surging demand and a population boom. Rents in Dubai increased in the third quarter of 2024 for the 15th quarter in a row and by 18 per cent annually, property consultancy Cushman and Wakefield Core said in November.
Apartment rents increased by 19 per cent annually, while villa rents recorded a more moderate increase of 13 per cent, the research found. There has also been a continued increase in lease renewals, which rose by 16 per cent in the third quarter.
