RERA Rental Index Calculator- How much you pay off on Rent?

October 24, 2023
2 min read

RERA Rental Index Calculator- How much do you pay off on Rent?

If you live in Dubai and are considering moving to a different apartment or renewing your lease, you may use the RERA calculator to determine how competitive the rates are in your neighborhood. Do you know how to define the pricing range of the apartment or villa you are renting? If not, you should definitely learn how to use the RERA rent calculator.

In this article, we will guide you about the rental index Dubai RERA calculator. Knowing how to use a Dubai rent calculator is essential when looking to rent a property. Let us observe:

-What is a RERA rent calculator?

-How to use a Dubai rental calculator to see the rent price of your property

-New rent cap law in the UAE

1. What is a RERA rent calculator?

The Dubai Land department’s RERA, or Real Estate Regulatory Agency, is in charge of policing the tenant-landlord relationship. These two contracting parties, deal with problems. Therefore, to assist Dubai residents in determining how much a landlord can raise the rent, they came up with the RERA Dubai calculator.

2. How to use a Dubai rental calculator to see the rent price of your property

Using the RERA rent calculator 2022 will help you ensure that you are aware of and understand the price limitations. Therefore, if the landlord overcharges your annual rent, you can raise this issue to them. Also, you can explain the situation considering the speed at which the market is now functioning. How do you determine whether the rental increase is legal or within range now that you know the prices? Let us show you how to do it.

2.1 Step-by-step guide to use the Dubai RERA calculator

Firstly, you must visit the RERA website and view the page with the information of the RERA calculator. For your reference, here is the direct link: https://dubailand.gov.ae/en/eservices/rental-index/rental-index/#/

Then, you must enter the details:

-The expiration date of the lease. If you are just starting out and want to compare costs, you can also use the current date as a sample.

-Select the neighborhood, property type, sub-area, and apartment type.

-Include the monthly or yearly rent for the apartment you are renting.

-Select “calculate rental increase” from the menu.

Lastly, check out the RERA team’s observations on the neighborhood.

For the current annual rate, we tried using a different figure. But, the remarks remained the same (unless you select a different area). You will get a sense of the average rate of the properties in the area; regardless of how the other settings are changed. Therefore, if you want to comprehend the real estate market, this is still useful.

According to a Gulf News article, Dubai rents have decreased this year. Their study, which is likewise based on the RERA rental index 2022, found that apartment rental costs had decreased since last year.

The Dubai Government is constantly looking for methods to improve the system, and using this RERA index calculator can really assist to ensure that landlords are not overcharging or that we are only paying the neighborhood average.

3. New rent cap law in the UAE

The New Decree, Decree No. 43 of 2013 on Calculating the Increase in Real Estate Rentals in the Emirate of Dubai, was published on December 18, 2013, and it is currently in force. This is Dubai’s new rent cap law, as the name implies. Here you can see how the New Decree is being put into practice, recognizing a shift in the power dynamic in favor of landlords, and describing some doable actions both landlords and tenants may do to better prepare for the introduction of the new rent restriction.

3.1 Tenancy law

Law No. 26 of 2007 Regulating the Relationship between Tenants and Landlords in the Dubai Emirate (as revised by Law No. 33 of 2008) (the “Tenancy Law”) governs the majority of landlord-tenant interactions in Dubai. The regulation, which was initially introduced in 2007, had a severe cap on rental growth for the first two years of a lease. With the implementation of Law No. 33 of 2008, this safeguard for tenants (or limitation on landlords) was eliminated.

Landlords are now free to raise rent every year after the two-year limit was eliminated. But, only to the amount governed by some later rent cap legislation. Including Decree No. 62 of 2009 and Decree No. 2 of 2011.

3.2 Application of the new decree

The New Decree becomes operative on December 18, 2013. It covers all leases in Dubai, including those in special development regions, free zones, and the Dubai International Financial Center (“DIFC”), as well as landlords in both the governmental and private sectors.

The maximum percentage increase in rent that is permissible when a lease is extended is outlined in Article 1 of the New Decree. The difference between the property rental worth and the typical market rental rates for properties in a particular location in Dubai will determine how the rent cap is applied. The Real Estate Regulatory Agency (“RERA”) produces and frequently updates a rent index in Dubai that is used to determine the average market rental rate.

The new rent cap’s layered structure is outlined below with examples to help make it clear.

If the rent is currently:

-No rent increases are allowed; the rental rate must be less than 10% far below the market average.

-A rent increase of no more than 5% is allowed but must be between 11% and 20% under the typical market rental rate.

-A rent increase of no more than 10% is allowed but must be between 21% and 30% just below the market average.

-A rent increase of no more than 15% is allowed but must be between 31% and 40% somewhere under the typical market rental rate.

-A maximum rent increase of 20% is allowed when the rental rate is more than 40% much below the market average.

3.2.1 Example 1

One-bedroom apartments in area X typically rent for AED 100,000 per year on the open market. The tenant pays AED 95,000 per year. Which is 5% less than the typical market rental rate. The landlord is not allowed to raise the rent in compliance with the Current Decree at the time of lease renewal.

3.2.2 Example 2

A commercial office in area Y can be rented for an average market rent of AED 2,000,000 per year. Currently, a tenant pays AED 1,500,000 per year, which is 25% less than the typical market rental rate. According to the New Decree, the landlord is allowed to raise the rent at the time of renewal by a maximum of 10%, or AED 150,000. Therefore, the rent increase cannot be more than AED 1,650.000.

For landlords and tenants to determine the permitted rental increase in conformity with the earlier rent caps set in 2009 and 2011, RERA previously supplied an online rent increase calculator. As far as is known, the Calculator has just been revised to comply with the new decree.

Visit www.dubailand.gov.ae/English/eServices/RentalIncreaseCalculatorEN.aspx to access the rental calculator Dubai. Landlords and tenants are urged to use the rent calculator Dubai as a starting point. This is to figure out the amount of rent increase allowed (if any) under the New Decree.

3.3 Changing the balance of power

The New Decree’s notion of a layered rent cap structure is comparable to the former rent cap system established by Decree No. 2 of 2011 (also known as “the Old Rent Cap”). Instead of the 26% mandated by the Old Rent Cap, rent increases now begin under the New Decree upon lease renewal and once the rent for a property is 11% less than the average market rental rate. The benchmark for rent increases has been lowered by 15% as a result of the New Decree, which shifts authority from renters to landlords and permits landlords to raise rent at a lesser benchmark when a lease is renewed.

Landlords and tenants might disagree with such a change in the power dynamic. Tenants may contend, on one hand, that the ceiling for allowed rent increases has been significantly lowered, which could lead to an increase of up to 20%. On the other hand, landlords might view the benchmark drop as reasonable given that the rent for certain homes in Dubai has not changed since the recession. This article’s goal is to inform landlords and renters of the new rent cap. Thus, they can be properly suited when their leases come up for renewal. It is not intended to analyze the reasons behind the change in the power dynamic.

3.4 Practical steps for tenants and landlords

In order to ensure that the new rent cap is applied correctly, tenants and landlords should think about these steps:

Firstly, determine the lease renewal date. Landlords and renters must agree on the dates of the lease renewal because rent increases are permissible.

-Then, additional rent adjustment clauses in the lease. It is not unusual for parties to a lease to agree to a constant rent or fixed rate increase at renewal, especially in commercial leases. In this situation, the contractual agreement takes precedence, and the agreed-upon fixed rent or set rental increase will take effect at the time of lease renewal.

-Also, calculate rent increases based on the new rent cap. To avoid any unpleasant surprises in the future, tenants and landlords should negotiate any potential rent increases before the lease renewal date, even if the prior step does not apply. To ascertain whether and by how much a rent increase is authorized, the RERA rental index calculator would be a useful tool. This would then provide the landlord and renter the opportunity to try and amicably negotiate a reasonable rent increase.

-Additionally, settling rental disagreements. The Rental Dispute Settlement Center, created by Decree No. 26 of 2013, should be consulted whenever a landlord and tenant cannot agree on the proper rent increase. 3.5% of the rental amount, which cannot be below AED 500 or greater than AED 20,000, is required to file a claim.

3.4.1 Disputes

Some disputes, such as those that involve long-term leases or free zones with their own judicial advisory boards or special courts (like the DIFC), are not appropriate for the Rental Dispute Settlement Center. The proper judicial committees or special courts must be consulted regarding such disputes. Decree No. 26 of 2013 does not specify what a long-term lease is. Plus, this will need to be done over time. The Dubai Land Department has a history of treating lease registration using the Ejari system as a long-term lease. Thus, it is likely that a lease with a period of more than five years may fall under this category.

4. Connect Legal, the best legal firm for you

Despite the controversy, the New Decree may cause because it favors landlords, it is now in effect. Also, both landowners and tenants are invited to comprehend its consequences. And to be more ready when their leases are up for renewal. If you want to better understand the Dubai rental index and RERA rent calculator, we are here for you.