Changes to Rent Re-evaluation Process in Dubai

In Dubai, landlords have the option to seek re-evaluation of rent with the Real Estate Regulatory Authority (RERA) to potentially increase rental prices, bypassing the recently updated Rental Index. However, starting from April 1, 2024, the process for seeking re-evaluation has undergone a significant change. Landlords are now required to provide a judgment or legal order as part of their application for the rent evaluation service. This marks a departure from the previous practice, where landlords could pay a fee to the Land Department for rental valuations. The updated Rental Index by RERA in March 2024 allows landlords to adjust rents in line with market trends, but within the parameters set by the RERA calculator. The RERA calculator now serves as the sole reference point for calculating rental increases. Previously, landlords could apply for a rental evaluation to deviate from the outdated calculator's benchmark. With the updated calculator, landlords are restricted from increasing rental prices beyond the benchmark, ensuring greater transparency and reliability for tenants. Sagar noted that in the first quarter of 2024, a total of 72,885 rental contracts were renewed, involving 145,770 decisions between tenants and landlords. This significant volume underscores the importance of using the RERA calculator as the definitive reference. The inclusion of legal requirements ensures fair vetting of valuation changes against the updated calculator, providing assurance to both landlords and tenants. The decrease in rental contract renewals by 7.2% year-on-year, compared to Q1 2023, suggests a possible trend of tenants shifting towards property ownership in Dubai, given the continuous rise in rents over the past year.

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