If you are currently negotiating a contract renewal with your landlord and they attempt to raise the rent above the RERA Index, they now must obtain a legal judgment or court order as of April 2024. Picture used for illustrative purposes.
Dubai: Having a rent-related dispute with your landlord? Changes have recently been introduced in Dubai to the Real Estate Regulatory Authority’s (Rera) Rental Index, as well as the process you need to follow for a rent valuation certificate. It is important to be aware of these changes, whether you are a property owner or a tenant.
Gulf News spoke with legal experts to find out exactly what has changed and how it will affect how rental disputes are managed.
How has the process of rent valuation certificates changed?
“Previously, tenants and/or landlords could obtain a rental valuation certificate specific to the unit. These rental valuation certificates were not always an accurate reflection of the unit’s condition and actual rent value. This often also led to disputes wherein one party would argue that the certificate supersedes the RERA Rental Index, and the other party would argue the opposite,” Ludmila Yamalova, founder and managing partner of HPL Yamalova and Plewka DMCC, explained.
“The change is that these certificates can now only be requested if there is an ongoing dispute, registered with the Courts or the Rental Dispute Centre (RDC),” she added.
The new change makes it so that these certificates can only be requested if there is an ongoing dispute, registered with the Courts or RDC. This means that the first source for rental valuations will always be the RERA Index. And, if the landlord and/or tenant wish to challenge the rental amount in the RERA Index, they can file a case, through which they may be able to obtain a rental valuation certificate.
– Ludmila Yamalova, founder and managing partner of HPL Yamalova and Plewka DMCC
RERA’s rental index is the primary reference for setting rents
This means that the first source for rental valuations will always be the RERA Index, Yamalova clarified.
“If the landlord and/or tenant wishes to challenge the rental amount in the RERA Index, they can file a case, through which they may be able to obtain a rental valuation certificate,” she said.
According to Ashraf El Motei, founder of Dubai-based law firm Motei and Associates, the rental index ensures that the rental market is regulated and provides an easy reference for both landlords and tenants.
“As part of RERA Dubai’s efforts to regulate the real estate market, the Rental Price Index through the smart investment map provides specific guidelines on allowed rent increases based on a comparison of the current rent with the average annual prices in the area,” he said.
He explained that the rent increases allowed as per the rental index, in case the current rent falls below the average rent in the areas, are as follows:
• A 5 per cent increase if the rent is 11 to 20 per cent below the annual average. • A 10 per cent increase if the rent is 21 to 30 per cent below the average. • A 15 per cent increase if the rent is 31 to 40 per cent below the average. • A 20 per cent increase if the rent is more than 41 per cent below the average.
“If the rent falls within the above ranges, no increase will be applied. Rera Dubai encourages tenants and landlords to use the rent calculator available on the department’s website to negotiate annual rent renewals and ensure price transparency,” he said.
“If the rent falls within the above ranges, no increase will be applied. Rera Dubai encourages tenants and landlords to use the rent calculator available on the department’s website to negotiate annual rent renewals and ensure price transparency.
– Ashraf El Motei, founder of Dubai-based law firm Motei and Associates
How will this affect rental disputes in Dubai?
“Presumably, this change was in order to streamline rental evaluations and make it so that one source is the primary and official source, that is, the Rera Index,” Yamalova highlighted.
“This also reduces the number of disputes between parties insofar as which rental valuation supersedes the other. Furthermore, this change allows everyone – tenants and landlords – to have a baseline for rental values, being the Rera Index. Both sides can work off those figures to estimate, and potentially agree on, the rental amount for the proceeding year. This change has a positive impact, both for tenants and landlords. It reduces uncertainty for rental values, and it allows both sides of the relationship to have clarity on which rental valuation figure to work off of,” she said.
Presumably, this change was in order to streamline rental evaluations and make it so that one source is the primary and official source. That is, the RERA Index. This also reduced the amount of disputes between parties insofar as which rental valuation supersedes the other.
– Ludmila Yamalova, founder and managing partner of HPL Yamalova and Plewka DMCC
However, if landlords or tenants disagree with the rent in place, they can then apply for a rent valuation certificate.
“The current period has seen a rise in rental prices in Dubai’s real estate market. However, when tenants opt to renew their leases, the guidelines set by Rera have significantly limited the amount by which landlords are allowed to increase the rent. In some cases, this has resulted in a significant discrepancy between market rates and what long-term tenants are paying,” Motei explained.
In such cases, the tenant or landlord can file a dispute with the rental dispute centre and apply for a rent valuation certificate.
The current period has seen a rise in rental prices in Dubai’s real estate market. However, when tenants opt to renew their leases, the guidelines set by Rera have significantly limited the amount by which landlords are allowed to increase the rent. In some cases, this has resulted in a significant discrepancy between market rates and what long-term tenants are paying.
– Ashraf El Motei, founder of Dubai-based law firm Motei and Associates
What is the new process for applying for a rental valuation certificate?
According to the Dubai Land Department (DLD) you can apply for a real estate rental evaluation online through their official website by visiting this link https://dubailand.gov.ae/en/eservices/request-for-valuation-of-property-lease/#/ or downloading the ‘Dubai REST’ app, which is available for Apple and Android devices.
Required documents
For tenants • Pictures of the property • Certificate of registration of lease contract data • A copy of a ruling or judicial order issued to evaluate the rent of the property
For landlords • Pictures of the property • A copy of a ruling or judicial order issued to evaluate the rent of the property
Fees and processing time: • Dh2,000 per property unit, with a maximum fee of Dh10,000. • The expected processing time is seven working days.
