New Decree on Rental Values in Dubai

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H.H. Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, in his capacity as the Ruler of Dubai, today issued a decree setting the maximum allowed increase in property rent values in 2010, reported the official news agency WAM.

The decree comes as part of Sheikh Mohammed’s keen interest in ensuring stability of Dubai’s property market as well as creating legislations that guarantee promoting landlord-tenant relationship.

The decree also comes as part of Sheikh Mohammed’s interest in ensuring economic and social for all national and non-national tenants as well as in preventing any increases that are not based on clearly defined legal references and standards that guarantees the rights of tenants and landlords alike.

For properties rented in 2009 and before, the maximum increase in rent value shall be set as per the previous relevant similar decree for 2009.

The decree approves the Real Estate Regulatory Authority’s (RERA) price index which shall be followed as the reference for setting any increase in rent values in 2010.

The new decree prevents any increase in rent values as long as they are less by a maximum of 25 % than the average rents of properties of similar specifications.

The maximum allowed rental increases shall be as follows:

  • – 5% increase if the rent value is 26% to 35% less than the average rent of properties of similar specifications.
  • -10% increase if the rent value is 36% to 45% less than the average rent of properties of similar specifications.
  • 15% increase if the rent value is 46% to 55% less than the average rent of properties of similar specifications.
  • –20% increase if the rent value is 55% more than the average rent of properties of similar specifications.

The decree goes into immediate effect and shall be published in the official gazette.

The decree also defines a new formula for lower rent values which allows a proportional increase in rents for 2009. According to the new formula, the increase in property rent will rise in proportion with the drop in 2008 rent value in the average annual rent for the same property.

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