According to a CBRE report, Dubai is witnessing a surge in rents, with tenants increasingly opting to renew leases. As of July 2023, the city recorded a 22 percent average rent increase this year. And compared to 2019’s figures, there’s a 43.5 percent rise in total tenancy contracts.
To aid tenants and landlords of the city’s thriving rental properties market, the Real Estate Regulatory Authority (RERA) offers a rental increase calculator. Primarily, it helps determine whether a rental increase is permissible within Dubai laws. Learn more about the RERA calculator through this guide.
What is the RERA calculator?
The RERA (Real Estate Regulatory Authority) calculator is an online tool that assists landlords and tenants in determining the viability of rental increases. It is based on factors such as property type, contract expiration date, location and current rent.
Offered as a free online service for all Dubai residents, the RERA calculator is a valuable resource for making well-informed decisions when renting in the city.
How to use the RERA calculator
Using this calculator is easy. Here are the steps to follow.
Step 1: Gather the necessary information
Before using the RERA calculator, you must obtain pertinent information beforehand. It includes:
- Property category (residential, commercial, industrial or staff accommodation)
- Location or area of the property
- Ownership status (freehold or not)
- Type of property (apartment or villa)
- Total number of bedrooms
- Date of contract expiration
- Current annual rent
Step 2: Access the calculator
You have two options: Visit the Dubai Land Department website or log into the Dubai REST app. Then, proceed to the “Inquiry about the Rental Index” section.
Step 3: Input your data and calculate
Once you’ve accessed the calculator, fill it in with the correct details. Apart from the information above, you must input your certificate or title deed number and year. After double-checking all the data, click on the “Calculate” button.
Step 4: Review results
The screen will display the typical rentals in your neighborhood for your chosen property type.
The RERA rent calculator helps you understand the actual value of your rented property and whether your landlord is charging a fair amount. On the landlord’s part, they can use the RERA rent calculator to determine appropriate rental increases within the legal framework.
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Why is the RERA calculator important?
RERA is the unit of the Dubai Land Department that oversees landlord-tenant relations in the city. It serves as the regulatory authority for all entities engaged in the city’s real estate sector. One of its roles is managing the city’s Rental Price Index. It’s a database that captures average rental prices and undergoes annual updates, ensuring transparency in rental transactions across properties in the city.
Nonetheless, simply referring to the database can be challenging. To enhance accessibility and user-friendliness for Dubai citizens, RERA introduced the said calculator. As stated, it helps evaluate whether a rental increase is permissible by law.
The maximum allowable percentage of rent increase for properties in Dubai depends on several factors. These include area, property type, size and current market value. The following guidelines apply:
- No increase is permitted if the rental price is less than 10 percent below the market value for the area.
- For rentals between 11 percent and 20 percent below market value for the area, a landlord is allowed to increase by 5 percent.
- For rentals between 21 percent and 30 percent below market value for the area, a landlord can implement a 10 percent increase.
- For rentals between 31 percent and 40 percent below market value for the area, a landlord can increase the rent by 15 percent.
- Properties priced at 41 percent or more below market value will incur a 20 percent increase in rent.
RERA calculator’s history and development
In 2013, rents in Dubai surged by 50 to 60 percent, according to a report by realty company Asteco. To prevent market overpricing, Dubai Ruler Sheikh Mohammed bin Rashid Al Maktoum issued Decree No. 43 of 2013 in December of that year. It established the above-stated framework to cap rental increases and curb illegal adjustments. Since the calculator’s launch, it has made it easier for tenants and landlords alike to gauge whether their rental increases abide by the pricing framework.
RERA calculator benefits
These are the best perks of the RERA calculator.
1. Easier fact-checking
The RERA calculator cultivates a culture of transparency in the real estate sector by providing an objective tool for determining rental increases. In particular, tenants can use data from the calculator to fact-check the rental price they are paying.
2. Better legal compliance
Landlords must inform the tenant of any impending rental fee increases at least 90 days before the contract renewal. Failure to meet this criterion grants the tenant the right to decline the proposed increase. Both can use the tool to determine whether the increase is allowed.
3. Improved decision-making
The RERA calculator empowers users with valuable information, allowing them to make sound decisions about rental agreements. Experts advise tenants to use the calculator when negotiating lease contracts.
RERA calculator limitations
The RERA calculator is a beneficial tool. However, it has its own limitations.
1. Limited considerations
The calculator doesn’t account for unique circumstances surrounding individual properties. Factors such as the age of the building or unit, building condition, available facilities or floor level are not considered. This can lead to inequitable assessments.
2. Availability of market data
The accuracy of the RERA calculator heavily relies on the market data used. Fluctuations or inaccuracies could impact the reliability of the outcomes. Additionally, if the rental index data is not yet available for a certain period, the tool won’t be able to provide calculations.
Final thoughts
With the RERA calculator, navigating Dubai’s bustling rental property landscape is now easier. While it has limitations, it is immensely valuable in improving decision-making and implementing more equitable rental increases. It ensures landlords’s legal compliance while empowering tenants to negotiate for better prices.
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