Living in Dubai
Rent Cap in Dubai
Before 2006, the property market in Dubai was quite volatile. Rental costs were constantly changed arbitrarily at the owner’s discretion. From 2006, however, the Dubai Government decided to introduce rent caps as a way of stabilizing the property market in the Emirate. This move was applauded by property market players who viewed it as a critical step in promoting market stability and confidence.
At the start of 2006, the first rent cap law was passed by the government of Dubai. The law limited rent increases up to a maximum of 15%. Later, a second rent law was introduced fixing maximum rent increase to an even lower level of 7%. This law would be applicable for both commercial and residential properties. There are few exceptions, however, that allow rental increases to exceed 7%.
2010 Rent Cap
The Prime Minister of UAE and Ruler of Dubai, His Highness Shaikh Mohammad Bin Rashid Al Maktoum, issued a decree on rent cap in Dubai for 2010. It was a means of stabilizing the property market, regulating tenant-landlord relations, and setting course for a legal framework on the same subject.
The decree also approved the Real Estate Regulator Authority (RERA) rent index of 2009 as the main reference in determining average rent upon which the rental increases would be based. The rental increases would be between 0 to 20percent, depending on the percentage on rent below the average index price. Only properties that are 25% below the average index price were entitled to rental hikes.
Rent Cap in Abu Dhabi, Ajman, Ras Al Khaimah and Sharjah
The move by Dubai to introduce the rental controls has prompted other emirates in the UAE to also do the same. With the exception of Fujairah, other cities have initiated various controls. Abu Dhabi allows rent increases up to 7% for tenancies with a term of three or less. Sharjah does not permit rentals for the first three years of tenancy but permits increases hikes in line with market figures thereafter. Rent increases in Ajman are set at 20% once every three years while those of Ras Al Khaimah are set at 15%.
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