The Dubai Land Department (DLD) recently introduced this index to create a fairer rental landscape , linking property ratings to rental valuations. The index categorises residential buildings from one to five stars based on more than 60 criteria, influencing permissible rent increases.
For tenants like Mohammed S., this new system is already making a difference. Mohammed received a 16 per cent rent increase notice for his two-bedroom apartment, which would raise his rent from Dh54,000 to Dh65,000 - an increase of Dh11,000.
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"The real estate company sent me an email saying it would be raised to Dh65,000. However, after checking the rent index, I found that they could only increase my rent by Dh2,700, which brings it to about Dh56,700. I immediately wrote to my real estate agent and attached a screenshot. I intend to pursue this matter until they bring the rent in line with the index," he shared.
The smart rental index is also reshaping the rental market for older buildings. Landlords of such properties must now invest in renovating their properties before they can increase rents.
Mohammed Iqbal, a tenant in a building over 30 years old, shared his positive experience with the new rules. "One of my neighbours renewed his lease this year and discovered that the company couldn't raise the rent anymore. That was a huge relief for us. While we are paying significantly less compared to newer buildings in the area, it also reflects the condition of our property," he said.
Mohammed pointed out that their building lacks covered parking and many amenities, and there are persistent issues like leakages that require constant maintenance. "We believe what we are paying is fair given the conditions and the amenities we receive," he added.
"The new rule feels like a perfect addition to the rental market. Previously, rent was determined solely by the area, without considering other crucial factors. Now, it finally supports tenants. Until now, it felt like a landlord's market, but this index provides some much-needed support for renters. I believe it will further improve the Dubai rental landscape," he noted, expressing his appreciation for the new regulations.
No arbitrary rent hikes
Khalid Al Shaibani, director of the Rental Affairs Department at DLD, emphasised the index considers various factors, including the average rent in areas, the condition of buildings, and existing rental contracts. This approach aims to prevent arbitrary rent hikes and offers a fairer rental environment.
However, not all landlords are entirely at ease with the new regulations. ALTIN Inanç, a Turkish expat and property investor, shared his thoughts on the situation. "As a landlord, I know how these laws work in Europe," he said. "If a building is in good condition and has a five-star rating, they can increase rent to some extent. But if it's old or poorly maintained, they cannot."
Inanç expressed his concerns about the potential impact of the index on the broader real estate market in Dubai. He mentioned that he bought an apartment in Dubai Marina last March, which is well-renovated. However, he is worried about the slightly older condition of the building itself. "Investors who bought properties expecting rental increases may now face challenges if they cannot raise rents due to the index," he noted.
Inanç