The Rental Index in Dubai Could Be Adjusted to Reflect Building Conditions


Changing Rental Index in Dubai

The Rental Index in Dubai is considered for changes related to particular buildings rather than neighbourhood trends. Although it is still merely a suggestion, if it were to be implemented, it would make the rate-setting process more transparent. The landlord or owner of the building is also responsible for ensuring that the rent requests are reasonable.

According to a top source in the sector, the location of a specific building or property has been a factor in rent rises or requests for far too long. According to the currently being developed proposal, the new Rental Index in Dubai will be based on the building’s age, quality, and other amenities. Rent adjustments will thus depend on each tower rather than the demand and supply situation in that district if there are 50 towers there.

What Does the New Rental Index Apply To?

Notably, the new Rental Index in Dubai only applies to apartment buildings, not villas. It is unknown if a new index will be created for villas.

When Would the Change Take Place?

Upon approval, a change would take place at a time when most Dubai districts have experienced rent increases of between 15% and 25%. In other areas, such as the Palm, Downtown, and Dubai Marina, rises have been seen that are much greater than the national average.

What Does the Idea Guarantee?

In any event, the idea guarantees landlords make decisions on rental requests transparently and represents the most significant revision to the Rental Index in Dubai. After all, it will be up to the tenants to decide how that works.

For instance, just because new buildings in an area have higher rates does not always indicate that an older structure lacking several essential characteristics may seek a rent rise.

Due to this, landlords and building owners must participate in Dubai’s system for grading specific properties. Since the program’s beginning in 2015–16, it has evaluated both new and old structures in the city.

How High May Landlords Raise Rent?

The changes to the Rental Index in Dubai measures are intended to prevent scenarios in which landlords of older buildings raise rents if additional buildings with higher rents are built in the neighbourhood. Or in situations when landlords are merely asking for more rent because it has increased in the area.

Under the proposed amendment, landlords with properties older than a certain age would only be allowed to raise the rent following inflation or within a specific range. Owners of 4-star rated homes with more recent construction have much more flexibility regarding when and how much they may renovate. (Brick-and-mortar buildings will be given five-star ratings if they have great green and sustainability credentials.)

The Rental Index in Dubai had been on pause for the previous two years, except for the early Covid period. According to Industry sources, the market’s continued expansion over the last two years is necessary to create a new index that better reflects the current and expected status of the market.