UAE Property: 'How does Dubai's new rental index differ from the old one?'

The existing regulation will still be used to calculate any percentage increases to the rental amounts when the market is going up

Rental increases have accounted for a large chunk of Dubai's inflation in the past three years. Lauren Lancaster /The National KEY WORDS: Real Estate Agent home homes rent rentals

Question: I read an article recently about the launch of a new smart rental index for the Dubai real estate market. Can you tell me what this is exactly and how does it differ from the old one? CT, Dubai

Answer: The Dubai Land Department has now introduced an updated version of what was previously known as the Rera rental calculator to the smart rental index. This came into effect on January 1, 2025.

There are several differences between the two but suffice to say the main difference is that the new index will use real time, live data through artificial intelligence to quote rental values. Decree 43 of 2013 will still be used to calculate any percentage increases to the rental amounts when the market is going up.

This amendment to the existing system will mean that the rental values are updated in real time and not just once a year as before because the system will rely on AI and countless other data points, thus increasing the accuracy and transparency of the new system.

Dubai's new rental index is based on star ratings for buildings

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The new system will use three main components to decide on future rental values. The first is taking into consideration old and new rental contract values through the Ejari system. The second is the rating of the building between one to five stars, and the third is the location of the property.

For the moment, only the buildings are rated, not individual apartments. For villas, it will be the actual property that is rated but this will be later down the line. Commercial properties are expected to form part of this new index later in the year, probably by the second quarter.

Q: I rent a three-bedroom apartment in Al Wasl and I have been living here with my parents since 2009. The building has a gym and swimming pool area but these have never been operational. The building is mostly used for commercial purposes and we are one of the few families living here.

My rent, which was Dh100,000 ($27,225) in 2020, dropped to Dh90,000 in 2021 after Covid-19, but since then has been steadily increased. In parallel, the maintenance has declined severely.

We had plans to move a few months ago, however, given the increases in rent, a medical situation in the family and difficulty finding an apt accommodation, we are hoping to continue another year. We were given a notice of rent increase (90 days beforehand) from Dh107,000 to Dh128,400.

The proposed increase is 20 per cent and is not as per Rera's terms at 15 per cent. The Rera website calculator shows there is no case to increase the rent for this unit.

When I checked with the management company, I was informed that the landlord/real estate company manager has done a building assessment with the Land Department and has a certificate which permits him to increase the rent to a certain value.

Is there any advice or guidance you can offer me on this situation or am I simply at the mercy of the landlord? I'm not keen to open a rental dispute. JG, Dubai

A: Since you wrote to me, the Land Department has introduced a new smart rental index, which is more accurate than the previous offering. There are a few things I’d like to point out, firstly as per decree 43 of 2013 the maximum a landlord can increase the rent in any given year is 20 per cent, not 15 per cent as you have alluded to.

Secondly, the new smart index takes into consideration the building’s rating which is a matrix used to determine the quality of the facilities and the building itself. This is graded from one star to five stars. I understand that you have not seen sight of the building’s grade certificate, but at this point, you have to have faith in the new index because it takes the building’s rating into consideration. So, my advice now would be to visit the new rental index, and to see what (if any) changes it will make.

The smart index uses old and new contracts data via the Ejari system as a benchmark and given that it is also driven by artificial intelligence, it is more accurate than the previous matrix. Whatever the index will now say you should stick to, especially if it still states no increase. If however, it suggests a higher rent, this is the amount all parties should agree upon.

I understand that you are not keen to file a case at the rental dispute centre but unfortunately, if you and the landlord cannot arrive at an agreement, this avenue is your only other recourse to find a conclusion. If you do decide to file, I believe you have a strong case based on several factors.

The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to [e-mail]