The Real Estate Regulatory Authority (RERA) in Dubai recently updated its rental price calculator, which experts say could lead to higher rents for some tenants. The RERA calculator is used to determine allowable rental increases when leases are renewed. It provides a benchmark rental price for different communities and limits how much rents can go up each year.
The calculator was revised on March 1st to make renewal rents more aligned with current market prices. According to the CEO of Betterhomes, Richard Waind, tenants who have lived in their properties for over two years are most likely to see a bigger increase when renewing their lease due to the changes. He estimates rents could rise 10-20% in the short term for areas that have experienced significant rental growth in the past two years, such as popular villa communities and waterfront apartment buildings.
However, Waind also believes the updated calculator may help stabilize rents long-term. Before the revision, there was a large gap between benchmark renewal prices set by RERA and actual market rents, especially for coveted neighbourhoods. This discouraged tenants from moving out and led to a lack of supply on the market. By making renewal costs more reflective of current values, the new calculator may motivate more tenant turnover and open up more listings. With increased supply, open market rents could potentially edge down slightly over time.
For tenants, the changes mean looking at bigger rental hikes when renewals come up if they have been in place for multiple years. This may prompt some renters to consider relocating to a less expensive property or even purchasing a home instead of renewing their lease. Landlords are also expected to benefit from higher renewal rates allowed under the revised calculator.
Overall, the adjustment aims to bring greater balance and fluidity to Dubai’s rental sector by aligning regulated renewal prices with current market conditions. While some tenants face steeper costs in the short-run, the changes may help moderate rent increases on average going forward. The updated RERA calculator is another step in the authority’s efforts to improve transparency and efficiency across the emirate’s dynamic property market.
Dubai’s rental price regulator RERA recently updated its calculator used to set maximum lease renewal increases. This is likely to result in higher rents for some long-term tenants. However, experts say it could also encourage more tenant turnover, increasing housing supply and potentially mitigating rent rises on the open market over the long run. The changes aim to better align regulated prices with current property values.
