RERA system resolve Landlord and Tenant Dispute

Dubai rents rise: RERA system used to resolve Landlord, Tenant Dispute

With residential rents in Dubai up more than 25 per cent, more tenants and landlords are engaged in ways to try and find some way to arrive at an agreement on increases during renewals.

Landlords are resorting to the RERA (Real Estate Regulatory Agency) Valuation Certificate to see if they are eligible to ask for an increase. The process has RERA officials providing the required service and recommending whether the demand is justified or not. If the rent for that property or building is increased, landlords can ask their tenant – mostly the existing one – to sign up for the increased lease.

At the same time, tenants are still using the RERA Rental Calculator to try and convince their landlords as to what should be an optimum rent to pay at a time when rates have been climbing.

This is what’s setting off the tussle between two different ways of calculating rent and rent increase.

“While we are seeing some landlords leverage the rental valuation certificate to increase rents during renewals, until RERA officially announces that the rental valuation certificate supersedes the RERA rental index, the RERA rental index remains applicable for rental renewals,” said Prathyusha Gurrapu, Head of Research and Advisory at Core, the property consultancy.

RERA RENTAL INDEX

RERA has specified rental ranges in various areas which impact renewal contracts. Landlords can only increase rent in the renewed contract based on these ranges.

If you pay an amount lower than the minimum range, he/she can raise rents by a specific percentage, depending on the difference in rents paid and the rental index in the area. If tenants pay an amount equal to or more than this rent, the landlord cannot raise rents further.

These ranges have no impact on new contracts – a landlord can quote rents well above these brackets for new tenants. The calculator only affects rental increases in the area for existing tenants wishing to renew.

“As most districts (in Dubai) have witnessed over 25 per cent increases, such a sharp rise in rents is impacting affordability and is a growing concern amongst tenants.

“Landlords who have been in a downward market for a long time are pushing to increase rents during renewals, while many tenants are resorting to the RERA rental calculator to protect them from such increases.”

And as a last resort, tenants and landlords continue to hit the Rental Disputes Settlement Centre at Dubai Land Department, hoping the judgements would go in their favour.

In the year to end September, villa rents are up by 28 per cent and those on apartments by 26 per cent year-on-year.