The existing regulation will still be used to calculate any percentage increases to the rental amounts when the market is going up
Question: I recently read about a new smart rental index introduced in Dubai’s real estate market. Can you explain what it is and how it differs from the previous system? – CT, Dubai
Answer: The Dubai Land Department (DLD) has rolled out an advanced version of the former Rera rental calculator, now rebranded as the smart rental index. This updated system officially came into effect on January 1, 2025.
The key distinction lies in how the new index operates. Unlike the older version, this system leverages live, real-time data powered by artificial intelligence (AI) to determine rental values. However, Decree 43 of 2013 still governs the calculation of rental increases when market rates rise.
This upgraded mechanism ensures that rental values are adjusted in real-time rather than on an annual basis, as was previously the case. By relying on AI and integrating numerous data points, the system delivers greater transparency and precision in rental assessments.
The new smart rental index evaluates rental values using three core components. Firstly, it factors in both old and new rental contracts recorded through the Ejari system. Secondly, it incorporates a building rating system, which grades properties on a scale of one to five stars. Lastly, it considers the location of the property.
Currently, only buildings are rated, not individual apartments. For villas, the ratings will eventually apply to individual properties but at a later stage. Commercial properties are expected to be incorporated into the index by the second quarter of the year.
Question: I’ve been renting a three-bedroom apartment in Al Wasl with my family since 2009. The building, primarily commercial, has some families living there and includes a gym and swimming pool, but these amenities have never been functional. My rent, initially Dh100,000 ($27,225) in 2020, dropped to Dh90,000 during Covid-19 but has since steadily increased. Maintenance, however, has significantly declined.
Recently, I received a notice of rent increase from Dh107,000 to Dh128,400 — a 20% hike. However, the Rera calculator suggests no increase is applicable. The management company claims that the landlord has obtained a certificate allowing this adjustment. Is there anything I can do, or am I at the landlord’s mercy? – JG, Dubai
Answer: Since your inquiry, the DLD has introduced the new smart rental index, which is designed to provide more accurate rental assessments. Let me clarify a few points:
Firstly, under Decree 43 of 2013, landlords are permitted to increase rent by a maximum of 20% annually, contrary to your understanding of a 15% cap.
Secondly, the new index incorporates a building rating matrix that evaluates the quality of facilities and the property itself, grading it from one to five stars. While you may not have seen the building’s certificate, this rating is crucial in determining rental adjustments. It’s advisable to use the smart index to check the building’s rating and verify any permissible changes to your rent.
The new system uses historical and current rental data from Ejari as a benchmark, along with AI-driven analytics, making it more reliable than the previous model. If the index indicates no increase for your unit, this is the amount you should adhere to. However, if the index suggests a higher rental value, both you and the landlord must align with the recommended amount.
While filing a case with the Rental Dispute Centre may not appeal to you, it remains your best option if an agreement with the landlord cannot be reached. Based on the information you’ve shared, you appear to have a strong case if you decide to pursue this route.
