Dubai’s New Rental Index to Prevent Arbitrary Rent Hikes by Landlords

 

Tenants in Dubai will soon benefit from greater transparency in rental adjustments as the new digital rental index goes live in early 2025. The initiative promises to minimize sudden and arbitrary rent hikes, bringing much-needed clarity to lease negotiations.

Real-Time Data for Greater Transparency

Unlike the current system, which updates quarterly, the digital rental index will provide real-time insights into rental trends. This information will filter down to specific buildings and areas, enhancing transparency and enabling fair pricing.

The Dubai Land Department (DLD) confirmed the imminent launch of the index, with a detailed announcement scheduled for January 2, 2025. The move follows a significant gap in rental index updates between 2022 and April 2024, during which rents in Dubai saw steep increases across locations and property types.

Regulated Pricing for Older and Newer Properties

The new index aims to bridge the pricing gap between older and newer properties. According to property market experts, this initiative will prevent landlords of older leased units from imposing arbitrary rent increases.

“Landlords in older buildings will need to offer competitive pricing and undergo verification checks,” said Rohit Bachani, co-founder of Merlin Real Estate. “This will create a more regulated pricing structure, benefiting tenants and brokers alike.”

Guidelines for Rent Hikes

The index will also ensure adherence to specific guidelines for rent increases:

• 11%-20% below market value: Maximum 5% increase.

• 21%-30% below market value: Maximum 10% increase.

• 31%-40% below market value: Maximum 15% increase.

• 40% or more below market value: Maximum 20% increase.

Previously, landlords often exceeded these limits to align older leases with newer properties’ market rates. With the introduction of the new index, such practices are expected to diminish.

A Trusted Real Estate Ecosystem

Experts believe the new index is a culmination of the DLD’s efforts to create a more trusted and data-driven real estate ecosystem. Initiatives like the Makani system and Ejari registration have paved the way for this landmark development.

“The index will provide tenants with assurance against sudden rent hikes while promoting fair competition among landlords,” said Bachani.

As more homes prepare for handover in 2025, Dubai’s new Rental Index is set to redefine rental benchmarks, ensuring sustainable growth in the property market and greater fairness for all stakeholders.

 

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