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RERA Rental Index Fails to Halt Evictions as Landlords Cut Deals with Tenants

In Dubai, landlords are offering generous incentives to hasten evictions

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Pavitra Shetty

Published on June 6, 2024, 09:52:44

264

rera rental index, evictions, landlords in dubai

Despite the introduction of the new RERA Rental Index in Dubai two months ago, tenants continue to receive eviction notices from landlords eager to renegotiate rents.

Although tenants have a 12-month grace period before eviction, some landlords are offering sweeteners to hasten the process. These incentives include covering a portion of the increased rent tenants would pay in a new property, demonstrating a tactic-based method to circumvent the regulatory changes and maximise rental yields.

In Dubai, landlords are offering generous incentives to hasten evictions, with some paying over 50 per cent of the increased rent on a new property in the same area. The landlords are occupying the apartment personally and don’t want to wait the full 12 months. While such generous offers are exceptions, they still represent significant savings for landlords eager to regain access to their properties.

Eviction notices remain common, driven by factors such as property sales or personal use, not because of a decrease in demand for rentals. These notices are often tied to sale prices or landlords finding it more affordable to occupy their properties.

Contrary to expectations, the updated RERA Rental Index has not led to a significant decrease in eviction notices. Initially, it was thought that landlords would have less incentive to issue eviction notices, as they could now adjust rents to match market rates. However, the current trend suggests otherwise. Landlords are either increasing rents or issuing eviction notices, indicating that the new index has not reduced the number of evictions.

The data suggests that landlords are prioritising their interests, either by maximising rental income or regaining control of their properties. According to Dubai's regulations, landlords are required to provide 12-month eviction notices in specific circumstances: when they intend to occupy the property themselves, sell it, or undertake major renovations.

Notably, despite the introduction of the new rent index, there has been no significant surge in landlords seeking valuations from the Dubai Rental Disputes Centre to resolve disputes related to rent increases. This suggests that landlords are not actively utilising formal channels to address rent-related issues, instead opting for alternative approaches, such as negotiating with tenants or issuing eviction notices.

Landlords seeking to adjust rents must now follow a specific process. First, they must apply to open a rental adjustment case, and if the judge rules in their favour, they can then request a rental valuation.

This valuation will assess the rent based on the current market value in that area. However, it's important to note that the tenancy laws still apply, governing the maximum amount by which landlords can increase rents. This process ensures that rent adjustments are fair and aligned with market rates, while also protecting tenants from excessive increases.

Landlords who obtain a new valuation certificate must adhere to the following rent increase guidelines:

  • 0-11% below market value: No rent increase allowed
  •  11-20% below market value: Maximum 5% rent increase
  •  21-30% below market value: Maximum 10% rent increase
  •  31-40% below market value: Maximum 15% rent increase
  • 41% below market value: Maximum 20% rent increase

The landlords must operate within these predetermined ranges, even if the valuation suggests potentially higher rents. The regulations ensure that rent adjustments are fair and controlled, preventing excessive increases.

For any enquiries or information, contact ask@tlr.ae or call us on +971 52 644 3004Follow The Law Reporters on WhatsApp Channels.

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