The Real Estate Regulatory Authority (RERA) Rental Calculator was introduced in December 2013 with the aim of preventing any arbitrary rental increases in the market. It is a tool on the DLD website where users can input their home information (whether they are a tenant or a landlord) and see what the current rent is for that location.
RERA has recently updated their rental index calculator, a tool many residents use to guage the current rent for the homes they are renting or renting out. In an effort to regulate rents in the emirate, RERA continues to update this invaluable resource so as to give residents a better idea of what the benchmark is for new rental contracts or renewals. Landlords and tenants can access this tool through the DLD website and input details from their tenancy contracts to see if their property is priced at the market level or needs to be reduced or increased.
The recent update to the Rera calculator, implemented on March 1st, aims to align future renewals more closely with prevailing market rents. This adjustment has implications for tenants who have resided in properties for over two years, potentially leading to larger rent increases upon renewal compared to previous years.
Short-Term Impact on Residents
According to the CEO of Better Homes Richard Waind, tenants who have been living in a property for over two years are likely to witness a notable increase in renewal costs following the revision. Areas experiencing substantial rent hikes over the past two years, such as central villa communities and waterfront apartment communities, are expected to be particularly affected. Rent increases ranging from 10 to 20 percent are anticipated in these areas in the near future.
Long-Term Implications and Market Dynamics
While the immediate effect of the updated calculator might translate into higher renewal costs for tenants, there are expectations of a more balanced rental market in the long run. The previous calculator had created a significant disparity between renewal prices and open market rates, resulting in limited movement within the market. This stagnation contributed to a shortage of property supply, especially in popular villa communities.
The revised calculator is poised to stimulate market activity by potentially increasing the supply of homes in sought-after communities. As a result, there’s optimism that this could exert downward pressure on open market rents over time. Waind suggests that the adjustment in renewal costs might incentivize more movement within the market, ultimately leading to a more equitable distribution of rental properties and mitigating rent escalation in the long term.
Conclusion
In navigating Dubai’s rental landscape, tenants can leverage tools like the RERA rental calculator to understand their rights and obligations during lease signings and renewals. While the recent updates might initially lead to higher renewal costs for some, there’s optimism that they could contribute to a healthier rental market in the long term. By fostering increased market activity and supply, these changes hold the potential to promote stability for Dubai’s diverse resident population.
As always, keep checking Viewit for more information on what is happening in the Dubai real estate market!
Sources:
- Khaleej Times – “Rera Calculator Update Likely to Impact Dubai Tenants”
- Dubai Land Department – RERA Calculator Guide