Dubai’s 90-Day Notice Rule for Rental Increases

Under the updated Smart Rental Index launched in January 2025, landlords are now required to inform tenants of their intention to raise annual rental charges at least 90 days before the expiration of their tenancy contracts. This rule applies regardless of whether the property qualifies for a rent increase under the new index. This 90-day notice period is a crucial change, as it provides tenants ample time to assess their options, negotiate with their landlords, or seek alternative housing, if necessary. The Smart Rental Index is a game changer that utilizes artificial intelligence to deliver up-to-date property price assessments moving away from the previous system that relied on annual updates based on zones or districts. This index aims to reduce rental inflation, promote transparency, and prevent unreasonable price hikes.

The new index focuses on individual buildings and covers all areas in Dubai including freehold and non-freehold zones. This granular approach ensures more accurate and standardized rental price assessments enhancing market transparency and fostering greater confidence in Dubai's real estate sector. A key feature of the Smart Rental Index is its star rating system for residential buildings. This rating combined with data on current and previous rental rates, location specifics, and area demographics helps determine the permissible rent increase.

The amount a landlord can raise rent depends on the difference between the current rental value and the average market rent, in line with the existing regulations. The implementation of this new system has specific guidelines for contract renewals. The previous rental index will be applied if the contract was renewed before 2025, while the new Smart Rental Index will be enforced if the contract is renewed during 2025.

This clear distinction helps tenants understand which rules apply to their situation and whether a rent hike is justified. This move is expected to have a significant impact on Dubai's rental market potentially stabilizing rental prices and mitigating overall inflation in 2024. Dubai recorded over 900,000 lease contracts and an 8% increase annually, with apartment rents rising by 19% and villa rents by 13%.

By providing greater transparency and giving tenants more time to prepare for rent increases, the new regulations aim to create a more balanced and sustainable rental market in Dubai. The Dubai Land Department (DLD) and the Real Estate Regulatory Agency (RERA) have enforced this regulation to minimize and resolve disputes effectively and efficiently. This policy protects tenants from rent increases, helps in stabilizing the rental market, and enhances the investors confidence in Dubai’s booming property sector.