Tim Elliott
Welcome to Lawgical, the UAE’s first and only regular legal podcast. My name is Tim Elliott, and I’m here with the expert—managing partner of the Dubai-based legal firm HPL Yamalova & Plewka—Ludmila Yamalova. Great to talk with you.
Ludmila Yamalova
Good to talk to you too, Tim. And thank you, as always, for being here.
Tim Elliott
This episode is all about the recent update to the RERA index by Dubai’s Real Estate Regulatory Agency. The RERA index is basically a guideline for rental prices across different areas in Dubai, and it’s a big topic here. I just moved, so it’s top of mind for me. With the index update, have the rental laws changed as well?
Ludmila Yamalova
No, the laws themselves haven’t changed. The RERA index has indeed been updated, but this doesn’t reflect any changes to the rental laws. The rental law in Dubai dates back to 2008, with an amendment in 2013, but there hasn’t been a new law. This update is purely about adjusting the baseline prices in the index, which the government uses to determine current market values for rentals. So, while the RERA index prices have been updated, the legal framework governing rentals in Dubai remains the same.
Tim Elliott
Let’s take a step back. Can you remind everyone what exactly the RERA index is?
Ludmila Yamalova
Certainly. RERA stands for the Real Estate Regulatory Agency, and it’s a Dubai-based agency responsible for regulating the local real estate market. One of RERA’s main tools is the RERA index, a calculator designed to manage rental prices and serve as a basis for potential rental increases. The index’s relevance comes from Dubai’s rental law, specifically Article 3 of Decree Number 43 of 2013, which references the RERA index as the standard for determining allowable rent increases.
This index is the main reference point that the Dubai Rental Dispute Center (RDC), or Dubai Rental Court, uses when handling rental increase disputes. For example, if a landlord wants to raise the rent and a tenant challenges it, the RDC will look to the RERA index to see if the increase aligns with the current market rate.
Tim Elliott
So, how exactly do you use the RERA index in a case with the rental dispute center?
Ludmila Yamalova
Let’s say you’re my landlord, and I’m renting a property from you for AED 100,000 per year. Now, you decide you want to raise it to AED 150,000. From your perspective, this increase may seem reasonable based on what similar properties are being rented for.
To do this correctly, you’d need to give me a 90-day notice before the lease term expires. If I don’t agree to the increase, either one of us would then file a case with RDC, and they would refer to the RERA index. I’d go online, input my property details in the index, and check if the requested increase aligns with similar properties. If the index doesn’t support the increase, I can use this as my defense.
Ultimately, the RDC relies on the RERA index to ensure that any rent increase request from landlords is within reason and aligns with market standards.
Tim Elliott
I remember back in 2008, there was a huge real estate boom, and the RERA index was updated quarterly. That frequency has definitely changed over the years. How often is the index updated now?
Ludmila Yamalova
You’re right; originally, the index was updated regularly. Recently, it hadn’t been updated often, likely because the market remained stable for some time. But in the last couple of years, Dubai’s economy has been booming, and property prices have surged for both buying and renting. Many landlords, seeing this shift, began asking for rent increases, and as these disputes accumulated at the RDC, it made sense for RERA to review the index.
Just recently, without any formal announcement, we noticed updates in the RERA index while working on cases for our clients. This kind of quiet update to the index appears to be the new approach.
Tim Elliott
It’s March 2024 now, and we’re seeing the latest update this month. I can’t recall an update before this.
Ludmila Yamalova
Neither can I. We handle many RDC cases, so we keep a close eye on the RERA index. This latest update in March 2024 is the first in a while, and it reflects the current boom in certain areas.
Tim Elliott
You mentioned specific areas that have seen changes. Can you share any notable examples?
Ludmila Yamalova
Certainly. While we haven’t seen an across-the-board announcement, we did notice area-specific changes. For example, in Jumeirah Lakes Towers (JLT), the average rental values have increased by 25% compared to 2023. On the Palm Jumeirah, specifically in Golden Mile, there’s been a 33% increase in average rental values.
In Al Wasl, we’ve observed a 19% increase in rental prices. These changes reflect the high demand in these areas, but it’s worth noting that not all areas have seen increases. For example, in Jumeirah Park, there’s been a 5% decrease in the average rental value.
Tim Elliott
So, not everything is going up. And it’s worth pointing out that the RERA index applies only to Dubai, correct?
Ludmila Yamalova
That’s correct. The RERA index is specific to Dubai, as RERA is a Dubai government agency. Rental laws in the UAE are managed at the Emirate level, so Dubai, Abu Dhabi, and other Emirates have their own laws. Additionally, the RERA index excludes the DIFC (Dubai International Financial Centre), which has its own set of laws.
Tim Elliott
For anyone listening who’s directly impacted by these changes, what’s the main takeaway?
Ludmila Yamalova
Stay informed and check the RERA index regularly. With rental prices on the rise, many landlords are issuing eviction notices or seeking rent increases. Tenants should review the RERA index before responding to any increase request, as it’s been updated recently and may continue to change.
For landlords, the RERA index updates may now provide more justification for raising rents. Both parties should keep an eye on the RERA index to make informed decisions.
Tim Elliott
The RERA index is definitely a hot topic in Dubai right now. That’s another episode of Lawgical. Thanks, as always, to our legal expert, managing partner of Yamalova & Plewka, Ludmila Yamalova.
Ludmila Yamalova
Thank you, Tim. It’s always great to chat with you.
Tim Elliott
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