The new decree, signed at the end of 2013, the ruler of Dubai Sheikh Mohammad Bin Rashid Al Mactum, can seriously change the situation in the leased real estate market.
According to this decree, owners of real estate leased, it has the opportunity to change the lease when extending the contract. First of all, this applies to rent. According to the new rules, an increase in the cost of rent can be up to 20%.Prior to the adoption of the document, the owner of the removable real estate could also increase the rental rates for the cost of his housing, but this increase in the registration of the contract could not be more than 5%. At first glance, it may seem that the new law will lead to a sharp increase in the cost of rented square meters, but in fact it provides for significant restrictions. A high percentage of increase is possible only when the previous rent below more than 40% of the average price of similar housing offered to tenants in this area. By 15% it will be possible to increase the amount of rent to those owners who in the previous period received payment for their real estate, the amount of which was lower than the average in the district by 31-40%. If the rent was 21-30%lower, then the tenant has the right to raise the rates by 10%.In all other cases, when when re-registering the lease, it turns out that the previous rent was less by 11-20%, the amount of payment under the new lease may not exceed, as before, 5%.The new resolution only affects the issues of rented housing, it contains no changes in the rules by which real estate is sold in Dubai. The main indicator on which the new decree is based – the average market cost of renting housing will be provided by the Agency for the regulation of the Dubai Real Estate market (Rera).The new rule will affect all owners of rented square meters, regardless of the form of ownership. New rules will adhere to private owners (including real estate owners in free economic zones) and state owners.