Rent increase caps and the rental index

The rule

This is the rule that decides whether an underlet property can be repriced, and it is misunderstood by landlords and tenants in roughly equal measure.

How the cap works

Under Decree No. 43 of 2013, the permitted increase depends on how far the existing rent sits below the average market rent for comparable units, as determined by the RERA rental index.

• Within ten percent of the index: no increase permitted
• Eleven to twenty percent below: up to five percent
• Twenty one to thirty percent below: up to ten percent
• Thirty one to forty percent below: up to fifteen percent
• More than forty percent below: up to twenty percent

The index is the authority, not the landlord's opinion of market rent and not the agent's. The Land Department publishes a calculator that returns the permitted figure for a specific unit.

What this means if you are buying

A property let well below market is not the bargain it appears. You cannot simply reprice it to market on renewal. If the sitting rent is thirty five percent below the index you may raise it fifteen percent, which still leaves it below market, and you repeat the exercise the following year.

That has three consequences for the arithmetic. The yield you can achieve in year one is the passing rent, not the market rent. The path to market rent takes years, not one renewal. And the break-even occupancy calculation should use the rent you are legally able to charge, not the one in the sales pitch.

Buying a vacant unit avoids the problem entirely, which is part of why vacant possession commands a premium.

Notice, which is where landlords lose

A rent increase requires ninety days written notice before the tenancy expires unless the contract specifies otherwise. Miss it and the tenancy renews on the existing terms.

Separately, ending a tenancy for reasons other than tenant breach, including sale or personal use, requires twelve months notice served through notary or registered mail. A message on a phone is not service.

These are the provisions that most often decide disputes, and they are procedural rather than substantive: a landlord with a perfectly good case loses it by serving notice incorrectly.

The tenant's side of the same rule

The cap is symmetrical in usefulness. A tenant facing an increase can check the index themselves and decline anything above the permitted figure. The Rental Dispute Centre exists for the disagreement that follows.

The arithmetic

Where it breaks

• The index moves. A gap calculated against last year's index is not the gap that applies at the next renewal, and the calculator should be run fresh each time.
• The tiers apply to the permitted maximum, not to an automatic entitlement. A landlord may still agree less, and in a soft market frequently should.
• Notice served incorrectly defeats an otherwise valid increase. Procedure decides more disputes here than substance does.
• It applies to renewal of an existing tenancy. A new tenancy with a new tenant is a different transaction, which is why vacant possession is worth paying for.
• Rules and tiers are set by decree and can be amended, so a framework page is a starting point rather than a current legal position.
• This is general information and not legal advice. A live dispute belongs with the Rental Dispute Centre or a lawyer, not with a calculator.

When to use it

Before buying any tenanted property, because the achievable rent is a legal question before it is a market one. Also every year before serving or receiving a renewal notice.

Sources

1. Dubai Land Department, RERA rental index and calculator
2. Dubai Land Department, Rental Dispute Settlement Centre
3. Decree 43 of 2013, rent increase tiers, summary

Last reviewed 26 August 2026. Commercial relationship disclosure: the author works in Dubai real estate brokerage. See the disclosure standards. Disclosure standards.