9.1 Decree No. 43 of 2013: RERA Rent Index & Statutory Increase Tiers
Key Takeaways
Decree No. 43 of 2013 caps rent increases on renewal of Dubai leases, including in free zones such as DIFC (Article 2).
No increase is allowed if the rent is up to 10% below the index average; the maximum is 20% when the rent is more than 40% below.
The intermediate tiers allow 5% (11–20% below), 10% (21–30% below) and 15% (31–40% below) increases.
An increase must be notified at least 90 days before the lease expires unless the parties agreed otherwise (Article 14 of Law No. 26 of 2007).
DLD launched the Smart Rental Index on 2 January 2025, rating buildings on structure, finishes, maintenance, location and services.
9.1 Decree No. 43 of 2013: RERA Rent Index & Statutory Increase Tiers
In dynamic real estate markets, balancing the investment yields of property owners with tenure security for tenants is essential to economic stability. Prior to comprehensive statutory intervention, tenants in Dubai were vulnerable to sharp, arbitrary rent increases at lease expiration, while landlords lacked predictable standards for adjusting below-market rents. To establish market equilibrium, transparency, and consumer protection, the Government of Dubai enacted Decree No. 43 of 2013 Determining the Increase in Rent for Properties in the Emirate of Dubai.
Decree No. 43 of 2013 works in direct concert with Law No. 26 of 2007 (as amended by Law No. 33 of 2008) Regulating the Relationship Between Landlords and Tenants in the Emirate of Dubai. Real estate brokers must understand the statutory calculation mechanics, the five increase tiers, notice formalities, and valuation protocols to properly advise leasing clients and prevent unlawful disputes.
1. Statutory Scope and Binding Nature
Article 2 of Decree No. 43 of 2013 applies it to all landlords, private or public, in the Emirate of Dubai, including those in special development zones and free zones such as the Dubai International Financial Centre.
Mandatory Public Policy Law
Article 1 sets the maximum percentage by which rent may rise when a lease is renewed. Consequently:
- A lease clause promising an automatic increase (for example "10% every renewal") cannot lift the rent above the cap that applies at the time of renewal.
- Under Article 3, the "average rental value of similar units" is determined by the Rent Index of the Emirate of Dubai approved by RERA, which tenants and landlords check through DLD's rental index calculator.
- If the parties cannot agree, the RDC may determine a fair rent (Articles 9 and 13 of Law No. 26 of 2007), taking into account RERA's criteria, the property's condition and the average rents of similar property.
Important
No Unilateral Market-Rate Hikes A landlord cannot demand that an existing tenant match current secondary market asking rents. Even if neighboring vacant units are leasing for 50% more, an existing tenant's rent adjustment is strictly confined to the statutory tier percentages set forth in Decree No. 43 of 2013.
2. The Five Statutory Increase Tiers
Under Article 1 of Decree No. 43 of 2013, the maximum permissible percentage increase upon lease renewal is dictated strictly by the degree to which the current contracted rent falls below the average rental value of similar units in the RERA rent index.
The Disparity Formula
To determine the applicable tier, brokers calculate the percentage disparity between current rent and the official market average:
Statutory Tiers Breakdown
| Statutory Tier | Rental Disparity Below Market Average | Maximum Permissible Rent Increase |
|---|---|---|
| Tier 1: No Increase | Current rent is up to 10% below market average | 0% (Rent must remain unchanged) |
| Tier 2: First Tier | Current rent is 11% to 20% below market average | 5% maximum increase |
| Tier 3: Second Tier | Current rent is 21% to 30% below market average | 10% maximum increase |
| Tier 4: Third Tier | Current rent is 31% to 40% below market average | 15% maximum increase |
| Tier 5: Maximum Ceiling | Current rent is more than 40% below market average | 20% maximum increase (Absolute statutory ceiling) |
Note
The 20% Absolute Ceiling Regardless of how far below market rent a property is leased—even if it is 60% or 70% below the average market rental rate—the maximum increase permitted in any single renewal cycle is strictly capped at 20%.
3. Practical Calculation Scenarios
To master licensing exam questions, candidates must evaluate real-world numerical scenarios using the statutory formula:
Scenario A: Marginal Disparity (Tier 1)
- Current Annual Rent: AED 92,000
- RERA Average Market Rent: AED 100,000
- Calculation:
(100,000 - 92,000) / 100,000 = 8% - Legal Outcome: Because the disparity is 8% (within the 0% to 10% bracket), the landlord is permitted 0% increase. The rent remains AED 92,000.
Scenario B: Moderate Disparity (Tier 3)
- Current Annual Rent: AED 120,000
- RERA Average Market Rent: AED 160,000
- Calculation:
(160,000 - 120,000) / 160,000 = 25% - Legal Outcome: The disparity of 25% falls into Tier 3 (21% to 30% below market). The maximum permitted increase is 10% of current rent (
AED 120,000 * 10% = AED 12,000). The maximum renewed annual rent is AED 132,000.
Scenario C: Extreme Disparity (Tier 5)
- Current Annual Rent: AED 50,000
- RERA Average Market Rent: AED 95,000
- Calculation:
(95,000 - 50,000) / 95,000 = 47.37% - Legal Outcome: Because the disparity exceeds 40%, the landlord may apply the statutory ceiling of 20% (
AED 50,000 * 20% = AED 10,000). The new annual rent is AED 60,000. The landlord cannot charge AED 95,000.
4. The Mandatory 90-Day Notice Rule
Possessing the statutory right to an increase under Decree No. 43 of 2013 is ineffective without procedural compliance under Law No. 26 of 2007 (as amended by Law No. 33 of 2008).
Article 14 Requirements
Under Article 14, if either party desires to amend any terms or conditions of the tenancy contract (including rent adjustments or payment frequency), they must provide written notice to the other party at least 90 calendar days prior to contract expiration, unless both parties mutually agree otherwise in writing.
Fatal Consequences of Late Notice
- Unless the parties agreed a different period, a notice served 89 days or fewer before expiration is late.
- The tenant is entitled to renew the tenancy on identical terms, meaning 0% rent increase, even if the RERA Rent Calculator indicates a 20% entitlement.
- Notice must be communicated in writing via verifiable channels: email with delivery confirmation, registered mail, or Notary Public notice.
Caution
The Strict Calendar Cut-off Brokers frequently misadvise landlords that "the calculator allows 15%, so you can demand it up to the renewal date." The Rental Dispute Centre (RDC) strictly enforces the 90-day cut-off. Failure to deliver written notice by day 90 forfeits the landlord's statutory entitlement for the entire subsequent 12-month lease period.
5. The Smart Rental Index (since 2 January 2025)
On 2 January 2025 DLD launched the Smart Rental Index 2025, the current version of the RERA rental index used with Decree No. 43 of 2013:
- Coverage: all residential areas of Dubai, including special development zones and free zones.
- Building classification: each building is rated on its technical and structural characteristics, the quality of finishes and maintenance, its location, and the level of services and facilities such as maintenance, cleanliness and parking management.
- Purpose: to give landlords a reliable valuation tool and tenants protection from unjustified increases by comparing rents for similar units in similarly rated buildings.
How brokers use it:
- Enter the property's details in DLD's rental index calculator (through the DLD website or the Dubai REST app).
- Compare the current rent with the average shown to find the percentage below average.
- Apply the Decree No. 43 tier to find the maximum increase.
- Make sure any increase is notified at least 90 days before expiry (Article 14 of Law No. 26 of 2007), unless the parties agreed otherwise.
Portal asking prices and private opinions do not replace the RERA index for Decree No. 43 purposes; they may support negotiations, but the cap is calculated against the index.
A residential tenant in Dubai Marina pays AED 120,000 annually under an Ejari contract expiring on December 31. The landlord checks the official RERA Rent Calculator, which shows that the average market rental rate for comparable two-bedroom apartments in that community is AED 160,000. The landlord provides written notice of a proposed rent increase 95 days prior to expiration. Under Decree No. 43 of 2013, what is the maximum permissible rent increase the landlord may legally demand upon renewal?
A 10% increase (AED 12,000), resulting in a renewed annual rent of AED 132,000.
A 25% increase (AED 40,000), allowing the rent to immediately reach the market average of AED 160,000.
A 15% increase (AED 18,000), because the disparity exceeds 20% of the market average.
A 20% increase (AED 24,000), because any disparity greater than AED 30,000 qualifies for the maximum statutory tier.
A landlord in Downtown Dubai wishes to increase the rent on a one-bedroom apartment from AED 80,000 to AED 92,000 upon lease renewal on October 1. The official RERA Rent Calculator indicates that the current rent is 35% below the market average, authorizing a 15% increase. However, the landlord transmits the formal written notice of increase to the tenant via registered email on July 15 (78 days prior to contract expiration). The tenant refuses the increase and files a dispute at the RDC. How will the RDC rule regarding the proposed rent increase?
The RDC will approve the 15% increase because the RERA Rent Calculator conclusively determines statutory entitlement regardless of notice timing.
The RDC will deny the rent increase entirely and order the lease renewed at AED 80,000 because the landlord failed to provide the 90-day written notice required by Article 14 of Law No. 26 of 2007 (as amended by Law No. 33 of 2008).
The RDC will prorate the increase to 5% as an equitable compromise for the 12-day notice shortfall.
The RDC will permit the increase to take effect after an initial 90-day grace period at the old rate.
A Business Bay landlord wants a 30% increase, citing portal listings and a private valuation, but the RERA rental index shows the current rent is only 8% below the average. What is the maximum increase under Decree No. 43 of 2013?
30%, because private valuations override the index
15%, halfway between the index and the listings
0%, because the rent is less than 10% below the RERA index average
5%, the minimum increase for commercial property
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