Market insights✓ Updated Dec 2025

Dubai Rental Increase Cap Rules for 2026

RERA Rental Index dictates legal rent increases. Walk through the cap percentages and how to advise both sides.

·7 min read·By AgentsAI Editorial
RERA sets the maximum allowable rent increase each year through the Dubai Rental Index, which uses the average of comparable properties in the same building or community to determine the cap. The 2026 cap rules remain unchanged from the previous cycle: increases are limited to a maximum of 20% for properties where current rent sits more than 40% below the index average, 15% for rents 21-40% below index, 10% for rents 11-20% below index, and 5% for rents up to 10% below index. Properties already at or above the index average receive zero permitted increase. These percentages apply across all freehold and leasehold residential units in Dubai, including Dubai Marina, JLT, JVC, Arabian Ranches, and MBR City.

How the Index Calculates the Cap

The Dubai Land Department updates the Rental Index monthly using transaction data from over 180,000 active leases. For any given unit, the system compares its current rent per square foot against the rolling 12-month average for similar units (same bedroom count, same building age band, same community). A 1,200 sqft 2-bedroom apartment in JLT Cluster Y, for example, is benchmarked only against other 2-bed units in the same cluster built between 2015-2020. If the index shows AED 95 per sqft and the tenant currently pays AED 78 per sqft, the difference is 18% below average, triggering a maximum 10% increase.

Advising Landlords

Landlords must serve the notice of increase at least 90 days before the lease expiry date. The notice must reference the exact RERA Rental Index reference number and state the new rent in AED. For a 3-bedroom villa in Arabian Ranches 2 currently rented at AED 165,000, where the index average is AED 198,000, the maximum legal increase is 15% (AED 24,750), bringing the new rent to AED 189,750. Landlords who attempt increases above the cap face rejection at the RERA tenancy contract renewal portal and potential fines starting at AED 5,000 under Executive Regulation No. 43 of 2023.

Advising Tenants

Tenants receive the same 90-day notice window. They should first verify the proposed increase against the public Rental Index on the Dubai REST app or the DLD website before signing any renewal. If the increase exceeds the calculated cap, tenants can refuse and request a new contract at the capped amount. In practice, most tenants in MBR City and JVC accept the maximum allowed increase because comparable units are still 8-12% higher. Tenants who want to negotiate below the cap should present three comparable listings from Property Finder and Bayut showing lower rents in the same building.

Renewal Process and Documentation

  1. Confirm current rent and lease expiry date from the existing Ejari contract.
  2. Check the latest RERA Rental Index value for the exact community and unit type on the Dubai REST portal.
  3. Calculate the permitted increase percentage using the four-tier table above.
  4. Issue the increase notice via registered email or through the RERA tenancy portal at least 90 days prior.
  5. Upload the new tenancy contract to Ejari within 30 days of signing to avoid MOHRE penalties.

Service Charge Impact on Net Yield

Landlords should also factor annual service charge increases when quoting new rents. In 2026, average service charges in Dubai Marina stand at AED 18.50 per sqft, JLT at AED 16.75, and Arabian Ranches at AED 12.40. A 10% rent increase on a 1,400 sqft apartment may be offset by a 7% rise in service fees, reducing net yield by roughly 1.2 percentage points. Agents should present landlords with both gross and net figures before finalising the renewal amount.

What happens if a landlord ignores the cap and charges more?

RERA will reject the new Ejari contract at the portal stage. The landlord must then re-issue a compliant notice or face a fine of AED 5,000 plus any overpaid rent returned to the tenant.

Can tenants request a rent decrease if the index falls?

Yes. If the index average drops 5% or more below the current rent, tenants may request a reduction at renewal. The landlord is not legally obliged to accept, but many agree to retain good tenants rather than risk vacancy.

Do the same caps apply to commercial units?

No. The 5-20% residential caps do not apply to offices or retail spaces. Commercial rent increases are negotiated freely, though RERA still requires 90-day notice and Ejari registration.

Stop typing. Start closing.

Generate property listings, follow-up emails, WhatsApp templates, and CMA reports in seconds. Free tier: 5 generations/month, no card needed. Try AgentsAI free →