Should You Rely on the RERA Rent Index System to Accurately Determine Annual Rent Increase?

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If you’re particularly new to the property for rent in Dubai scene, you might want to look into something called the RERA (Real Estate Regulatory Agency) rent index system – a tool of sorts that can be used to determine the annual rent increase and if the monthly rent being proposed to you is in accordance with current market trends.

It may especially prove to be useful if you’re looking get a fair assessment of how much rent you should be paying or it’s time to get in touch with your landlord to discuss annual rent increase.Checking the RERA Rental Increase Calculator can give you a fair idea so as to what the landlord demands is fair and meets current rent increase trends.

All-in-one Tool for Gauging Rent Value and Annual Increase?

However, the RERA index system is far from perfect and there’s a certain level of generalisation that often doesn’t fall in line with market realities. For example, the current rent rates it displays at any given time might often lag by three to six months, and tenants really can’t afford to wait around while RERA plays catch up.

If you’re thinking of RERA as a complex rental matrix, you might want to “err” on the side of caution: it does not factor in variables like unit size, views, building age etc. and you might be left wondering if you’re getting the short end of the stick – the rental index simply does not take into account current market conditions.

A major problem users of this tool have faced is a lack of frequent updates. Up until 2013, RERA had their indexes updated four times a year. Last year, it saw just one annual update and when Dubai residents wanted to calculate their annual rental increase, they did not get any conclusive answers as the rental index had yet to be updated.

Property for rent in Dubai continued to decline and users did not see this reflect on the RERA rental index. As a result, many “off grid” deals were closed that didn’t quite confirm to RERA’s index.

Should I Still Use RERA Despite the Lack of Updates?

If you’re relying heavily on the RERA calculator, know in advance that it doesn’t come without its share of glaring shortcomings. For example, let’s say you have two 3-bedroom apartments in the same vicinity; one of them spans over 4,000 square foot while the other occupies at around 1,900 square foot. They should both be subjected to the same annual rental increase but since RERA does not take into account unit size, the view or number of floors, it will not display an accurate annual rental increase for either property.

As another example, take the one-bedroom apartments in Jumeirah Lake Towers – some towers are better equipped than others, having larger areas; however, the RERA Rental Increase Calculator will list them all under one rental price. None of the key factors like story heights build quality or the views are taken into accounts which are all important variables when it comes to gauging a shift in annual rent rates.

RERA says they are currently looking into all this. 2014 was not a pleasant year for landlords and tenants solely relying on the tool to get a fair idea of annual rent increase, as many were simply greeted by a message that said the system was updating and that they should contact ‘pmrs@rera.gov.ae’ for further assistance.

Well, not all is gloomy: the rent index finally got updated early this year and according to a senior manager at RERA, will continue to be updated every four months. RERA also claims a more detailed rent index matrix will be updated this year, which factors in apartment views, building age, tower facilities etc.

Although, how all of this takes shape and proves its worth remains to be seen. Leave all the nitty gritty details to real estate companies in Dubai who do make sure you are getting the best possible deal according to your preferences.

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