Dubai landlords looking to raise rents will now need to improve their property ratings under a new smart rental index launched by the Dubai Land Department (DLD). The index, which aims to ensure fair rental values and promote trust among landlords, tenants, and investors, was unveiled on Thursday.

The system links rent increases to a building’s classification and quality. Residential properties will be covered first, with commercial buildings to follow at a later stage. Properties in Dubai are rated from one to five stars, and rental adjustments will depend on these ratings.

Majid Al Marri, CEO of the Real Estate Registration Sector at DLD, explained that the initiative encourages landlords to renovate and upgrade their buildings. He noted this would improve both rental value and quality of life for residents. According to Al Marri, landlords investing in their properties can benefit financially through higher rents, provided the upgrades meet the index’s criteria.

The smart rental index uses over 60 factors to classify buildings and determines rent adjustments based on criteria such as average area rents, the property’s condition, and contract details. Khalid Al Shaibani, director of the Rental Affairs Department at DLD, emphasized that this approach makes rental hikes fairer and more precise, particularly for older buildings in prime locations.

The system is also designed to reduce disputes between landlords and tenants. Al Marri stated that the new index could lower such conflicts by 20 per cent, promoting transparency and balance in the market. He added that the initiative aligns with Dubai’s Digital Strategy, creating a sustainable ecosystem and enhancing the emirate’s position as a global investment hub.

Under the new system, landlords must adhere to Dubai’s rental regulations, which allow rent increases starting from zero per cent for tenants paying close to market averages and up to 20 per cent for those significantly below average rates.

Additionally, DLD introduced a “Model Tenant Classification” tool, enabling landlords to check tenants’ credit ratings and reports through the Ejari system.

In 2024, Dubai registered over 900,000 lease contracts, an increase of 8 per cent compared to 2023. With the new rental index, DLD hopes to further strengthen its real estate sector while ensuring benefits for landlords, tenants, and investors alike.