Abu Dhabi Rent Renewals: The Gap Between the Law and the Market

Abu Dhabi rents have moved sharply over the past year. According to Reidin, the residential rent index rose by 21.82 percent in 2025. Cushman & Wakefield put annual rental growth at around 23 percent, while Bayut also reported strong increases across affordable apartment communities.

That is the market. The law is different.

For existing tenants, rent increases at renewal are capped at five percent. The gap between what the market will pay and what a landlord can legally charge a sitting tenant has become one of the biggest pressure points in Abu Dhabi’s rental market.

What the law says

The main framework is Law No. 20 of 2006, amended by Law No. 4 of 2010 and Resolution No. 14 of 2016.

Resolution No. 14 of 2016 reintroduced the annual five percent rent cap, effective from 13 December 2016. It applies to residential, commercial, and industrial leases.

In simple terms, a landlord cannot increase the rent in an existing contract more than once a year, and the increase cannot be more than five percent. For residential leases, the tenant must also receive at least two months’ written notice before the lease expires.

That is the tenant’s protection. But it is not the whole story.

The cap protects the rent, not always the tenancy

The complication comes from Law No. 4 of 2010.

A landlord can give notice to end the tenancy when the contract expires, provided the correct notice is served. This means the five percent cap limits the increase on a renewal, but it does not necessarily guarantee that the tenant can stay.

That distinction matters.

Some landlords still believe eviction is only possible if they want to move into the property themselves. That was the older understanding of the law. The current position is broader. In many cases, a landlord can choose not to renew.

A similar issue exists in ADGM, which has its own regulations. Under the 2024 ADGM real estate rules, landlords must give 90 days’ notice of a rent increase, and the increase is capped at five percent. But there is still no real limit on a landlord giving notice for the tenant to leave when the lease expires.

The workarounds now appearing

When market rents rise four times faster than the legal cap, workarounds become almost inevitable.

The first is the simplest: non-renewal.

A landlord refuses to renew the existing tenant, the tenant moves out, and the property is then re-let at the current market rate. In some cases, this has happened across entire buildings.

The second is the Tawtheeq reset.

This is where both parties agree to cancel the existing tenancy and register a new Tawtheeq at a higher rent. The argument is that the five percent cap applies to a renewal, not to a new contract. It is a legally fragile position, but it happens, especially when the tenant would rather pay more than incur the cost and disruption of moving.

The third is key money.

This is an off-contract payment made by the tenant to close the gap between the legal five percent increase and the rent the landlord wants. It sits outside the lease, outside the official rent, and outside any clean audit trail. It is also where tenants are most exposed.

What tenants can actually do

If a tenant receives a valid notice to vacate, the options can be limited.

But if there is written evidence that the eviction is really being used to force a higher rent beyond the legal cap, the tenant should take legal advice. That evidence may be relevant before the Rental Dispute Settlement Committee or, where applicable, in ADGM.

The same applies to a Tawtheeq reset. If a tenant is pressured into cancelling the existing Tawtheeq and the landlord then initiates a new one at a higher figure, that may create evidence of an attempted increase beyond the cap.

But this is not something tenants should handle casually. Once the original Tawtheeq is cancelled, the tenant may be left in a difficult position. Legal advice should come before any tactical move.

Key money is even harder. Because it is usually paid outside the contract, recovering it later can be difficult. If a landlord refuses to renew unless an off-contract payment is made, tenants should get advice before paying anything.

Landlords are not always the villains

It is also worth saying that landlords have a legitimate commercial problem.

Many bought their properties as investments. They have mortgages, service charges and other costs to cover. Some may still be renting at levels below what they expected when they purchased, especially if they bought during previous market peaks.

So the issue is not simply landlord versus tenant.

The issue is that the law is trying to protect sitting tenants from sudden increases, while the market is moving much faster than the cap allows. That creates pressure. And pressure creates workarounds.

Where this leaves the market

The five percent cap was brought back in 2016 to prevent exactly this kind of rental shock.

On the rent itself, the rule is clear. The increase is capped. The problem is the gap around renewal. If a landlord can avoid the cap by refusing to renew and re-letting at the market rate, then the protection becomes less complete in practice than it appears on paper.

That is the part that needs attention. Abu Dhabi does not need a rental system that ignores the market. Landlords need a fair return, and tenants need stability.

But at the moment, the gap between the law and the market is where most of the tension sits.