Letting your Dubai property

Your obligations, briefly

Dubai’s residential tenancy regime is Law No. 26 of 2007 as amended by Law No. 33 of 2008, with rent increases governed by Decree No. 43 of 2013. Three obligations do most of the work.

• Register the tenancy on Ejari. The UAE Government portal is explicit that in Dubai landlords must register lease agreements with the Dubai Land Department. An unregistered tenancy also leaves you unable to enforce anything at the Rental Dispute Settlement Centre.
• Keep the property fit to occupy. Major maintenance and structural repair are the landlord’s responsibility by default under the law. A contract can allocate minor upkeep to the tenant; it cannot transfer the structural obligation.
• Respect the notice periods. Ninety days to change the rent or the terms. Twelve months to require possession at the end of a term. These are not interchangeable.

Setting the rent, and raising it

You can ask whatever the market will pay when you let to a new tenant. Once someone is in place, Decree No. 43 of 2013 limits what you can add at renewal, and the limit depends on how far the current rent sits below the market rate for comparable property in the area.

Two consequences follow, and they are worth thinking about before you under-let a property to fill it quickly. A rent set well below market can only be corrected in capped annual steps, so it can take several years to catch up. And the 90-day notice under Article 14 is strict: if you want to change the rent or any other term at renewal, the tenant must have that notice before the term ends, or the tenancy renews unchanged.

Set the notice date in your calendar the day the tenancy starts. More landlords lose an increase to a missed diary date than to the cap itself.

Choosing a tenant

A good tenant on a slightly lower rent is worth more than a marginal tenant on a higher one. Void periods, bounced cheques and dispute filings cost far more than the difference.

• Verify employment and income, and sense-check the rent against it. A rent beyond about a third of take-home pay tends to come back as a payment problem.
• Confirm the residency visa is valid and has reasonable time left to run.
• Take the deposit and the cheques before handover, not after.
• Do a documented handover: a written inventory, meter readings and dated photographs, signed by both sides.
• Register the Ejari immediately. It protects you as much as the tenant.

If the property is furnished, photograph every room and list the contents with condition notes. Deposit disputes are won and lost on the quality of the move-in record, and almost never on the argument made afterwards.

Getting possession back

This is the part that catches people, so it is worth being precise. There are two different situations with two different routes.

During the term, you can only seek eviction on the specific grounds in Article 25(1): non-payment of rent after formal notice to pay, subletting without consent, illegal or damaging use of the property, or the tenant allowing the property to deteriorate. You apply to the Rental Dispute Settlement Centre; you do not simply change the locks.

At the end of the term, Article 25(2) permits you to require possession where you intend to sell, to occupy the property yourself or house a first-degree relative, or to demolish or substantially reconstruct it. In all of those cases:

• You must give 12 months’ notice, not 90 days.
• The notice must be served through the Notary Public or by registered mail. Nothing less constitutes valid service.
• The notice must state the reason, and you are held to the reason you gave.

Selling a property that has a tenant

You may sell at any time. The sale does not terminate the tenancy. The buyer inherits your position as landlord, on the existing terms, until the term expires.

So you have a choice. Sell tenanted, which keeps the rent flowing throughout and appeals to investors, or serve the 12-month notice and sell with vacant possession later, which opens the market to owner-occupiers and usually achieves a stronger price. Which is better depends on the property and the market, and it is a decision worth taking a year ahead rather than in the week you decide to list. Our seller’s guide covers the sale process itself.

The running costs you carry

Rent is not your return. These come off it, and the first one is the item most often underestimated by new landlords.

• Service charges, set per square foot by the master developer and payable whether the property is let or empty.
• Major maintenance, which is your responsibility under the law regardless of what the contract says.
• Letting commission, conventionally 5 per cent of annual rent or a fixed fee, plus VAT.
• Management fee if you use an agent, usually a percentage of collected rent.
• Void periods between tenancies, plus the make-good work before the next viewing.
• District cooling capacity charges, which in many buildings continue even when the unit is empty.

On service charges you have more standing than many owners realise. Under Dubai Law No. 6 of 2019 a management entity must obtain RERA’s approval before charging owners, the budget must be audited by a RERA-recognised firm, and collections must be held in a dedicated account at a Dubai-licensed bank. The Dubai Land Department administers this through Mollak. If you cannot get an approved budget, ask why.

Our investment guide works through how these affect a net yield as opposed to the gross figure usually quoted.

Common questions