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Legal aspects of short-term rental properties in Dubai

05/30/2024 37
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Real estate rentals in Dubai for a short period of time are made depending on the needs of clients. This may be due to the need to attend a conference for a short time, spend a vacation in that state, or create a new business that requires permanent presence and residence in the country. Clients want all the amenities in their short-term rental property, whether they are in or out of the country. They should contain high-quality and beautiful furniture, modern appliances, and sufficient living space.

The regulatory and legal regulation of short-term rental properties in Dubai is governed by relevant regulations issued in the UAE, which guarantee the protection of the rights of tenants and landlords.

Why choose RAD Holiday Homes

RAD Holiday Homes connects landlords (owners of short-term rental properties) with tenants (needing accommodation in Dubai to meet their minimum and luxury standards requirements). 

The RAD Holiday Homes company acts as an intermediary, providing homeowners with a reliable and high income. In relation to tenants, it acts as a landlord when concluding a lease agreement, ensuring that the premises rented for a short period have the desired style, modern appliances, furniture, and the area of ​​the premises is tidy and clean. Thanks to this, the agency has accumulated significant experience in short-term rental of real estate.

Let's take a closer look at the nuances, subtleties and features of short-term rentals in Dubai.

Travelers visiting this country receive a variety of experiences, making Dubai an attractive destination for tourists as well as business travelers.

What is the difference between short-term and long-term rental in Dubai?

Short-term rental housing has different goals compared to long-term rentals. It refers to the receipt of real estate for rent for a short period of residence for the purpose of business trips and vacations. The purpose of long-term rental is to rent housing for a long stay and residence in the country.

To provide tenants with all the amenities they require, apartments, apartments or houses for short-term rentals are fully furnished. They provide water supply, electricity, and Internet access. Such housing can be cleaned by cleaning companies during the tenants' stay or in the period between renting out the property.

According to Dubai law, it is impossible to rent out only part of a property. All rooms and other premises located in it must be the subject of a rental agreement.

Taxes when renting out housing

In Dubai, there is no tax for investors on income from rental properties. In short-term rentals, after transferring the apartment under management to the company and obtaining permission for short-term rentals, the owner receives income minus all expenses. 

The authorities governing short and long term rentals in Dubai are not the same. Thus, long-term rentals are managed by Ejari, which is part of the Real Estate Regulatory Agency (RERA), while short-term rentals are regulated by the Department of Economic Affairs and Tourism (DET).

Therefore, to obtain permission for short-term rentals, you must contact DET. This body is responsible for developing the tourism industry in Dubai and resolving marketing issues. It is he who is entrusted with the responsibility of monitoring the short-term rental of real estate by citizens and homeowners of this state.

The importance of concluding a lease agreement between the tenant and the landlord

Short-term rentals in Dubai, in addition to the general rules, are determined by the standards and rules in force in a particular building. So, in some places it is necessary to send guests’ details and car number in order to use a parking space, but in others it is enough just to have a parking access card. But, in any building and community, tenants are required to comply with the rules for those living in this building. A lease agreement concluded between 2 parties defines the rights and obligations of both the tenant and the landlord. It is necessary to take into account such a nuance as taking a deposit when paying rent by the landlord.

Diverse real estate market

Short-term housing rentals in Dubai are determined by the type of property provided and location. depends on the terms of the lease agreement and the rent paid. Thus, the areas of Palm Jumeirah and Downtown are considered one of the most prestigious in the UAE due to their close location to the port and airport, tourist attractions and entertainment centers, so in these areas it is possible to set higher rents compared to other areas.

Real estate insurance

For short-term rental of real estate in Dubai, no compulsory home insurance is required, except for compulsory insurance by the owner of liability to the tenant for the duration of the tenant's stay in the property. But to ensure the interests of the owner in the event of unexpected events (flood, accidents, damage to his property, etc.), it is carried out voluntarily.

When insuring real estate, different types of coverage can be used, in accordance with the previously listed unexpected events (from theft, liability to third parties, damage, and others). Some property management agencies require the presentation of insurance, which should be part of the terms of the rental or management agreement.

Consequently, in Dubai, property insurance is not mandatory for short-term rentals, but is recommended to protect the interests of owners and ensure financial security in the event of force majeure.

What properties are allowed for short-term rental?

The Department of Tourism and Commerce Marketing, located in Dubai, gives permission for the use of any types of properties for short-term rentals, except for hotel apartments, which are considered separately.


The main advantages of renting out housing for a short period of time

Homeowners enjoy many benefits when planning a short-term rental property in Dubai:

  • Unlike long-term rentals, the short-term rental process is subject to fewer disputes between tenants and landlords over time due to the conclusion of contracts for a short period

  • Property owners are under less pressure because maintenance is limited to the actual use of the property under the contract, rather than occurring throughout the year.

  • An easy exit from investment or use of housing for personal purposes; with short-term rentals there is no obligation to notarize the tenant 12 months in advance as with long-term rentals. 

  • When selling an apartment, its value is 15-20% higher if it does not have a long-term tenant.

  • The rent paid by the tenant to the landlord for long-term rentals is fixed, but for short-term rentals it may fluctuate, for example, depending on the season: during the peak holiday period, when they are located near the beaches, it will increase and bring more income to the owners (on average, short-term rentals bring in 10 -15% more income compared to long-term rent depending on the location of the property and its condition).

  • Guarantee of payment for accommodation by the tenant, since for short-term rentals the rule of 100% prepayment applies.

  • Short term rentals are characterized by limited maintenance and much less pressure on the property.