We have already we talked in detail, now it's the turn to look at this process from the perspective of the property owner.
The growing demand for rent due to the influx of expats, a fairly high yield (on average 5.7%), as well as the absence of income tax, all this sounds attractive to an investor who wants to earn money by renting an apartment or villa in Dubai. But it is important to take into account the legal and marketing aspects in order to choose the right strategy and avoid making mistakes.
Pre-purchase liquidity care
"Ideally, if you choose in advance and purchase an object specifically for long-term rental, that is, real estate that finds a tenant easier and faster," says Sergey Luptakov, head of the RIU Property agency.
Clarification: long-term rentals in Dubai are considered to be for a period of six months or more. For a period of up to six months - short-term rental, which is regulated separately and deserves a separate article.
Which areas are the most liquid?
Premium and elite segment:Dubai Marina, JBR, JLT, Downtown Dubai, Business Bay.Stable demand, high prices.
More budget segment:Jumeirah Village Circle (JVC), Dubai Hills Estate, Dubai Silicon Oasis, Al Barsha, Al Barsha Heights. Value for money, proximity to schools.
Rule (universal for most markets, not just Dubai):Areas without proper infrastructure and projects with an excessive number of identical apartments should be avoided.
Legal aspects of renting real estate in Dubai: the strength and vulnerability of the landlord
1. All market-related processes are handled by Dubai Real Estate Regulatory Authority (RERA), operating as part of the Dubai Department of Land Resources (DLD). Key documents:
-
Law No. 26 of 2007 regulates the relationship between landlord and tenant.
- Law No. 33 of 2008 establishes the rules for the activities of realtors.
- RERA instructions and circulars are regularly updated by-laws.
2. All lease agreements signed in Dubai must be registered in the Ejari system. This is a mandatory procedure designed to protect the rights of both parties.
Without registering with Ejari, it is impossible to connect utilities to DEWA (Dubai Electricity and Water Authority) or go to court if disputes arise.
The contract is registered through the online portal or Ejari service centers within 30 days from the beginning of the contract.
Required documents:
- A copy of the owner's passport
- Copy of the tenant's passport and visa
- A copy of the Title Deed
- Signed lease agreement
- Move-in Permit from the management company
3. In Dubai, there are restrictions on rent increases (Rent Increase Cap).
How does this work in practice?
Firstly, an increase is possible only upon renewal of the contract and no more than once a year.
Secondly, before increasing the rent, the landlord is obliged to check the acceptable percentage of increase through the online calculator RERA.
The percentage of increase depends on the average market rate:
If the current rent is lower than the market average for similar properties by less than 10%, an increase is not allowed.
If the difference is:
✓ 11-20% You can increase the maximum by5%
✓ 21-30% maximum of 10%
✓ 31-40% maximum 15%
✓ More than 40% maximum of 20%
The law strictly protects the tenant's rights for the duration of the registered contract. You cannot arbitrarily evict him or raise the price beyond the percentage allowed by the RERA calculator.Unauthorized actions (turning off water/electricity, changing locks) are strictly prohibited and will result in serious fines and cancellation of your claims in court.
4. Disputes are resolved through RDSC (Rental Dispute Settlement Center)
The RDSC, or the Center for the Settlement of Rental Disputes, is a pre-trial body under the RERA that handles all disputes between the landlord and the tenant. The dispute settlement procedure takes an average of 3-6 weeks."In case of non-payment of rent, you can file a lawsuit, after which the tenant's Emirates ID will be blocked (he will not be able to leave the country or issue any documents), which is a powerful lever of pressure. The eviction process, although lengthy, at least 2-3 months in case of non-payment, has clear regulations," says Elena Timchenko, Managing partner of the Royal Home Real Estate agency.
4. It is necessary to inform the tenant in advance about the termination of contact with the tenant. The relationship between the landlord and the tenant is regulated by Law No. 26 of 2007 and its amendments. The lease agreement is usually concluded for a year. It is automatically extended for the same period if neither party notifies of the termination 90 days before the end. If you decide to sell your apartment or move into your property yourself, you need to notify the tenant 12 months in advance through a notary public or by registered mail. However, you cannot rent the property to other people during the year. In practice, according to Sergey Luptakov, if the tenant does not want to, he may not move out, even if you give him 90 or 120 days' notice. In this case, the law on notarial notification applies and you will have to wait a year. But if a tenant who has been evicted in this way comes to the apartment and finds a new tenant there, despite the fact that the owner has not changed, the "defrauded" tenant can sue. In which cases can you get the tenant evicted earlier? Only in case of breach of contract. Violations include: Rent is usually paid in one to four checks per year. However, the eviction procedure is quite lengthy and involves several stages: 1. A written notification of the tenant about the violation, indicating the time limit for its elimination. To pay off the rent arrears: a 30-day period. 2. If the tenant does not remedy the violations, the landlord can file a complaint with the Rent Dispute Resolution Committee (RDC), providing evidence of violations. 3. The RDC reviews the dispute and makes a decision. If you disagree with the decision, you can apply to the Dubai Court. 4. After receiving a court decision, you can request a forced eviction through the police. Self-eviction or disconnection of utilities is illegal. The unpleasant nuance is that after the eviction of the would-be tenant, who was engaged in, say, illegal activities, the apartment will be arrested.and it's sealed for a period of six months to a year, and you won't be able to turn it in. It is possible to rent an apartment yourself, especially if you live in the UAE and have studied the laws in depth. However, experts agree that for most investors, working with a professional agency pays off. Advantages of the agency:Professionals will check the tenant, competently draw up and register the contract with Ejari, take over communications on current issues and help fix the correct, not undervalued price. Their commission is insurance against large financial losses. Error 1. Surrender without Ejari.Complete waiver of legal protection. Ejari is sacred.There are no gray schemes, only the official registration of the contract. This is your main defense. Error 2. Underestimating the starting price.A mistake that leads to long-term losses. "Due to restrictions on rent increases, it is important to initially rent an apartment at or near the market price.If you panicked or unknowingly rented the property cheaply, you will not be able to dramatically raise the price for the next year and will incur losses for the entire duration of the contract.It's better to wait, but deliver at the right price," Sergey Luptakov is convinced. Mistake 3. Careless preparation.An untidy or overloaded apartment loses out to cleaner and neater competitors during the show. You should paint the walls, make sure that all plumbing and electrics are in good working order, and order professional cleaning, air conditioning and ventilation. It is also important to focus on versatility, avoiding extreme design solutions (non-standard kitchen height, specific furniture). The light shades of the walls and functional household items attract more potential tenants. Don't forget to record the condition of the apartment before the tenants move in. Error 4. Incomplete contract. The contract must describe in detail all the disputed points. The lease agreement template has been approved by RERA, and its use is mandatory. However, all the details can be adjusted in additional agreements. Specify everything: responsibility for the equipment, the amount of the deposit, the conditions for its return, the list of property. The less room there is for ambiguous interpretation, the fewer potential conflicts. "Based on my experience, I recommend that you clearly state that the responsibility for household appliances, especially for the dishwasher and washing machine, is on the tenant for the entire term of the contract. Blatantly negligent handling of household appliances is not uncommon, says Sergey Luptakov. Error 5. There is no deposit, or its size is insufficient. The deposit is usually 5% of the annual rent for unfurnished and 10% for furnished properties. The landlord can withhold the deposit amount to cover: unpaid bills, damage repairs, as well as cleaning if the apartment is dirty. If the tenant does not agree with the deductions, he can contact the RERA Rental Dispute Center. Error 6. The concepts in the contract were interpreted incorrectly. Sort out all the points with an experienced specialist. For example, the phrase maintenance including means that maintenance is enabled. "Many people think that repair is meant, but it is maintenance that is meant, that is, the tenant will bother you whenever, say, he needs to change a light bulb or fix a toilet lid," says Sergey Luptakov. According to Elena Timchenko, this issue should be approached carefully, studying potential tenants as biasively as the bank considers borrowers. Be sure to request: "Alarm bells", after which it is worth refusing to interact with a possible tenant: It's better to lose an unsuitable client than to solve problems for years afterwards. "Remember that one bad tenant can destroy income over the years," warns Elena Timchenko. Thus, the successful rental of real estate in Dubai stands on three pillars:legal literacy, high-quality asset preparation (repairs, cleanliness) and a professional approach to tenant selection. Consider it as a business - systematically, without emotions and with clear rules. Please note that the legislation on renting out housing varies quite significantly in different emirates. Thank you for your help in preparing the material: Elena Timchenko, Managing Partner of the agencyRoyal Home Real Estate Sergey Luptakov,Head of the agencyRIU Property
Is it possible to rent a property in Dubai on your own, without an agency?
Common mistakes when renting out real estate in Dubai
How to choose the right tenant?
Emirates ID and visa (copies).
