Dubai is a city of visitors. More than 90% of the nearly two million inhabitants of the metropolis are expatriates. Few of them can afford to buy their own housing, however, everyone needs to live, work and relax somewhere. And therefore, the rental market is very developed. This, in turn, makes property in Dubai attractive in terms of investment.
Not a secret, 
that many have already acquired or are going to acquire Dubai real estate precisely for the purpose of obtaining rental income, which is two to three times higher than in developed markets. In this regard, investors are raising questions about renting real estate in Dubai. In this article, we, with the help of specialists from the Dubai real estate agency IMEX Real Estate, have tried to summarize the answers to the most important and frequently asked of them.
Can a property owner in Dubai rent it out?
Relations between landlords and tenants in Dubai are regulated by Law No. 26 of 2007, as well as its amendments. According to current legislation, any owner of real estate in the territory of the Dubai Emirate has the right to lease his property for a period of at least 1 (one) year. In the case of renting for a period of less than a year, such a rental is considered short-term and requires the owner to have the appropriate license (for the activities of a hotel or hotel apartments). In this case, usually, the owners turn to a licensed management company, which they transfer their property to management, and which already rents real estate on its own behalf.
What rental income can a property owner in Dubai expect?
If we talk about the average market indicators of the current return on investment in real estate, then for housing in Dubai today the indicator of net rental income (that is, income minus the cost of servicing real estate) is on average 5-10% per annum. The spread in profitability is due to differences in the types and categories of real estate, its location and cost of services. At the same time, more expensive exclusive real estate, as a rule, gives lower returns in the form of rental income than mass housing in affordable projects.
As for the office real estate market, today such investments are less attractive in terms of rental income than the purchase of housing. Leasing of retail space (this includes not only shops, but also service points, cafes, restaurants, etc.) is potentially capable of generating higher incomes (up to 15% per year), however, this depends on the parameters of the property itself , and from factors external to it.
Are there any restrictions on the cost of renting in Dubai?
By concluding a real estate lease agreement, the parties to the transaction have the right to agree on any conditions that do not contradict the current legislation. There are no direct restrictions on the rental price, which is indicated in the contract between the lessor and the lessee. However, there are legislatively established restrictions on increasing the cost of renting when renewing a contract for the next term.
So, for example, in respect of residential real estate, there is a rule according to which the landlord does not have the right to increase rent if less than two years have passed since the conclusion of the initial contract.
In addition, when revising leases upward, the landlord should be guided by the index of the Dubai Real Estate Regulatory Authority (RERA), which reflects the average rental rates for various types of housing depending on the area.
What are the requirements for tenants in Dubai?
A tenant of real estate in Dubai (if we are not talking about short-term rental housing) can only be an individual or legal entity with resident status in the United Arab Emirates. That is, a lease agreement can only be concluded with a citizen of the UAE or a country that is a member of the Cooperation Council of the Arab States of the Persian Gulf, or with an expatriate with a UAE resident visa.
Accordingly, the lessee is a legal entity, must have the appropriate registration in the UAE. This can be a local organization, a company registered in a free economic zone, or a branch (representative office) of a foreign company.
Do you need to register a rental contract for real estate in Dubai, and who is involved in it?
In accordance with the laws of the Emirate of Dubai, all leases of real estate on its territory must be properly registered. The registration of leases is handled by the Dubai Real Estate Regulatory Authority (RERA). Especially for these purposes, the agency created the Ejari system, which allows registering contracts via the Internet. Online registration on the Ejari website is simple, requires minimal technical knowledge, and involves the introduction of only basic information about the lease contract, which include:
information about the property and participants in the transaction, as well as the terms of the contract. Each registered contract is assigned a unique barcode for the duration of its validity. Registration is free, and both the lessor and the lessee can register a lease. So far, liability has been established for non-compliance with the requirement of mandatory registration, but, according to the provisions of the law, all participants in transactions that have not been registered are automatically deprived of the right to apply to judicial and government bodies for the protection of their interests.
Does the landlord pay any taxes on rental income in Dubai?
There are no property and income taxes in the United Arab Emirates. Therefore, the possession of real estate in Dubai, as well as the receipt of income, for example, from its rental, does not entail any tax consequences for the owner within the UAE jurisdiction. However, it must be understood that the owner of the real estate is responsible for its proper maintenance and must pay the costs of its maintenance (Maintenance Fees), established by the management company. As a rule, such payments are charged annually a year in advance and for Dubai, depending on the project, they are somewhere between 20 and 80 dollars per square meter. m per year.
How is the rental property in Dubai?
In its most general terms, the procedure for renting real estate in Dubai in most cases is as follows:
1. The landlord himself, or with the help of a real estate agency, is looking for a tenant.
2. When the tenant is found, the lessor signs a lease agreement with him, which reflects all the parameters of the transaction, in particular:
- rental price and terms of payment,
- rental period and terms of its extension,
- additional costs associated with the operation of the property and their distribution between the parties,
- responsibility of the parties in case of failure to fulfill the conditions of the contract.
3. When signing the contract, the tenant pays the rent for the year (usually by check), as well as a security deposit (usually 5% of the annual rent).
4. Having received payment from the tenant, the landlord gives him the keys, key rings, access cards, etc., necessary for unimpeded access to the rented premises and related infrastructure (pool, gym, etc.), as well as copies of documents ( certificate of ownership, passport of the owner, etc.) required by the lessee to connect water, electricity, air conditioning, telephone, Internet, etc.
How is the rental of real estate in Dubai carried out?
In the rental market in Dubai, as well as in the rest of the UAE, it is customary to pay rent a year in advance. As a rule, all payments are made by bank checks. Depending on the terms of the contract, the annual rental amount is paid by one or more checks. In the latter case, checks are dated by future dates. For example, if the number of checks is 4, then the dates of the checks will correspond to dates in the future every quarter, and if the number of checks is 12, they will be dated at intervals of a month. Accordingly, upon the date indicated on the check, the landlord can present it to the bank and receive money from the tenant's account. The issuance of unsecured checks in the UAE is a criminal offense, so paying with checks, although it does not give a 100% guarantee of rent, is a fairly reliable and convenient way to make payments.
Can a landlord who is not a resident of the UAE receive money by check?
It must be remembered that the period during which a check can be presented for payment is 6 months, after which it “burns out”. If the check is written in the name of an individual and there is no mark on it only on the recipient's bank account, then the person indicated on the check, regardless of the presence of a resident visa, can receive cash at any branch of the issuing bank. Otherwise, or if the check is written in the name of the company, money on it can only be received in a bank account, and the account must be opened in one of the banks in the UAE. Resident status is also not required.
A number of banks in the UAE easily open accounts for non-residents (including foreign companies). The procedure for opening a bank account takes less than an hour, and the minimum requirements for depositing money into an account to open it are currently 10 thousand UAE dirhams (about US $ 2750).
If the listed rental options are not suitable for the landlord, he can conclude an agreement with the real estate agency through which the rental was made. Then the checks can be issued in the name of the agency, and after receiving money from them, the agency transfers them (or transfers them in cash) to the lessor. The main thing in this case is to competently approach the issue of choosing a partner company.
Who pays a commission to a real estate agency?
When the intermediary in the transaction is a real estate agency, he is paid a commission. According to existing practice, the tenant pays the commission to the real estate agency. Usually, this is 5% of the annual rental amount. Agency services end after signing a lease. If the lessor needs additional agency services (representing his interests in the UAE during the term of the lease, accepting payments from the tenant, paying real estate maintenance costs, etc.), their cost is negotiated additionally.
Who pays for the operation and maintenance of rented property?
The tenant and the landlord can agree on any rental conditions, however, as a rule, the landlord is responsible for paying the maintenance costs (Maintenance Fees) and overhaul of the property. All current expenses associated with the operation of the leased object, such as: payment of water, electricity, air conditioning, telephone, Internet connection, etc., as well as ongoing repair of real estate, are borne by the tenant. Moreover, the tenant connects utilities from the respective suppliers independently and in their own name. The tenant also pays the so-called “housing fee” (Housing Fee), which is a municipal fee of 5% of the annual rent. The fee is charged by the Dubai Electricity and Water Authority (DEWA) in equal installments throughout the year along with payments for electricity and water. If the real estate unit is not connected to water and electricity (i.e. is not populated), then the housing tax is not charged. Despite the fact that the housing tax was introduced a long time ago, so far it has not been universally levied, and it is still not included in many DEWA accounts.
Is it possible to rent out real estate in Dubai without agents? 
Almost no real estate transaction, including its lease, can do without the participation of agents in Dubai, as, indeed, in the rest of the world. It is in real estate agencies, most often, clients who want to rent, rent, buy or sell real estate apply. Working in the market, agents, like no one else, possess information about who, what and how much they want to rent, rent, sell, or buy. However, far from all professional market participants are duly registered and operate legally.
What are the requirements for real estate agents in Dubai?
First of all, it should be borne in mind that, in accordance with the Order of the Chairman of the Dubai Land Department No. 85 of 2006, all real estate agencies operating in Dubai must have a license for the relevant type of activity and must be registered in a special register of the Market Regulatory Authority Dubai Real Estate (RERA). Since business entities in the UAE do not have universal legal capacity, the permitted type of activity must be clearly indicated in the license. For example, for mediation in leasing, this activity should be directly indicated in the license. At the same time, all agents of the company must undergo an appropriate training course and receive personal brokerage cards with an individual number. Such measures are primarily aimed at protecting the rights and interests of clients and are designed to minimize the possibility of fraud on the part of agents. PR
You can get any additional information from the specialists of IMEX Real Estate by tel. in Moscow +7 495 9842053, toll-free number in the UAE 800-IMEX (800-4639) or by sending a request by e-mail [email protected]
