Dubai is a bustling metropolis and a hub of international business and tourism. No wonder, there is a sudden increase in demand for rental properties. If you are looking to rent a property in Dubai, or you are a landlord who wants to rent out their property, you need to understand the legal requirements and key elements of tenancy contract Dubai.
In this comprehensive guide, we will explore everything you need to know about tenancy contracts in Dubai, including how to make one, what key terms to include, and how to renew or terminate a tenancy contract.
Understanding Tenancy Contracts
A tenancy contract is a legally binding agreement between a landlord and a tenant.. In Dubai, Dubai Rental Law governs the tenancy contracts. The law outlines the legal requirements for tenancy contracts, including the registration process and the role of the Real Estate Regulatory Agency (RERA).
The key elements of a tenancy contract include:
- Parties involved
- Property details
- The rental amount and payment terms
- Security deposit
- Maintenance responsibilities.
How to Make a Tenancy Contract in Dubai?
The process of making a tenancy contract in Dubai is a simple one. However, tenants and landlords should negotiate the terms before drafting the contract, especially if you are new to Dubai. Let’s understand the process:
Determine the terms of the contract
Before creating a tenancy contract, the landlord and tenant should agree on the tenancy terms, including the rent amount, payment terms, security deposit, notice period, maintenance responsibilities, early termination terms, and renewal terms.
Draft the contract
Once you have decided on the terms, you can draft the agreement. If you are renting your apartment on your own, you can download the tenancy contract template online and then fill out all the details. In case, you are renting your apartment through an agency, the agency will handle all the paperwork. When your property is with a property management company, then that company can generate the tenancy contract and tenancy certificate through the Ejari portal.
Before making a tenancy contract, you should know what documents you need. Here is a list of documents that you should keep in hand:
- Passport copy
- Residence visa copy
- Emirates ID copy
- Security deposit payment slip
If you are renting out a property directly from the owner, then do check the property’s title deed along with these documents.
Sign the contract
Once the contract is ready, both parties should sign it and the landlord and tenant should each receive a copy of the signed contract.
Register the contract
In Dubai, it is mandatory to register tenancy contracts with the Ejari system, which is managed by the Real Estate Regulatory Authority (RERA). You can create an Ejari yourself, or if you have rented through an agency, the company will create an Ejari for you.
The registration process involves providing the details of the tenancy contract, such as the names of the parties involved, the rent amount, and the property address, as well as paying a registration fee. Once the contract is registered, both parties will receive an Ejari certificate as proof of registration.
Cost of Creating a Tenancy Contract in Dubai
Before you rent a property, you should know all about the charges, so there are no surprises later. The costs associated with making a tenancy contract in Dubai can vary depending on a few factors, including the type of property, the duration of the tenancy, and the specific terms agreed upon by the landlord and tenant. However, here are some costs you need to consider:
- Ejari registration fee: Dubai Land Department charges this fee for registering your tenancy contract. Ejari registration fee varies according to the method. If you register through the app, then the cost is:
- Registration AED 155 + tax
- Innovation fee: AED 10
- Knowledge fee: AED 10
- If you are registering through a trustee center, then the cost is a little higher:
- Registration fee: AED 219.5 + tax
- Innovation fee: AED 10
- Knowledge fee: AED 10
- Security deposit: Tenant pays a security deposit to the landlord to cover any damages or outstanding bills at the end of the tenancy. The deposit amount is typically equivalent to one month’s rent. Alternatively, it could also be 5% for unfurnished properties and 10% for fully furnished properties. It is a refundable deposit.
- Agency fee: If you use a real estate agent to find your rental property, you may need to pay a fee, which is usually equivalent to 5% of the annual rent.
- DEWA connection fee: Dubai Electricity and Water Authority (DEWA) charges this one-time fee to connect your utilities. The fee is AED 110 for apartments and AED 130 for villas.
- DEWA security deposit: DEWA also requires a refundable security deposit for electricity and water services. The amount depends on the property type and can range from AED 1,000 to AED 2,000.
- Municipality fee: Dubai Municipality charges this one-time fee for new tenants. It is usually 5% of the annual rent, with a minimum of AED 315 and a maximum of AED 1,750. It is charged monthly through the DEWA payment.
Key Terms and Clauses in a Tenancy Contract Dubai
When drafting a tenancy contract in Dubai, make sure to include key terms and clauses that protect the interests of both the landlord and the tenant. Some important terms and clauses include:
Rent Amount and Payment Terms
The rent amount and payment terms should be clearly stated in the contract, including the frequency of rent payments (monthly, quarterly, etc.), the amount of rent, and the method of payment. While you can decide these conditions mutually, you should know that many landlords now ask for one cheque. It is also important to mention the consequences of late or missed rent payments, such as penalties or contract termination.
Security Deposit
A security deposit is a sum of money paid by the tenant to the landlord to cover any damages or unpaid rent at the end of the tenancy. The amount of the security deposit should be clearly stated in the contract, as well as the conditions under which the deposit will be refunded to the tenant.
Notice Period
The notice period is the time that either party must give the other before terminating the contract. In Dubai, the notice period for termination of a tenancy contract is usually 90 days, although this can vary depending on the terms of the contract.
Maintenance Responsibilities
There should be a mention of the maintenance responsibilities of both the landlord and the tenant. The contract should outline who is responsible for repairs, maintenance, and cleaning of the property, as well as any penalties for not fulfilling these responsibilities.
Early Termination
A landlord and the tenant can terminate the contract before the end of the fixed term under certain circumstances, including non-payment of rent, breach of contract, or mutual agreement between the parties. The consequences of early termination, such as penalties or forfeiture of the security deposit, should also be clearly stated in the contract.
Renewal Terms
Renewal terms mostly include the notice period for renewal, the rent amount and payment terms for the renewal period, and any changes to the terms of the contract. The contract should mention these terms.
Rights and Obligations of Tenants and Landlords
Before entering into a contract either as a tenant or a landlord, you should be aware of your rights and obligations.
Tenant’s Rights
Privacy: Tenants have the right to live on the property peacefully without any interference from the landlord. A landlord must obtain the tenant’s permission before entering the property, except in emergencies.
Repairs: If the tenant has not done any damage, then the landlord is responsible for major repairs.
Termination: Tenants can terminate the tenancy contract at the end of its term or earlier if the landlord breaches the contract.
Notice: Tenants are supposed to receive notice of any rent increase or termination of the tenancy contract at least 90 days before the end of the tenancy contract.
Tenant’s Obligations
Payment of Rent: Tenants must pay the rent on time and in full, as per the tenancy contract.
Property Maintenance: Tenants are responsible to maintain the property in good condition, and repairing any damages caused by their actions.
Use of Property: Tenants must use the property for its intended purpose, as specified in the tenancy contract. They will be subjected to penalties in case of overcrowding or subleasing without any proper contract.
Notification of Vacating: Tenants should notify the landlord of their intention to vacate the property at least 30 days before the end of the tenancy contract.
Landlord’s Rights
Receive Rent: Landlords have the right to receive the rent on time and in full, as per the tenancy contract.
Enter the Property: Landlords can enter the property for inspection or maintenance purposes but must obtain the tenant’s permission and give at least 24 hours notice.
Recover Property: If a tenant breaches the contract, landlords can recover their property, but they must obtain a court order before doing so.
Right to Evict: Landlords can evict tenants through legal means if the tenant breaches the contract or does not pay the rent.
Increase Rent: If the rents of similar properties have increased, landlords can increase the rent but must do so following the rental index set by the Dubai Land Department.
Landlord’s Obligations
Property Condition: Landlords must ensure that the property is in a habitable condition and make necessary repairs to make it a pleasant place for the tenants.
Respect Tenant’s privacy: Tenants have the right to quiet enjoyment of the property without the landlord interference.
Notification of Changes: The landlord has to provide tenants with a notice of any rent increase or termination of the tenancy contract at least 90 days before the end of the tenancy contract.
Security Deposit: Once the tenancy contract has ended and there is no damage or outstanding rent, landlords are supposed to return the security deposit to the tenant within 14 days.
Renewal of Tenancy: It is the responsibility of the landlord to renew the tenancy contract to the tenant at least 90 days before the end of the tenancy contract unless the tenant has breached the contract or caused damage to the property.
Final Words
Renting a property in Dubai doesn’t have to be a complex issue. By understanding the key terms and clauses of a tenancy contract, tenants can avoid misunderstandings and ensure a peaceful and enjoyable stay in their new home. Likewise, landlords can protect their property and investment by communicating their expectations and addressing any issues in a timely and professional manner. So, whether you are a tenant or landlord, we hope this guide has provided you with a better understanding of the tenancy process in Dubai and wish you the best of luck in your rental journey!
FAQs
- How often should the rent be paid?
The rent is paid in the manner and frequency agreed upon in the tenancy contract. Typically, it is paid monthly or quarterly, but a tenant can also pay in a lump sum for the entire contract term. You have more room to negotiate the rent if you pay in one cheque. Rents are usually higher with multiple cheques.
- What is the duration of the tenancy contract?
The duration of the tenancy contract can vary, but it is typically for a minimum period of one year. Landlords and tenants can agree on a longer or shorter duration, depending on their needs and preferences.
- What is the amount of the security deposit?
The amount of the security deposit is typically equal to one or two months’ rent. The landlord holds the security deposit to cover any damages to the property caused by the tenant. The landlord returns the deposit to the tenant at the end of the contract term if there are no damages.
- What are the terms and conditions for renewing the contract?
The terms and conditions for renewing the contract depend on the agreement between the landlord and tenant. The renewal may be automatic unless one party gives notice to terminate the contract. In other cases, the renewal may be subject to negotiation and agreement on new terms and conditions.
- What are the consequences of breaching the terms of the contract?
Typically, the landlord may have the right to terminate the contract and evict the tenant if they fail to pay rent or violate other terms of the contract. The tenant may also be liable for damages caused to the property or for breaching specific clauses of the contract.
- What is the process for resolving disputes between the landlord and tenant?
Mediation or arbitration are the two main ways of handling disputes depending on the specific terms of the contract. In some cases, Dubai Rental Dispute Settlement Centre, a government agency that provides mediation and arbitration services can also resolve the disputes.
- What are the conditions for early termination?
Early termination may be allowed if both the landlord and tenant agree to the termination and any penalties or fees are paid. Some contracts may also include specific clauses that allow for early termination under certain circumstances, such as if the property is sold or if the tenant needs to relocate for work.
