Long-Term Rental Contracts in the U.A.E.

Tim Elliott
Welcome to Lawgical, the UAE’s first and only legal podcast. My name is Tim Elliott. Lawgical comes to you from the Dubai-based legal firm HPL Yamalova & Plewka here in JLT. And as always, here’s the managing partner, Ludmila Yamalova. Good to talk to you again, Ludmila.

Ludmila Yamalova
Great to be in your company, Tim, as always.

Tim Elliott
This time, it’s another Lawgical Lite—a bite-sized podcast—a quick look at long-term rental contracts.

Now, by that, I guess the definition is really contracts that last for a period of what, a decade or over? Is that a reasonable assumption, Ludmila?

Ludmila Yamalova
Yes. Long-term rental contracts are agreements that span a period of more than 10 years. Anything less than 10 years is considered your typical rental contract and is subject to rental laws and the specific authority or agency mandated to regulate rental issues.

For example, in Dubai, rental contracts fall under RERA and the RDC, which is the Rental Dispute Center. These contracts are also governed by rental laws and specific rental regulations for tenancy matters, as is the case in other Emirates.

However, anything above 10 years is considered a long-term rental contract and is subject to different laws and authorities.

Tim Elliott
So, this applies to both residential and commercial properties?

Ludmila Yamalova
Yes, indeed. The principles, laws, protocols, and procedures for signing, executing, enforcing, or disputing long-term rental contracts are the same for both residential and commercial properties.

Tim Elliott
So, it’s not really an Ejari—the mandatory rental contract registration document that we all get. This is a slightly different registration format, isn’t it?

Ludmila Yamalova
Exactly. To explain the difference: typical rental agreements are registered with Ejari and adjudicated through the RDC, as they are subject to rental laws.

An Ejari contract involves registration through the Ejari system, which generates an Ejari certificate. The registration fee for this is around AED 150. The Ejari certificate is issued following the registration process and serves as proof of the rental agreement.

With long-term rental contracts, it’s a completely different protocol. These contracts are not subject to rental laws but instead fall under UAE contract laws and any other applicable laws based on the nature of the contract.

For example, long-term rental disputes in Dubai are handled by the regular Dubai courts, not the RDC. Additionally, when such a contract is executed—say, between a landlord and tenant for 15 years—it is registered not through the Ejari system but with the Dubai Land Department (DLD).

Tim Elliott
So, the registration process and certificate differ entirely?

Ludmila Yamalova
Correct. Long-term rental contracts are registered with the DLD rather than through RERA and the Ejari system. The resulting certificate is issued by the DLD, not Ejari, and the registration fee is 4% of the total value of the contract.

This process is more akin to a sale and purchase agreement for property. For instance, if I were to buy a property from you, a 4% transfer fee would be paid to the DLD for the title deed transfer. Similarly, with long-term rental contracts, 4% of the total contract value is paid as a registration fee.

For example, if the rental contract is for 15 years, the 4% fee would be calculated on the total rental amount for those 15 years.

Tim Elliott
So, in terms of how long-term rental contracts are treated under the law, they’re more like leasehold agreements?

Ludmila Yamalova
Yes, it’s a hybrid. While ownership does not transfer, the process of securing a long-term interest in the property resembles a property purchase. The agreement is registered with the DLD, subject to UAE contract laws, and disputes are resolved in the regular Dubai courts.

The certificate issued for a long-term rental contract looks similar to a title deed but is titled differently, stating it as a “contract registration.” This differs from the typical Ejari registration certificate.

Tim Elliott
So, long-term contracts offer more security and planning for tenants. Who are these contracts typically aimed at?

Ludmila Yamalova
These contracts are ideal for tenants seeking long-term security in a property, such as 15 years. During this period, tenants are protected from rent increases unless explicitly agreed upon in the contract.

For example, landlords cannot increase rent midway through the contract unless the agreement specifies otherwise, such as periodic increases every five years. Similarly, tenants cannot be evicted during the contract term, even if the landlord wishes to move into the property or sell it. The new owner would also be bound by the same contract.

Tim Elliott
These contracts seem particularly useful for tenants wanting to make property improvements.

Ludmila Yamalova
Exactly. Tenants with long-term contracts often feel more comfortable investing in property improvements since they know they’ll benefit from these changes over the duration of the agreement.

For instance, if someone rents a villa in a non-freehold area like Jumeirah, they may want to renovate or upgrade the property. With a long-term contract, they have the security to justify such an investment, knowing they won’t be evicted before the contract ends.

Tim Elliott
And this applies even in areas where foreigners cannot own property, correct?

Ludmila Yamalova
Yes, that’s correct. Non-freehold areas like Jumeirah, which are primarily owned by Emiratis, are often attractive to expats for their unique character. While foreigners cannot own property there, long-term rental agreements allow them to secure their place in these areas and even customize the property with the landlord’s approval.

Tim Elliott
It sounds like a great legal tool for long-term residents.

Ludmila Yamalova
It is. Long-term contracts provide tenants with enforceable security and flexibility. Additionally, the legal structure ensures clarity in case of disputes. For example, if a tenant invests in significant property improvements and the landlord breaches the contract, the tenant can seek compensation through the Dubai courts.

Tim Elliott
That wraps up another episode of Lawgical. This time, the ins and outs of long-term rental contracts—an effective way to secure your property for 10 years or more.

As always, our legal expert was Ludmila Yamalova, managing partner at Yamalova & Plewka in JLT, Dubai. Thank you, Ludmila.

Ludmila Yamalova
Thank you, Tim.

Tim Elliott
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