Tim Elliott
Welcome to Lawgical, the UAE’s first, and really only, legal podcast. My name’s Tim Elliot. Lawgical comes to you from the Dubai-based legal firm, HPL Yamalova & Plewka. As always, the Managing Partner is with me, Ludmila Yamalova. It’s good to see you.
Ludmila Yamalova
Good to see you too, Tim. Thanks for being here, as always.
Tim Elliott
You’re welcome. Today, it’s the regulations behind short-term rentals, and we should say from the outset, this is specifically in Dubai, rather than the UAE. Now, Dubai has been super busy of late, Ludmila. It’s tourist season, despite some of the rain we’ve had, which has been torrential at times, but it’s the right time to discuss how short-term rentals work from a legal standpoint, I think. First of all, there are a number of laws in place that anyone about to rent out a holiday home here in Dubai really should be aware of, aren’t there?
Ludmila Yamalova
Indeed. What this particular discussion comes on the heels of is what has now become very popular: short-term rentals by private owners, in comparison to the typical or more classical hotel rentals.
As many of us would know, Dubai in particular has been quite successful and prolific in terms of attracting guests and visitors from all over the world to occupy its many very nicely built and luxurious hotels all over the city with impeccable services, views, and so on and so forth. On the back of that, obviously, Dubai, because it had proven itself to be such a desirable tourist destination, more and more tourists kept flocking into Dubai, and with that, more and more hotels were opening up. Prices, obviously, were reflected in correspondence with the bigger and higher traffic of tourists.
But in parallel, what we have been observing—and in many countries this trend had developed perhaps earlier—was home rentals or holiday home rentals, in particular through Airbnb. These kinds of options have proven to be quite successful and popular, especially more appealing to families versus, let’s say, individuals and couples. In many cases, they have become more preferable to traditional hotel stays. Yet, in Dubai, the hotel industry was quite well regulated. But with regard to short-term rentals of private properties, that whole area was rather unregulated.
There were no laws that would set any kind of framework as to whether this was legal or illegal. People were renting out properties, obviously in the absence of a specific regulation, and people started to rent out their properties and even offer them on Airbnb. Then, on the back of that, there was all sorts of discussion about whether it was legal or not. To an extent, there were rumors—perhaps substantiated to a degree—on the back of certain statements that this was illegal and that only those specifically licensed to provide this kind of service could legally do so. Everyone else, even if it was their own private property, would not be doing it legally. There was this rumor that Airbnb was illegal or that any kind of short-term rentals, other than through traditional hotels, was illegal.
For a while, that discussion was rather prolific in the news. In the meantime, a few things developed and crystalized.
One, that it is true that if you are renting out multiple properties—for example, if I am a real estate agent, and this, by the way, was also one of the topics in the context of this discussion—I go and represent 15 to 20 units of different owners, start showing them, renting them out, and managing those properties. There was a legal issue there because, as an agent—and this is the overall preamble to any kind of business activity in the UAE—you are required to have a proper business license. As an agent, I would have to have a specific license for that kind of activity. At that time, there was no such license.
That was one legal nuance that appeared and perhaps gave, legitimately and rightfully, the government a foothold in terms of saying this activity, done in this way, was illegal. Then, there were individual owners who had 15 to 20 units and said, “We want to rent out our units this way without an agent.” In that case as well, there’s a question: if you are doing it at that level where you have multiple units, does that constitute a business? And if it constitutes a business, should this also require a license? In other words, licensing became a question, rightfully so.
But what we are talking about right now is not necessarily these kinds of examples. What we’re talking about is if somebody has one or two units, their own unit, and even their own home. As we know, Dubai has a lot of residents or investors who may or may not live here full-time and would be happy to rent out their property or maybe have an extra property they’ve invested in. It doesn’t necessarily rise to the level of a business to qualify or warrant an application for a business license.
At the same time, it is perhaps an activity that in some ways competes with the hotel industry and in other ways affects public interest because there are more and more options like that on the market where individual units are being offered to the greater public. The public comes to Dubai, and now instead of staying in hotels, they stay in these private units. You can see private and public interest now becoming more involved, and why it became natural for the authorities to step in and say, “This is a space we must regulate,” and regulate it from different dimensions.
That is the history, if you will, the background of these holiday home regulations, and why they are the way they are.
Just to give some anecdotal evidence of why, in particular, there was a time when this sort of activity really needed to be regulated: more and more people were opting for these holiday home reservations or stays in lieu of traditional hotel rooms. They would come to Dubai, bring their whole families, and plan holidays or vacations. Payments were often made upfront, and in many of these cases, people would show up and find that there was no one there to meet and greet them.
They couldn’t find the property, so they called the agent they had been communicating with, or the property that was marketed wasn’t at all what they expected. There were also issues with the property—let’s say it didn’t have running water, proper security, clean sheets, or what have you.
What ended up happening in all these cases was that there was no legal mechanism for tenants—also called the victims—to address their disputes. Everything was done privately, not necessarily under the table, but without any kind of legal framework. There wasn’t even a place or mechanism for them to report their disputes.
At the same time, it became quite apparent that it was in the public interest for the authorities to step in and ensure that there was some kind of mechanism or framework to avoid such incidents. In many ways, this reflected poorly on Dubai and tourism in general. On the back of that, Dubai set up the Department of Tourism and Commerce Marketing (DTCM).
The DTCM, among other things, was given the mandate to operate a short-term rental properties market in Dubai. Once an authority is established, you create regulations that provide a legal framework for what the authority can do and what is required to qualify a home as a holiday home.
The first regulations began in 2013—Decree 41 of 2013—which regulated the leasing of holiday homes in the emirate of Dubai. That decree was the initial legal authority that set the framework for holiday homes. Think about it: ten years ago isn’t that long in Dubai’s timeline as a popular tourist destination.
Tim Elliott
For sure.
Ludmila Yamalova
In 2014, there was an additional Executive Council Resolution 49, which approved fees and fines related to leasing holiday homes in Dubai. Initially, the framework focused on (1) setting up the DTCM as the governing authority for holiday homes and (2) creating a general framework for registering and licensing a property as a holiday home.
A year later, an add-on regulation introduced payments to the authorities in exchange for oversight and supervision of the activity, along with fines for violations. Then, in 2020, an Administrative Resolution was issued, amending the 2013 law. Shortly thereafter, the DTCM issued a Marketing Guide regulating how holiday homes could be marketed.
The legislative foundation for holiday homes in Dubai began in 2013, and the latest regulation was issued in 2020. These laws define the eligibility requirements, costs of obtaining, renewing, and canceling a license, and operating holiday homes within the legal framework.
At a high level, there are:
(a) a regulating authority,
(b) a legislative framework outlining what is permissible,
(c) a licensing requirement to operate legally, and
(d) specific eligibility criteria for homes that qualify as holiday homes.
The DTCM offers a service through its website to apply for holiday home licenses. The process is user-friendly and largely online, making it easier for individuals or companies to comply with regulations.
Tim Elliott
The point is, isn’t it, that everything here comes under the DTCM—the Department of Tourism and Commerce Marketing?
Ludmila Yamalova
Exactly. Dubai has been particularly effective at creating specific authorities to govern industries. For example, the Dubai Land Department governs real estate, and RERA (Real Estate Regulatory Agency) falls under it. Similarly, the DTCM oversees anything tourism-related, including holiday homes.
Even if you’re an individual renting out an investment property, you’re part of the tourism market. Hence, this naturally falls under the DTCM.
The DTCM is well-funded and staffed, reflecting Dubai’s prioritization of tourism. Their services, especially their website, are sophisticated and user-friendly. For example, you can apply for a holiday home license entirely online, upload documents through a portal, and manage everything digitally.
Tim Elliott
It’s reasonable to say, isn’t it, that Dubai is sophisticated in tourism terms?
Ludmila Yamalova
Absolutely. Dubai has become extremely popular in a short span of time, attracting large numbers of tourists year-round. Unlike the past, even Ramadan and the peak summer months are no longer off-seasons. Policies have adapted to make Dubai more tourist-friendly, with services and activities largely continuing as usual during these periods.
Tim Elliott
Let’s look in more detail at the eligibility requirements. Individuals can hold up to eight licenses or permits simultaneously. Is that right?
Ludmila Yamalova
Yes, that’s correct. These permits are issued for durations ranging from three to 12 months. Let’s say you want to rent out your property for the summer or for December while you’re away; you can obtain a three-month permit.
Individuals can hold a maximum of eight permits simultaneously. Beyond that, the government expects you to obtain a business license, as managing more properties becomes akin to running a business.
To qualify, the property must be in a residential building or villa compound and meet certain standards. For instance, office spaces cannot be converted into holiday homes. You also need a title deed proving ownership or a No Objection Certificate (NOC) from the landlord if you’re a tenant.
Tim Elliott
So, in theory, if I rented a house, and my landlord gave permission, I could rent it out as a holiday home?
Ludmila Yamalova
Exactly. This was introduced in 2020, allowing tenants to rent out properties as holiday homes with landlord consent, aligning with Dubai’s subletting laws.
Tim Elliott
What documentation and fees are required?
Ludmila Yamalova
The required documents vary based on whether you’re an individual or a company. Individuals need a passport copy, Emirates ID, title deed, and a DEWA bill. Companies must also provide trade licenses, management agreements, and other due diligence documents.
The fees depend on the property size:
- Studio or one-bedroom: AED 370
- Two-bedroom: AED 670
- Three-bedroom: AED 970
- Four+ bedrooms: AED 1,270
There are additional tourism fees: AED 15 per night for deluxe properties and AED 10 per night for standard properties. These must be paid monthly to the DTCM.
Tim Elliott
This is the tourism dirham fee that the DTCM collects, isn’t it?
Ludmila Yamalova
Exactly. These fees are collected per night and must be paid by the 15th of the following month. Payments can be made via direct deposit, cheques, or bank transfers.
Additionally, there is a housing fee or tax that tenants or occupiers must pay. This is 5% of the annual rent and is collected alongside your DEWA bill.
Tim Elliott
So, if you rent an apartment or villa in Dubai, you pay 5% of the annual rent as a housing fee?
Ludmila Yamalova
Correct. This fee is typically collected from the tenant or occupier, not the landlord.
Tim Elliott
This could also apply to holiday home guests, couldn’t it?
Ludmila Yamalova
Yes, we’ve seen instances where agents or property managers collect this fee from short-term guests to pay to the authorities. This can be surprising for visitors who assume all costs are included upfront, especially those renting through platforms like Airbnb.
To avoid disputes, it’s important for owners or agents to clearly disclose all fees—including the tourism fee, VAT, or housing fee—at the time of booking. This transparency ensures that guests know what to expect and prevents misunderstandings.
Tim Elliott
If someone books a holiday home but doesn’t get what was advertised—like facilities or amenities that don’t match the listing—what recourse do they have?
Ludmila Yamalova
This is a very common issue. If the property doesn’t meet expectations—for example, access to facilities like pools or gyms is denied, or basic amenities like running water or a/c aren’t functioning—guests can file a complaint with the DTCM.
The DTCM has a specific dispute resolution department, and complaints can be sent to ecomplaints@DubaiTourism.ae. The DTCM may pressure the property owner or agent to provide alternative accommodations or issue a refund.
However, the DTCM is a regulatory authority, not a judicial body. While they can suspend licenses or impose penalties, they cannot issue legally enforceable judgments. For that, disputes must be filed with the Rental Dispute Centre (RDC), Dubai’s rental court.
Tim Elliott
So, the RDC handles holiday home disputes as well?
Ludmila Yamalova
Yes. While the RDC primarily handles rental disputes, its jurisdiction has expanded to include holiday home disputes. It’s an efficient court focused on real estate and rental matters, making it well-suited to resolve these issues.
Tim Elliott
Are there any specific conditions owners or agents need to meet when renting out holiday homes?
Ludmila Yamalova
Yes, there are several conditions outlined by the DTCM. Owners or agents must:
- Provide guests with clear terms and conditions for their stay, including house rules.
- Ensure the property meets minimum standards, such as operational toilets, running water, air conditioning, and access to advertised facilities.
- Register all guests with the DTCM and the building’s management.
If a unit is unavailable or doesn’t meet promised expectations, the owner or agent must provide alternative accommodations. For example, if an elevator isn’t working or access cards aren’t provided, guests have grounds to cancel their agreement and request a refund.
Tim Elliott
What about deposits? Are they required?
Ludmila Yamalova
Deposits aren’t legally required, but owners can request them as security. If a deposit is taken, it must be refunded promptly after the guest checks out. Failure to refund deposits is a common cause of disputes.
Guests should also document any promises or representations made by the owner or agent, as this evidence can be crucial if a dispute arises.
Tim Elliott
So, the takeaway is: guests should keep records, and owners should ensure transparency.
Ludmila Yamalova
Absolutely. Transparency and documentation are key. These protect both parties and help avoid disputes.
Tim Elliott
That’s another episode of Lawgical, this time focusing on short-term rental regulations and holiday homes in Dubai. Our legal expert, as always, Ludmila Yamalova, Managing Partner at Yamalova & Plewka. Thank you.
Ludmila Yamalova
Thank you, Tim.
Tim Elliott
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