Tim Elliot: Welcome to Lawgical, the U.A.E.’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 Elliot: You are welcome. Today, it is the regulations behind short-term rentals, and we should say from the outset, this is specifically in Dubai, rather than the U.A.E. Now, Dubai has been super busy of late, Ludmila. It is tourist season, despite some of the rain we’ve had, which has been torrential at times, but it is 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, the 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 and especially more appealing to families versus, let’s say, individuals and couples and such. In many cases, they have become more preferable to your 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, whether it was not legal, and to an extent there were rumors, to an extent maybe they were substantiated, on the back of certain statements that this was illegal and only those who were specifically licensed to provide this kind of service could legally do so, and everybody else therefore, even if it is your own private property, you were not doing it legally, and there was this rumor that Airbnb was illegal or any kind of short-term rentals through anything other than traditional hotels was illegal.
For a while, that discussion was rather prolific in the news, and in the meantime, a few things developed, and perhaps 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 was that I am an agent and now I go and represent 15 to 20 units of different owners, and I start showing them and renting out and managing those properties. In a way there was a legal issue there because as an agent, and this is the overall, perhaps preamble, to any kind of business activity in the U.A.E. ultimately requires you 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 so the government a foothold in terms of this activity being done in this kind of way is illegal. Then there were individual owners who would have 15 to 20 units and they said, we want to rent out our units this way without an agent. In that case as well, there is a question. If you are doing it at that level where you have multiple units, does that constitute a business? And if 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 are talking about is if somebody has one unit 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 fulltime and would be happy to rent out their property or maybe they have an extra property that they have invested in. It doesn’t necessarily rise to the level of a business to qualify or to warrant an application for a business license. But at the same time, it is perhaps an activity that in some ways competes with the hotel industry and in other ways affects the public interest because there are more and more options like that on the market where individual units are being offered to the greater public and the public comes to Dubai and now instead of staying in hotels, they stay in these private units. You can see private interest and public interest now becomes more involved and why perhaps it became natural for the authorities to step in and say this is a space we must regulate, and we must regulate 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 and why in particular there was a time where this sort of activity really needed to be regulated is that more and more people were now opting for these holiday home reservations or holiday home stays in lieu of traditional hotel rooms, and they would come to Dubai and bring their whole families and plan these holidays and vacations. They would make the payments upfront and in most of these cases payments were made upfront, and they would show up and there was no one here to meet and greet them, and they could not find the property so they called the agent they had been communicating with, or the property that they were so-called sold or marketed was not at all the property that they wanted or that they expected, or there were also some issues with the property. Let’s say it didn’t have running water, proper security, or clean sheets, or what have you. What ended up happening was for all of those cases, there was no legal mechanism, at least for the tenants, who are also called the victims, to address their disputes and their matters because all of this was done in private. I don’t want to say under the table necessarily, but without any kind of a legal framework behind them. There was not even a place or a mechanism for them to report their disputes to or through.
At the same time, it became quite apparent that it was in the interest of the public for the authorities to step in and ensure that there was some kind of a mechanism, some sort of framework, to avoid these kinds of instances and incidents because in many ways it reflects poorly on Dubai and on tourism in general. On the back of that, Dubai in particular set up what is called 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. As part of it, once you set up an appointed authority then you have some regulations that you set forward that now start creating a legal framework in terms of what the authority can do and what are the requirements if you wanted to qualify your home as the holiday home.
The first regulations started in 2013, now 10 years ago. That was degree 41 of 2013 and it was regulating the activity of leasing out holiday homes in the emirate of Dubai. That is the initial legal authority that set the framework for homes in Dubai. Think about it, 10 years, it is not such a long time ago. Dubai has been a very popular tourist destination for much longer than that.
Tim Elliot: For sure.
Ludmila Yamalova: Then in 2014, there was an additional Executive Council Resolution 49 which approved fees and fines related to the activity of leasing out holiday homes in the emirate of Dubai. The way it started, first there was the initial foundation or legal framework for setting up the DTCM as the governing authority for holiday homes and, second, setting up a general framework in terms of (1) how to qualify to register your and (2) as a party what documents you need to submit to the authorities to obtain ultimately a license to rent out your home as a holiday home.
But then a year later, there was an add-on regulation that now (1) sets up payments to the authorities for renting out your home in exchange the authorities overlooking and supervising this activity, and (2) (2) then also fines for violating any of these regulations. That is how, in legal terms, the law was developing. Then in 2020, there was an additional Administrative Resolution 1 issuing the executive regulations which went back to the initial decree 41 of 2003, regulating the activity of leasing out holiday homes and it is an add-on or an amendment to the original law of 2013 and then shortly thereafter there was another marketing guide that was issued. It was the DTCM Marketing Guide, regulating the activity of leasing out holiday homes, and that is basically the marketing guide in terms of how they can market these properties and where they can market and such. That is dated 2020 and it is called The Guide.
Here, just as a summary in terms of the legislative foundation for holiday homes in Dubai, it started in 2013 and the latest regulation was issued in 2020, so again quite recent still. These are the legal terms and regulations that set out the eligibility requirements, the price for obtaining, renewing, and cancelling a license, and operating a holiday home in accordance with, obviously, the legislative framework. As you can extrapolate from this, there is ultimately at a high level, there is (a) a regulating authority, (b) a legislative framework of what can and cannot be done, (c) the requirement of obtaining a license to perform this kind of activity, and then (d) the requirements for specifically what can qualify to be a specific home that is eligible for a holiday home license.
As part of this, the DTCM offered on its website a service to apply for this kind of license and in a way the small differences depend on the party who is applying for the license, whether it is an individual, for example, you, Tim, or me, as an individual, or whether it is a company that is applying. The requirements are somewhat different, but ultimately what it comes down to now, as per these regulations, there is a requirement for the party to basically show two things: (1) who this party is and then (2) submit these details to the authorities.
Let’s say if I am individual, I have to submit my passport, my emirate ID, the title deed for the property showing I am an eligible owner of this particular property, and not a stranger. Again, there previously had been many cases like this where people were renting out somebody else’s properties. Now there is a mechanism through the authorities as part of this license application that I, as an individual, had to show who I am as a party to this transaction, or for example, Tim, if you had a company behind you, and you were doing it as a business, you would need to present all the same documents to the authorities, showing your trade license, that your activity actually allows you to do this kind of short-term leasing, insurance, a copy of the passport of the manager, and so on and so forth, all of the typical due diligence.
Tim Elliot: The point is, isn’t it, that everything here comes under the DTCM, the Department of Tourism and Commerce Marketing. If it has to do with tourism in Dubai, it comes under the DTCM. That is the point.
Ludmila Yamalova: Exactly. That is one thing that Dubai has been particularly effective at, is designing and creating the specific authorities that govern specific industries, for example, the Dubai Land Department that governs our real estate market. By the way, in other emirates, to this day, there isn’t such an authority. For example, in Abu Dhabi, any kind of property registration is under the Abu Dhabi Municipality, whereas in Dubai there is a specific authority which is called the Real Estate Regulatory Agency (RERA). Similarly, for tourism there is a special dedicated authority that deals with this and anything to do with holiday homes now falls under the jurisdiction of this authority, and as you rightfully said, even though you may be thinking, this is one of my investments, an extra property I have, I am just renting it out, you may not be thinking of it in terms of the tourism industry, but it is because you are ultimately renting it out to the outsiders, in most cases, nonresidents, and therefore that is the tourism market that you are targeting. Therefore, naturally it would fall under the jurisdiction of the DTCM.
One of the nice things about DTCM is because tourism has been such an important part of Dubai industry, it is an authority that is quite well funded, well regulated and managed, and well staffed, and as part of their mandate, in terms of the services that they offer to the public. They are quite well developed and, at risk of maybe overusing this word, fairly sophisticated in their interface with the users, among which is their website, for example, and all the services that they offer through the website. For example, if you wanted to apply for your own holiday home license, you would do it through their website. The website is fairly user friendly and easy to navigate and maneuver, which is extremely important because this is what it is about. Let’s say it is your own home, and you are leaving for the holidays. If you want to do it legally, you need to get a license. To do this, it doesn’t require – as perhaps was the case early on, and that is why a lot of people shied away from applying for licenses because you had to go somewhere physically and you had to stand in line and wait for weeks to get some kind of approvals and such. Now it is all done through the website. It is a specific service that is dedicated for a holiday home license. You upload all the documents on the portal. You create a log-in account so you have access to your own portal, and then you upload all the documents and you manage everything through this portal, which is quite important and that is one of the great things that DTCM has always been known for is a fairly technologically advanced user interface, which logically goes along with its mandate of encouraging tourism and facilitating the user experience in Dubai for outsiders.
Tim Elliot: It’s reasonable to say, isn’t it, that if people outside, looking in at Dubai, in this region, in the Gulf, let’s take that as the example, Dubai is – and I think the words you used there is right- Dubai is sophisticated in tourism terms.
Ludmila Yamalova: Absolutely and for all the right reasons, it has to, because it is a fairly new economy, new city, and it has become extremely popular over a very short period of time with very, very large numbers of tourists who perhaps in the past only used to come during certain periods of time, but now, fast forward a few years, it seems like we’re always in the tourism season. It’s no longer just the winter season, or even, for example, during Ramadan. It was the kind of the low season before because the country was a lot more conservative with regard to observing Ramadan and its traditions, so therefore, for tourists perhaps it was not the best time to come because a lot of the services that they would otherwise want to benefit from were no longer available. Well, even that has changed and now in most cases the shops and the restaurants and cafes remain open and even licensed to serve drinks during this time. Even the music is no longer restricted. There is still obviously some sensible limitations that need to be observed, but for the most part, there is not much difference, which is quite a significant departure from how it used to be. To add to your point, Tim, even that period of time is no longer an off season for tourism. We are always sort of in season. We are always attracting investors or tourists even during the peak of the summer months, by the way. We have also had that because a lot of people find that rent is cheaper, or rooms are cheaper, and hotels are more accessible in the summertime. There are a lot of people who just love the sun and the water and all they want to do is just hang in the pool and get a bit of sun, and even the summer sun does not scare them.
Tim Elliot: It’s hot, but you’re guaranteed a bit of sunshine in Dubai. That really is the point. Let’s look in a little bit more detail at the eligibility requirements. If you want to operate a holiday home in accordance with Dubai laws, individuals, I am gathering, can hold up to eight licenses or eight permits simultaneously. Is that right?
Ludmila Yamalova: Yes. That’s correct. These permits, by the way, are issued for anything between three months to 12 months. That is also important to highlight. Let’s say if you just wanted to rent out your property for the summer when you are away, or for the month of December if you go back to your home country for the holidays, you can just get a three-month permit or a maximum of 12 months. These permits are renewable at the end of every period. But yes, as you rightfully said, individuals can only obtain a maximum of eight permits simultaneously and this perhaps is an example of at which point the authorities would expect for you to maybe obtain a license versus operating as an individual, but obtain a business license to do this as a business. If you are an individual, you can get up to eight licenses. Let’s say if you have 12 or 15 properties, which by the way is not uncommon in the U.A.E. there are a lot of very successful investors that went in early and have multiple properties. In that case, perhaps here is the incentive for them to set up, and that is the expectation of the government at that point, that this is more akin to business activity and therefore in line with the U.A.E. company law and corporate law, you should actually have a license because you are now really operating more as a business versus just an individual investor. In that case, you would no longer be an individual. You would now be a company, so the restriction on the number of licenses no longer applies.
Now in terms of what kind of properties can qualify for the eligibility requirements to obtain this holiday home license, it has to be an apartment or a building that is designated for this sort of activity. There are some apartment buildings that are off limits, and that is perhaps due to the type of people that they attract or the residents or for some other reasons. It has to be a specific building that qualifies or perhaps does not have restrictions. It has to be in a residential building, so it cannot be an office, at least for the time being. You cannot try to convert an office and rent it out as a residential building or as a residential unit. It could be a house or a villa, or it could also be in a compound, or it could be an independent villa. Any one of those would qualify.
What you cannot do is do it as a hotel room. Let’s say I come in here and I rent a hotel room for a month or two, and then I rent it out to you, Tim, for a short stay. That is a specific restriction or limitation and that is off limits. As I mentioned earlier, as part of qualification requirements, as a homeowner, be it as an individual or as a business, you have to present the title deed to show that you actually have the legal right to dispose of that property or to manage that property.
By the way, it is quite interesting that even as a tenant you may be able to rent out your property as a holiday home, but you do need to present a NOC from your landlord.
Tim Elliot: So, in theory, I rent a house here, if my landlord said it was fine, I could rent that out if I was away for the summer, for example.
Ludmila Yamalova: Exactly. This, by the way, is a fairly recent addition to the legislative framework, and that was set out in an Administrative Resolution from 2020, which is fairly new, where that specific requirement is now mentioned. You can see how this is a win-win because you could be renting a property here and you could be a very good tenant and a long-term tenant, and you have a good relationship with your landlord, and as a tenant you leave your property often enough where you would love to be able to and you do not mind renting it out as a holiday home, in particular on Airbnb, because as we know the Airbnb principle or concept is based in many cases on renting out somebody else’s home. The authorities now allow for it, as long it is done with the consent of the landlord, which in many ways obviously makes sense, and that also is in line with the general Dubai law on subletting. Subletting itself is allowed or is legal if there is consent from the landlord or from the property owner.
Tim Elliot: When it comes to permits, what documentation do you need to upload to the portal? What kinds of costs are we looking at?
Ludmila Yamalova: It depends. In terms of the permits or the documentation, it depends on whether you are an individual or a company that is applying. It is basically all of the documents related to due diligence in terms of who the party is. If you are an individual, you need to submit your passport copy, your title deed, and your emirate ID, for example, and maybe the sales and purchase agreement because some communities may have restrictions against short-term rentals. Though, to be honest with you, in practical terms, I haven’t seen that particular restriction being applied or enforced so much. If you are a company, then you would also need to submit your articles of associations and then passport copies of let’s say the manager and maybe certain shareholder resolutions or at least a certificate of incumbency, basically anything that shows that this entity is (1) licensed to conduct this kind of activity and then (b) it has the right to rent out these particular properties. The title deeds would always be there and any kind of documentation that shows that you as an entity either own these properties by the title deed or that you have a management agreement or a power of attorney or some kind of official authorization to represent these properties. That is with regard to the documents. Also, you would need to submit the Dubai Water and Electricity (DEWA) bill, and it has to be for no less than three months and also the name of the owner and the tenant would need to be submitted to the authorities, as some of the documents.
In terms of the application fees, the application fee is paid to DTCM. Payment of the application fees depends on the size of the property. For example, if it is a studio or one bedroom it is 370 dirhams. If it is a two bedroom it is 670 dirhams, if it is a three bedroom it is 970 dirhams, and if it is four+ bedrooms it is 1,270 dirhams. As I said, these permits are issued for three to 12 months maximum, and they must be renewed.
Now on top of that, there are also some tourism fees that have to be paid on a regular basis. The previous fees I cited are to apply for the permit.
Tim Elliot: This is the tourism dirhams, isn’t it, that DTCM collects?
Ludmila Yamalova: Exactly. Exactly. Yes. These fees are per night. For the deluxe holiday home, it is 15 dirhams per night. Then for the standard holiday home, it is 10 dirhams per night. That has to be paid to DTCM. There are different ways of paying this, but it has to be collected for each month and has to be paid by the 15th of the following month and could be paid through direct deposit, cheques, or a bank transfers and all of that information is readily available at DTCM to help you make the payment timely and duly, so to speak.
There is another interesting payment, and this came up recently. I heard it from a few clients and have seen it in practice. That is what is called the housing fee that is paid or the tax.
Tim Elliot: This is if you rent an apartment or villa here in Dubai, you pay, I think, is it 5% of the annual rent?
Ludmila Yamalova: Correct.
Tim Elliot: That is a housing fee tax that we have to pay, and that is collected with your water and electricity bill.
Ludmila Yamalova: Correct. This, by the way, is collected from the tenant or the owner or the occupier, and not the landlord.
Tim Elliot: Exactly. Yes.
Ludmila Yamalova: We’ve heard recently at some of the properties, the tenants, or the tourists would come and then at some point they would collect the 5% housing fee or municipality fee. Usually the agent who would rent out the property would collect it from them so they can pay it to the authorities. That is quite interesting. I think that is something to keep in mind because it is not always clearly disclosed and especially for a lot of the holiday home visitors. If you have ever rented through Airbnb, you usually pay one sum through Airbnb and you are done. There is nothing else. Unlike your hotel stay, you don’t have to pay a tourist tax, a hotel tax, and a VAT tax, and so on and so forth. You don’t have to pay these extra costs. You just pay to Airbnb whatever you pay. Well, in this particular case, the agent collected additional amounts to pay to the authorities. That is interesting because I think in a way maybe this was just an example of how some of these properties are managed or rented out, but I guess another way of doing it, collecting all of these fees, is that you would collect upfront through the portal or the service that you would be using, such as Airbnb. It is possible and feasible to just collect all these fees upfront through Airbnb and then you spell out which fees go where and then the agent who manages the property or the owner will take the 5% and pay directly to the government on behalf of the tenant or on behalf of the occupier.
Tim Elliot: Okay. That does need to be paid. That could add, if you came to stay for a week, two, three, four weeks, that could add a good couple hundred dollars to your overall fee.
Ludmila Yamalova: Exactly. This goes back to why we are talking about this legislation to begin with and it is because of that. There is so much of this mismatch in the past and even to this day with all of these regulations in place, there are still some questions. For example, do I have to pay VAT? Do I have to pay this municipality fee or the housing fee? What about the tourism fee? Do I have to pay a tourism fee? I think obviously I would argue that the burden should be on the owners or the agents that manage these properties to clearly spell out all these costs so that occupiers or visitors know exactly what to expect and when they are supposed to pay this. Because these examples I am mentioning right now, these are real-life examples that we heard in our practice where some visitors have checked in and then somebody just knocked on the door and said, by the way, I need to collect this additional 5% to give to the government. It is about managing expectations. Perhaps this one example of how this was not in line with the expectations. But certainly, the rules provide for and there are enough methods or tools to keep visitors and tourists informed ahead of time so that this does not come as a surprise.
Tim Elliot: Okay. One thing the DTCM is very clear about is that when a guest checks in, the conditions that need to be met, there is the holiday homes website, all guests have to be entered onto the system. The DTCM runs that system, don’t they?
Ludmila Yamalova: Indeed. Yes, they do. Also, as part of the conditions for holidays homes, the DTCM makes it very clear that as a landlord or as an owner or as an agent that is renting out the property, there are a lot of obligations in terms of what information you provide to these guests, for example, the terms and conditions of what can and cannot be done in your home. The burden is on you. While DTCM does not provide any kind of standard or template of these terms and conditions, or any kind of standard agreement that a landlord should sign with their visitors or that owners should sign with their visitors, there is an expectation that there will be a service agreement or an agreement and there will be some terms and conditions and internal rules for visitors that they must abide by. Also, building management, every community has perhaps its own regulations, some of which could be the requirement that all the guests provide copies of their passports. Once again, you can see how this is important for security reasons. Whoever it is, as a management company or community, you want to know who those people, the guests, are, and similarly so for DTCM, they would want to know who is residing in your property – I guess I don’t need to give examples – for security reasons, if something happens to this person, if they get sick, the authorities need to know and the community needs to know who these people are and how to get in contact with them. As you said, because of that, all these guests have to check in on the DTCM website and also with the particular community so that if you are a responsible agent or owner, you would make sure that all your guests are registered also with your community and copies of their passports are also submitted to the community so that everybody knows who these people are and they are not some strangers to the community and how they can be identified. This also comes with a lot of practical issues. For example, these guests are obviously coming to use facilities, pools, beaches, and gyms in these communities, so they would need to have access cards and so to issue these access cards, that is a requirement. This, by the way, is not atypical or too dissimilar, for example, from when you have guests coming to visit you and you live in one of these communities. If they are staying with you, and your family member as well, if they are coming to use, and they want to use the gym and your pool and whatever other common facilities, that is the requirement now, you have to present a copy of their passport and register them with the community so that they can use the facilities legally and with full disclosure. That is obviously one of the important conditions.
Some of the other conditions that are listed on the DTCM website, in the event, as an owner that unit is not available for one reason or another, or it does not meet the promised expectations, then you need to be able to provide an alternative accommodation. Obviously that is a lot harder to offer to somebody for whom it is just a one-off unit, but it does create an obligation for all those who run this as a business and who have multiple units or for agents, that if you have lured somebody in to come and rent from you, then you need to make sure that if this unit, for one reason or another, is not available or does not meet the expectations, that you have an alternative.
Tim Elliot: Let me put you up on facilities, for example. If you don’t get what has been advertised, and we’ve all heard the stories, the place just wasn’t how it looked in the pictures. It is very easy to take a nice wide angle shot of this amazing huge swimming pool that is actually a postage stamp. Those things happen. How would you resolve disputes in this case? Where do you turn to if you don’t get what you paid for?
Ludmila Yamalova: Well, this actually is a very topical question because recently, especially as we are just coming out of our Christmas and New Year season, there have been a flurry of questions, examples, anecdotal stories and complaints, perhaps even news articles, and in our own law practice we have had many people reach out to us complaining exactly about that. I rented this property. I came on the day to check in, and the property is not available. It turned out it was not available. Or when we came to check in, the agent said that property is not available, and a different property was available. Or we came and we were promised access to the facilities, let’s say the pool and the beach, and it turns out that we cannot use the facilities. Or let’s say some of the basic facilities were not operating, like the washer and dryer or one of the showers was not working or the a/c. There have been many, many examples similar to that. Yeah. What do you do? The main point of contact, and this is the utility of the DTCM and doing it all through this authority, is you can file a complaint with the DTCM. There is specific dispute resolution department at DTCM, and there is an email, a fairly easy email address, ecomplaints@DubaiTourism.ae. The idea is that somebody from DTCM may try to resolve this. Now as a tenant or as a visitor, how can they resolve this for you particularly if you are coming for a one-week visit? At the very least, DTCM does have the authority to perhaps put a little pressure on than individual or that company that is managing the property, either to put some pressure on them to give you a different unit or to at the very least give you a refund. That is where you file complaints. By the way, for all those who may be listening, it’s important to know that you should file a complaint with DTCM one way or another, even for example – and we hear this all too often – even if you come for one week and all of a sudden you arrive with your whole family and with suitcases in the middle of the night and you realize that unit is not available and the agent is missing in action, and you, just out of desperation, you have no other option, but you go and hire a hotel room or you find some other last minute accommodation at Airbnb, and you end up renting through someone else, you should still make the effort to file the complaint with DTCM because the role of DTCM is to keep an eye on all these parties and properties that are being rented out as holiday homes and so, at the very least, these licenses could be suspended, penalties could be imposed, and fines on companies and individuals, and a license could be cancelled altogether, and there could be pressure even put on in different ways to make sure that the fees are refunded and such. DTCM definitely has some effective power and authority to put some pressure on the holiday home community to make sure that they comply with the regulations and make sure that the visitors are provided the services that they were represented. That being said, they are only a regulatory authority. They are not a judicial authority. They can only do so much. As I said, they can suspend a license. They can pick up the phone and say you have to pay back, but they don’t have the legal authority to make enforceable decisions and judgments because they are not a judicial authority. Therefore, in Dubai in particular, and this is important, any kind of complaints like that, you would file through the Rent Dispute Centre (RDC) and that is our rental court. All holiday home disputes would be filed through RDC. Even though RDC seems a little more for rentals versus holiday accommodation, but the RDC court, and it is a court, has expanded its jurisdiction from the initial setup. For example, all the complaints regarding community dispute and service fees and kind of commonly own property disputes all fall under the umbrella of DTCM, so equally so, even the holiday home disputes have to be filed first through DTCM and then ultimately through RDC, with RDC being the Rental Dispute Centre, and they have the authority to issue judgments and decisions. This, by the way, is also good news because RDC, by its setup and its objectives, is a lot more efficient because it concentrates or focuses on the varied topics of real estate, rental properties, in particular, and common ownership, so they are best suited and in the best position to resolve these disputes quickly.
Tim Elliot: Have I missed anything? I think we’ve pretty much covered it.
Ludmila Yamalova: Yeah. I think basically that’s all. There is obviously a lot more nuances in terms of what documents need to be provided and what other additional terms, for example, owners can impose and therefore visitors may expect, such as deposits, and that said, there is no requirement that a deposit is paid, but it is an option for owners to request a deposit from visitors, and therefore whenever you have that kind of requirement or obligation, there is also an expectation of the deposit being paid back. One of the other disputes we have heard is that I have paid my deposit and we have checked out, but we have not received the deposit back. That is one of the other elements and nuances to keep in mind. It is not required that you pay by law, but certainly, if you do pay, you can understand the logic behind it for owners because they do want to have some sort of a security deposit in the event something happens, but at the same time, you need to make sure as a landlord to refund it in time because without it – we have seen this all too often – then you have a dispute. Also, just in general, there are certain minimum requirements in terms of the viability of the property that you rent out. You have to have operational toilets, showers, running water, and a/c, the elevator is working, and such. Whenever you don’t have at least some of the basic regulations that are listed throughout the different authorities, but ultimately if something like this is not available, that does give grounds for visitors to cancel the entire agreement and expect the full amount back. For example, let’s say I rented a property in Burj Khalifa, and the elevators don’t work for the few days, for one reason or another, or I don’t have access to the elevators because the agent forgot to activate my elevator access. That, in legal terms, would give you grounds to request cancellation of the agreement and reinstatement of the initial position, i.e., a full refund. But these kinds of examples are becoming all too frequent, and if they cannot be resolved by DTCM, then your next point of contact is the RDC. This is why whenever you rent, make sure you collect documents and evidence, because if the dispute arises, this is what you are going to have to rely on, and that is copies of all these documents and representations, particularly if you are going to be disputing the payment because of a promise or representation or another were not provided.
Tim Elliot: That is another episode of Lawgical, this time short-term rental regulations, holiday homes, if you like, but specifically here in Dubai, rather than the U.A.E. Our legal expert, as always, Ludmila Yamalova, the Managing Partner here at Yamalova & Plewka. Thank you.
Ludmila Yamalova: Thank you, Tim.
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