The Ultimate Guide to Renting Out Your Apartment in Dubai

18/07/2023
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The real estate market in Dubai presents numerous opportunities for overseas investors, with buying properties for rental purposes being a popular choice. Remote property management services and the absence of personal income taxes make Dubai an attractive destination for generating a steady stream of passive income. However, before diving into the rental market, property owners must understand the intricacies involved in renting out their properties. 

This article explores key considerations, including the choice between short-term and long-term rentals, the rental process, responsibility for repairs and utilities, and other practical aspects.

Short-term vs. Long-term Rentals: Maximizing Returns

Determining whether to opt for short-term or long-term rentals depends on various factors such as property type, location, and personal preferences. Short-term rentals typically yield higher returns, ranging from 11% to 13% ROI, while long-term rentals offer a more stable 5% to 8% ROI. However, it’s essential to consider specific regulations that may restrict short-term rentals, particularly in certain projects or buildings managed by hotel brands. Consulting with a knowledgeable real estate agent who understands the local market dynamics is crucial in making an informed decision.

Renting Out Property in Dubai for a Year: The Process

Renting out a property for the long term involves a series of steps and requirements. First, property owners must obtain approval from the Dubai Land Department (DLD). Documents such as a copy of the owner’s passport, the property’s Title Deed, and a contract with a certified real estate agency (Listing Agreement) must be submitted to the DLD. 

A registered real estate agency will then list the property on a reputable platform, attracting potential tenants. Once a suitable tenant is found, a one-year Tenancy Contract can be signed, provided the tenant is a resident of the UAE. The contract should be registered in the Ejari system, ensuring its legality and protection for both parties.

Responsibilities for Utilities, Repairs, and Maintenance

Service fees for maintaining common areas are typically the property owner’s responsibility, while the tenant pays utility bills. The tenant is responsible for minor repairs costing less than 500 AED ($140). However, major repairs and maintenance exceeding this amount are the landlord’s obligation.

Renting Out Property as a Non-Resident

Non-residents of the UAE can still open a bank account in Dubai based on their local real estate ownership. While some banks require residency for account opening, others accommodate non-resident property owners. 

Additionally, non-residents can cash rental cheques at local banks. Owning property worth at least 750,000 AED ($204,000) may qualify individuals for a three-year UAE resident visa, granting them additional benefits, including access to a Dubai bank account and an internationally usable bank card.

Rent Increase Regulations

Rental rates in Dubai are regulated by law, allowing property owners to increase the rent only by a certain percentage if the market’s average rent has risen by that percentage. The rental calculator tool assists owners in determining the permissible increase. To increase the rent, property owners must notify tenants 90 days before the contract expires. Failure to provide sufficient notice may result in tenants disputing the request, resulting in the renewal of the contract under the previous terms.

Conclusion

Renting out property in Dubai offers a profitable avenue for generating passive income. Property owners can confidently navigate the market by considering factors such as short-term vs. long-term rentals, adhering to the rental process, responsibilities, and the legal framework. Dubai’s reliable property management services, supportive regulatory environment, and potential for substantial returns make it an enticing destination for investors seeking to capitalize on the thriving real estate market.

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