With residential rents currently in decline, many home-owners are looking towards the short-term letting market to maximise returns. Here we examine both the legal and practical context in which short term lettings operate in Dubai.
The accessibility of online short-term letting platforms like Airbnb has created a significant market for holiday lets in Dubai. But initially the industry was largely unregulated, and work needed to be done by the operators and the authorities to create a legal framework for the benefit of all stakeholders. The Dubai Department of Tourism and Commerce Marketing ("DTCM") was appointed to oversee the introduction and implementation of such regulations, and they worked closely with industry players like Airbnb to put in place a system to promote transparency, safety and standardisation.
Initially a home-owner could only rent out their unit on a short-term basis through a licensed corporate operator (Decree 41 of 2013). Then in 2016 the regulations were amended to allow individual home-owners to become licensed operators and to rent out their properties directly. This change was motivated by a wish to boost tourism by providing a long overdue alternative to the traditional hotel offering in Dubai.
So how do you go about registering yourself as a short term let operator in Dubai? The first step is to visit the DTCM website and complete the detailed online application form, providing information about you and about the property you wish to rent out. You need to prove ownership of the property (by uploading the title deed / DEWA bills) and prove your identity (by uploading your passport). You also need to designate the property as being either 'standard' or 'deluxe', by reference to a list of relevant factors.
Once your application has been approved, you must pay the registration fees (currently totalling in the region of AED 2,000) before collecting your licence. Additional fees are payable for each property you want to register for short term letting. These include:
- a bedroom fee (based on the number of bedrooms in the unit);
- a classification fee (to classify your units as 'standard' or 'deluxe');
- a Tourism Dirham fee (based on the number of bedrooms in the unit, for every night that the unit is rented out).
Note that by registering as an individual operator of a short term let, you agree to be bound by the DTCM regulations that govern the short-term letting market. So you need to familiarise yourself with those regulations and ensure that you comply with the obligations imposed on you at all times, to avoid exposing yourself to fines etc for breach. These obligations include:
- taking out insurance cover for the guests, the property and the building;
- ensuring the unit is let as a whole (separate room letting is not allowed);
- coordinating with the building Owners Association;
- taking and uploading to the DTCM all guest details / passport copies in advance of lettings;
- checking-in / checking-out guests;
- providing a 24/7 emergency number;
- maintaining the units to the minimum required standards;
- keeping accounts;
- making payment of the various fees due to the DTCM.
Whilst the most recent regulations allow for individuals to register as operators, many owners still prefer to retain corporate licensed operators to handle short term lettings and assume responsibility for compliance with the DTCM regulations. Corporate operators are not only licensed by the DTCM but also by the Dubai Department of Economic Development. They are usually more experienced in this field and have the personnel and resources necessary to be able to furnish and maintain your unit to the requisite standards, deal with the mechanics of daily guest check in / check out, upload guest information, replenish and refresh units immediately after each stay and ensure that all accounts are kept up to date and payments made on time. Corporate operators usually charge a percentage of income for their services.
So in summary, the short term rental market is big business in Dubai, and platforms like Airbnb are not only legal but also approved by the authorities here. But you do need to let your unit through a licenced operator, whether that's you as an individual owner, or an experienced corporate entity.