As Vice President of the UAE and Ruler of Dubai, His Highness Sheikh Mohammed Bin Rashid al Maktoum enacted and enhanced multiple laws and legislations in the Dubai International Financial Centre (DIFC) area to improve the financial ecosystem of Dubai. DIFC passed the new leasing law, which will regulate all leasing contracts between lessors and lessees in DIFC Dubai.
In DIFC, what is the new lease law?
HH Sheikh Mohammed Bin Rashid Al Maktoum enacted the new leasing law in DIFC on 7 January 2020 to regulate the legal relationship between lessors and lessees in the DIFC area. According to the official document released by DIFC Authority, the leasing law will:
- Identify the statutory rights and obligations of lessors and lessees regarding leased space
- Disputes regarding leases may be resolved in certain instances
- Provide a system of centralized administration for security deposits
- Give the registrar specific powers and duties regarding lease agreements
To maintain consistency in leases within DIFC and throughout Dubai, Law No. 1 of 2020 aka the Leasing Law 2020 was enacted.
What is this law?
As DIFC is an offshore jurisdiction, the new DIFC rental law will provide a regulatory framework that aligns with onshore Dubai practices by offering provisions such as:
- The general requirements for leases, including the obligations of lessees and lessors;
- The Registrar of Real Property will administer a deposit scheme for residential leases;
- Leasing laws should require residential lessees to submit condition reports in the format specified by the lease law;
- A maximum limit on security deposits collected by residential lessors, and specific provisions for residential leases;
- Clarifying the termination of leases and disposition of property after the tenant or lessor liquidates.
As a result of these provisions of the new property leasing law, landlords and tenants in DIFC now have clear guidelines on how to conduct business when renting properties. DIFC laws and regulations also aim to promote real estate transactions for both residential and commercial rental properties.
Is it possible to rent properties without having to comply with the new DIFC law?
There are two specific cases where the new DIFC renting law will don’t apply. They are:
- A leased property should be used primarily for serviced apartments or hotel inventory if it is licensed to do so; or
- In the event that the lease is entered into by the parties to a mortgage of the leased premises.
This concludes this overview of the leasing law in DIFC. A vibrant commercial district in the city center, DIFC has much to offer and this new law for rental contracts in DIFC encourages tenants to consider the area as a viable residential option.