Holiday Home Rules in Dubai

You can let a Dubai property to short-stay guests, but only within a licensing system run by Dubai’s Department of Economy and Tourism (DET). A DET (formerly DTCM) licence and a holiday home permit are required. You either hold the licence and permits yourself or let the unit through a licensed holiday home operator.

This guide explains the rules as set out in Dubai law, what an owner must do, and what to check before you buy a unit you plan to let short term. It is general information. DET’s own pages set the current steps and fees, so check them before you apply.

Short-term rental in Dubai is regulated

The legal basis is Decree No. (41) of 2013, which regulates leasing out holiday homes in Dubai, and its implementing bylaw, Administrative Resolution No. (1) of 2020. Both name the Department of Tourism and Commerce Marketing (DTCM), whose role now sits with DET.

The decree defines a holiday home as a furnished property unit designated for the activity. The activity means leasing out holiday homes regularly and on an ongoing basis, or renting them in order to sublet to guests. The decree applies across Dubai, including special development zones and free zones such as the Dubai International Financial Centre.

No person or company may carry out the activity without a DET licence. DET sets the conditions, inspects holiday homes, handles complaints and can impose fines, suspend the activity or cancel a licence.

Two ways to operate: as owner or through an operator

The decree allows both individuals and companies to be licensed. In practice this gives an owner two routes.

Letting it yourself. You apply to DET for the licence and for a permit for your unit, then run the holiday home: taking bookings, signing guest contracts, registering guests and looking after the property. DET’s service for this is Apply for a holiday home permit.

Using a licensed operator. A company licensed by DET as a holiday home operator manages the unit and its guests. DET’s service for companies is Register as a Holiday Home Operator. Before you sign, check that the operator’s licence is valid, who holds the permit for your unit, and how income, costs and damage are handled.

A licensee must not act as a go-between for guests and anyone who is not licensed by DET. That is one reason to check an operator’s licence first.

Permit steps for owners

DET’s current service page, Issue a new Holiday Homes permit, sets out today’s process. Under the implementing bylaw, the main steps are:

1. Apply online. The permit application goes through DET’s electronic portal on the prescribed form.
2. Prove your identity and your right to the unit. The bylaw asks for a copy of the owner’s or tenant’s passport or Emirates ID, and proof that the applicant has the right to dispose of the unit.
3. Meet the technical requirements. The unit must meet the specifications and have the fittings that DET’s guide prescribes for its classification.
4. Allow inspection. DET may visit the unit and ask for further documents.
5. Pay and receive the permit. Once approved, you pay the prescribed fees and DET issues the permit. If it rejects an application, it gives the reasons, and you may apply again.

Classification. Holiday homes are classified as deluxe or standard against DET’s criteria. DET issues a classification certificate for each holiday home and may upgrade or downgrade it later.

Fees for licences and permits are set by a resolution of the Chairman of Dubai’s Executive Council and can change. Check the current amounts on DET’s service pages.

Eligibility conditions

Under the bylaw, apartments and villas (in a compound or independent) can hold a permit, and the whole unit must be let rather than rooms or bed spaces. In more detail, the unit must:

• be in an area where DET, together with other authorities, allows the activity;
• be an apartment in a building designated for holiday homes, an apartment in a residential building, a villa in a compound, or an independent villa;
• be furnished and meet DET’s technical standards for its classification;
• be let as a whole, not as separate rooms or bed spaces; and
• not be covered by a sale and purchase agreement that explicitly rules out holiday home use.

The bylaw also says that developers, owners of jointly owned property, and property management and leasing firms must enable licensees to carry out the activity in line with their licences and permits.

Ongoing obligations

Holding a permit brings duties for as long as you operate. Under the decree and bylaw, a licensee must, among other things:

• Renew on time. A permit is valid for one year, renewable. A licence can be granted for a longer term if its fees are paid for the whole term.
• Register guests. Provide DET with guest information as it requires, and keep guest records for the period the rules set.
• Use proper contracts. Sign a holiday home lease contract with each guest, give them a copy, and charge only the costs agreed in it. Electricity and water must not be charged to guests on top.
• Insure. Hold a comprehensive insurance policy from an insurer licensed in Dubai, covering damage guests may suffer, for the whole licence term.
• Keep standards. Keep the home clean, habitable and maintained, take reasonable safety measures, respect the maximum occupancy on the permit, and provide emergency and guest service contact numbers that are available around the clock.
• Advertise accurately. Include your approved trade name and permit number in every print and digital advert, and never describe a holiday home in a misleading way.
• Handle complaints. Display a guest complaints policy and record how each complaint is dealt with.

DET can suspend or revoke a permit if the rules are broken, if a licence or permit is not renewed in time, or if the unit stops meeting the permit conditions.

Off-plan buyers: check before you buy

If short-term letting is part of your plan for an off-plan unit, check these points before you sign:

• The sale and purchase agreement. Read it for any clause that rules out holiday home use. Our checklist for off-plan sales agreements covers what else to look for.
• The area. Ask DET, or check its service pages, whether the activity is allowed in the area where the project is.
• The building’s rules. Ask the developer or the owners association how holiday home guests are handled in practice, for example access cards and move-in rules.
• Timing. A permit is issued for a furnished unit that meets DET’s standards. In practice, that means after handover and fit-out, so plan for a period with no income.

Short-term vs long-term letting: the trade-offs

Neither approach is better in general. They are different businesses.

The tax point matters. The Federal Tax Authority’s Corporate Tax guide on real estate investment for natural persons treats a DET holiday home licence as a licence for Corporate Tax purposes. Income from holiday homes let under one is therefore not covered by the exclusion for personal real estate investment and may be taxable, subject to the thresholds in the Corporate Tax rules. Our guide to UAE property taxes for individuals explains this in more detail, and a tax adviser can confirm how it applies to you.

To compare the two options on your own numbers, work out net yield for each, as in our guide to calculating rental yield. Long-term letting is covered in renting out your Dubai property.