Commercial Rent Laws in Dubai

Dubai is a futuristic city ideal for business expansion. Renting commercial property in Dubai is a cost-effective way to start a thriving business. Many international companies are setting up offices in Dubai due to its beneficial business environment, reduced government fees, and attractive visa schemes.

Eligibility Critieria

To rent a commercial property in Dubai, one must have a valid trade license. A trade license will help you identify the locations that offer different types of commercial real estate in Dubai.

Finding the Ideal Location

When renting a commercial property in Dubai, thorough research is crucial.
Also, the type of local authority for the trade license determines the availability of business properties in that area. For instance, an onshore business trade license allows renting a property in the same area. The factors that have to be considered are:

• Feasibility of the selected location
• Accessibility of the area to generate sufficient footfall
• Ensure parking spaces for customers

Registration with Ejari

Commercial rental transactions in Dubai are regulated by Ejari. Rent can be paid by direct debit for tenants, which replaces the cheque system and benefits both parties.

 Documents Required

The tenant is required to have all of the required documents in order, which includes, but is not limited to:

• Business ownership proof
• Proper license for using the commercial area
• Compliance of the property with the existing plans

If you wish to modify the rented commercial property, for instance, by installing cubicles, then you have to mention it in the lease contract. It is essential to accurately fill out all of the information regarding your business to avoid any disputes in the future. Please also be sure that the lease agreement mentions the property’s address, rental rate, and terms of the lease with an effective start date.

Alongside the documents mentioned above, the landlord may ask you to provide the following:

• Copy of your business plan
• Personal and corporate financial statement(s)
• Bank references
• Current credit scores from three reporting bureaus
• Previous/current landlord references (for existing businesses that are relocating)
• Provisional approval from the emirate’s licensing authority
• Company manager’s passport
• Signing authority letter

When renting a commercial property in Dubai, set your budget to include all hidden costs. Use a RERA Rent Increase Calculator to estimate potential rent fluctuations and find the average annual rental index for commercial properties in the area. Obtain NOC, if changing the property’s interior, you cannot change the interiors without acquiring permission.

Sub-Letting Commercial Real Estate

Subletting commercial property in Dubai once you have written approval from the landlord. It is recommended to add a clause regarding the lease agreement beforehand.

Early Termination of a Rental Contract

A commercial tenant is free to end the agreement at any time if they have the money to pay the landlord a penalty for not adhering to the agreed-upon lease period. In Dubai, the penalty is usually two months' worth of rent, which makes up for any possible losses to the landlord. It is essential to let your landlord know in advance about your plans, and depending on your circumstances, you can work out a lower penalty.

Paying Rent for Commercial Property

In Dubai, cheques are the most common payment method for rent. Tenants issue cheques from their personal or company bank account in the UAE. The number of cheques given to the landlord upon signing the agreement is negotiable but usually ranges from four to six. Alternatively, tenants can pay the entire sum in one cheque per annum. Tenants must also pay a security deposit of 5% of the total rental amount, in addition to the rent and administration fees/maintenance charges.

 

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