Many of us are planning to escape the summer heat by hopping on a plane and going virtually anywhere cooler. And with the growing popularity of sites like Airbnb, some smart cookies have hoped to cover some of their holiday costs by renting out their Dubai pads while they’re out of town.
Dubai has high demand for short-term rental accommodation and while the tourists are scarce during summer, the business executives continue to flow through. Many would prefer to stay in a home for their few weeks to few months stint instead of a hotel or serviced apartment. It’s a more authentic experience and you often get more for your money. These days more and more companies are implementing travel expense policies that forbid hotel accommodation for extended stays.
Twelve month rental contracts are the norm in Dubai. But a property can achieve up to 50 per cent more when rented on a monthly basis; and considerably more on a weekly and daily basis.
Case in point; furnished one-bedroom apartments in Cayan Tower in Dubai Marina are currently advertised on propertyfinder.ae on a short term rental basis for Dh15,000 per month; Dh4,200 per week and Dh700 per day. Similar unfurnished apartments rent for Dh120,000 per year.
Garden Home villas on the Palm Jumeirah, which rent for Dh350,000 – Dh850,000 per year, are available on a short-term basis for Dh20,000 to Dh50,000 per week and Dh60,000 to Dh150,000 per month. If you’re lucky enough to call one of these villas home; it’s tempting to cash in.
But before you get carried away, please note that privately renting out your grand or humble abode or sub-renting without the proper permissions is strictly illegal in Dubai.
If you’re a tenant, first you need a no objection certificate from your landlord to sublet. And whether you’re a tenant or an owner you need to comply with Dubai’s Department of Tourism Commerce Marketing (DTCM) regulations and obtain the appropriate license and permissions.
The DTCM issued a timely stern warning earlier this month outlining hefty fines of up to Dh100,000 for those found in breach.
According to the DTCM, the regulations are about improving transparency and protecting prospective short-term tenants from fraudsters and unprofessional and unlicensed operators. The cynics among you could view the timing of this announcement as a deliberate scare tactic to reduce competition to hotel operators who are staring down a particular tough summer of low occupancy levels and/or to generate fee revenues. Semantics perhaps but for most of us contemplating renting out our places during summer, licensing requirements, fees and the threat of fines will likely push the idea quickly into the too hard basket. It needn’t be.
The solution lies in listing your property and engaging the services of a licensed short-term professional who can take care of everything from go to woe.
“The government’s objective is to standardise and regulate supply and ensure that tourists experience a certain quality of accommodation when they are staying in Dubai,” says Simon Kennedy, director at Edwards and Towers, a Dubai real estate broker with a specialised short term rental division. “It will help to reduce issues such as building access, false advertising and payment fraud and will ensure that the property meets a certain standard.”
OK you’ve convinced me. I’ll give it to a specialised short term agent, but what’s it going to cost me?
The answer is a decent chunk of the pie. Short term specialists typically charge 20 per cent to 30 per cent of the bookings made as opposed to the 3 per cent – 5 per cent charged to manage a property leased on an annual basis. While that might seem a lot, the work involved is considerable. They earn their money according to Mr Kennedy.
“A full service includes advertising, booking, accounting, inventories, housekeeping, maintenance, check-ins, checkouts, handling customer complaints, linen and towel change, handling additional customer requirements, maintenance issues, registering every guest passport with DTCM, providing welcome packs to the guests, and much more,” he explains.
All things you probably don’t want to handle yourself.
Be wary though of those offering lower management fees. They are unlikely to include all of the above and all that you and your short-term tenant need. And despite the largish management fees, more and more landlords in Dubai are opting to furnish their investment properties and offer them for short-term rental. Proponents claim the net income is higher for short term, but much depends on the competency of the management company. A good one will have it occupied 75 per cent of the year.
It is important to note that not all real estate companies have the appropriate license nor the expertise to offer a short-term service. The vast majority of agents advertising property for rent in Dubai are purely leasing agents that do not provide ongoing property management.
Those specialising in short term are even fewer. Anything less than a six-month lease is considered short term and requires a separate DTCM license. On propertyfinder.ae we only allow appropriately licensed operators to list properties for rent on a monthly, weekly and daily basis. Many of those you’ll find elsewhere, may technically be illegal. So be please careful and enjoy your summer.