Commercial Lease Agreement in the UAE
Dubai runs commercial and residential tenancies under the same statute but with different pressure points. Law No. 26 of 2007 as amended by Law No. 33 of 2008 applies to land and property leased in the Emirate, so a shop or office lease carries the same RERA registration duty and the same Decree No. 43 of 2013 renewal cap. What differs is Article 25(1)(d), which makes leaving business premises unoccupied a ground for eviction during the term, and Article 26, which bars re-letting non-residential property for three years after a possession award.
Governing law
In the Emirate of Dubai, Law No. 26 of 2007 as amended by Law No. 33 of 2008 applies to land and real property leased out in the Emirate, excluding property provided free of rent by natural or legal persons as accommodation for their employees.
What a commercial lease agreement has to contain in the UAE
The lease must set out a description of the property leaving no room for uncertainty, the purpose of the lease, the term, the rent and its payment method, and the owner's name where the landlord is not the owner, and it must be registered with RERA together with any amendments.
Unless the parties agree otherwise, where leased property is used as business premises and the tenant leaves it unoccupied without a valid reason for thirty consecutive days, or ninety non-consecutive days in a year, the landlord may seek eviction before the lease expires.
Law No. 26 of 2007 as amended by Law No. 33 of 2008, Art. 25(1)(d)
Where the tribunal awards the owner possession for his own use or that of a first-degree relative, he may not re-let the property for at least two years for residential property or three years for non-residential property, failing which the tenant may claim fair compensation.
Law No. 26 of 2007 as amended by Law No. 33 of 2008, Art. 26
Unless the parties agree otherwise, the tenant may not assign the use of the property or sub-lease it to third parties without the landlord's written consent.
The Decree No. 43 of 2013 renewal caps of nil, five, ten, fifteen and twenty per cent apply to real property generally in the Emirate and to landlords in special development zones and free zones, measured against RERA's Rent Index.
In the DIFC a lease must be in writing and state as a minimum the term, the rent, the rent payment dates, the permitted use, a description of the premises with a lease plan where available, and the identity of the lessor and lessee. Any term that excludes or modifies the Leasing Law is invalid.
What catches drafters out
In the DIFC, retail leases cannot carry key money. A lessor must not seek or accept key money or any consideration for the goodwill of a business carried on at retail premises, and a provision in a retail lease to that effect is void.
DIFC Leasing Law, DIFC Law No. 1 of 2020, Arts. 48 and 49(1)
The lease survives a sale. Transfer of ownership of the property to a new owner does not affect the tenant's right to continue occupying under the lease made with the previous owner, provided the lease has a fixed term.
Commercial Lease Agreement in the UAE: common questions
- Does the Dubai tenancy law cover commercial premises?
- Yes. Article 3 of Law No. 26 of 2007 as amended by Law No. 33 of 2008 applies the Law to land and real property leased out in the Emirate, excluding property provided free of rent as accommodation for employees, and Article 2 as amended defines real property to include property leased for practising any commercial activity, trade, profession or other lawful activity.
- Can a Dubai landlord evict a commercial tenant for leaving the premises empty?
- Article 25(1)(d) of Law No. 26 of 2007 as amended by Law No. 33 of 2008 allows eviction before expiry, unless the parties agreed otherwise, where the premises are used as business premises and the tenant leaves them unoccupied without a valid reason for thirty consecutive days or ninety non-consecutive days in a year. Notice for Article 25(1) grounds must be served through a Notary Public or by registered mail.
- Can a DIFC landlord charge key money for a retail unit?
- No. Article 49(1) of DIFC Law No. 1 of 2020 prohibits a lessor from seeking or accepting key money, or any consideration for the goodwill of a business carried on at the retail premises, and voids any provision in a retail lease to that effect. Article 48 confines that prohibition to retail leases.
Sources
Every statement on this page is drawn from one of these. All were fetched on .
- Law No. 26 of 2007 as amended by Law No. 33 of 2008, Art. 3, in Dubai Land Department, Real Estate Legislation of Dubai
- Law No. 26 of 2007 as amended by Law No. 33 of 2008, Art. 4
- Law No. 26 of 2007 as amended by Law No. 33 of 2008, Art. 25(1)(d)
- Law No. 26 of 2007 as amended by Law No. 33 of 2008, Art. 26
- Law No. (26) of 2007, Art. 24 (Dubai Legislation Portal)
- Decree No. (43) of 2013, Arts. 1, 2 and 3
- DIFC Leasing Law, DIFC Law No. 1 of 2020, Arts. 10 and 11
- DIFC Leasing Law, DIFC Law No. 1 of 2020, Arts. 48 and 49(1)
- Law No. (26) of 2007, Art. 28 (Dubai Legislation Portal)
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