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Subleasing vs. Renting in Dubai: What Is The Difference?

 

Understanding the difference between subleasing and renting in Dubai isn’t just about knowing real estate stuff—it’s about making a choice that could significantly impact your finances. 

Whether you’re a property owner looking to get a good the best ROI or you’re just eyeing the lucrative Airbnb market, you need this info.

Think of it like choosing between a bespoke suit and one off the rack. Both will cover you, but the fit, flexibility, and fine print can vary wildly. 

You dig?   

Now let’s explore the differences between these two.

 

What is Subleasing in Dubai?

Subleasing is renting an apartment as a regular tenant and then setting it up as a short-term rental on platforms like VRBO, Airbnb, or Booking.com.

Image showing a well furnished short term rental

Photo by: Jonathan Borba

It’s like being the middleman in a real estate sandwich (cheesy reference, we know). It’s also known as subletting, and here’s how it works:

  1. You rent a property from a landlord (the bread on top).
  2. You then rent out that same property to someone else (the filling).
  3. You’re still responsible to the original landlord (the bread on the bottom).

Let’s put the sandwich scenario aside for a bit. Before you jump on the subleasing trend, here’s the legal stuff you need to know:

Legal Considerations for Subleasing in Dubai

  • Written Permission: You must have written permission from your landlord to sublease.
  • DTCM License: To operate a holiday home, you need a license from the Department of Tourism and Commerce Marketing (DTCM).
  • Building Approval: Many buildings in Dubai have restrictions on short-term rentals, so check your building’s rules.
  • Ejari: Your original tenancy contract must be registered with Ejari.

Failing to comply with these subletting regulations in Dubai could land you in hot water jail with hefty fines or legal issues.

 

What is Long-Term Renting in Dubai?

Long-term renting in Dubai is the more traditional route. It’s paying for an entire apartment for 12 months or more, with the intention to live in it, or (cough, cough) — set it up for a short term rental.

In Dubai, long-term rental agreements usually look like this:

  • Agency Fee: If you use a real estate agent, you’ll often pay a 5% fee.
  • Duration: Most contracts are for 12 months, though you can find some for 6 or 24 months.
  • Security Deposit: Expect to pay a refundable security deposit, usually 5% of the annual rent.
  • Payment: Rent is often paid in 1-4 cheques per year. The fewer cheques, the better the deal you might get.

Legal Aspects of Tenancy In Dubai

Compared to cities like New York or London, Dubai’s rental market is relatively young but rapidly maturing. Dubai is that one country where the rental laws are designed to protect both tenants and landlords in the following ways:

  • Rent Increases: As a landlord in Dubai, you can only increase rent according to the RERA Rent Index and must give 90 days’ notice. You can’t just wake up one day and choose violence decide that you’ll increase rent by 20% out of thin air.
  • Eviction: Landlords need valid reasons and must provide a 12-month notice for eviction.
  • Maintenance: Major maintenance is the landlord’s responsibility, while minor upkeep falls to the tenant.

 

Subleasing Vs Renting in Dubai: How Do They Differ?

Let’s break down the key differences, but majorly from the perspective of a “tenant”:

Image showing a woman comparing subleasing Vs renting in Dubai:

Photo by: Tima Miroshnichenko

1. Lease Duration

Subleasing is typically short-term (think Airbnb) – from a few days to a few months. On the flip side, Renting is long-term, with most contracts lasting 12 months or more.

2. Costs

  • Subleasing:
    • Higher potential income
    • More variable costs (cleaning, utilities, etc.)
    • Higher upfront costs for furnishing and setup
  • Renting:
    • Fixed, predictable costs
    • Usually lower upfront costs
    • Potentially lower overall expenses

3. Legal Responsibilities

  • Subleasing:
    • You’re responsible to both the landlord and your subtenants Airbnb guests
    • You must comply with short-term rental regulations
    • You’ll need additional licenses and permissions
  • Renting:
    • Simpler legal framework
    • Direct responsibility to the landlord only

4. Maintenance and Repairs

  • Subleasing:
    • More frequent maintenance due to guest turnover
    • You’re responsible for guest satisfaction and property upkeep, unless you use a property management company like Homevy
  • Renting:
    • Regular maintenance as per the tenancy contract
    • Major repairs are often handled by the landlord

A vivid scenario of subleasing vs renting: 

Long Term Renting: Sarah rented a 1-bedroom apartment in Dubai Marina for AED 60,000 per year. Subleasing: She got permission to sublease and listed it on Airbnb. While she made AED 100,000 in a year, she spent AED 25,000 on management, cleaning, and additional wear and tear—still coming out with profit, but with more effort involved.


What Are the Pros and Cons of Subleasing As A Tenant In Dubai?

Pros:

  1. Potential for Higher Income: Dubai’s tourism boom means short-term rentals can earn 20-40% more than other rental types. During peak seasons, daily rates can skyrocket, and you’ll make more money.
  2. Flexibility in Property Use: You can easily have the place for yourself during off-peak times or when family visits. Plus, you can experiment with different rental strategies without long-term commitments.
  3. Tap into Dubai’s Tourism Market: With 17.15 million international visitors in 2023 alone, the market is HUGE, and this kinda gives you the opportunity to meet people from around the world and be a part of Dubai’s hospitality scene.

Cons:

  1. Legal Complexities and Risks: Navigating DTCM regulations can be tricky, and there’s a high risk of fines if you don’t comply with all rules and regulations.
  2. Higher Maintenance and Management Requirements: Constant turnover means you’ll need more cleaning and maintenance. You’ll also need to be available 24/7 for guest inquiries or hire a management company like Homevy (of course).

 

Is Long Term Renting More Profitable For Property Owners Than Subletting in Dubai?

Hard truth—no. 

But then, it depends on the perspective you’re asking from. If you’re a property owner considering a tenant that plans to sublease your apartment – you can propose a revenue share model, which makes it more profitable.

Imagine the scenario below;

Say you agree on a revenue share model, i.e the tenant pays you a % of the Airbnb earnings, PLUS the original yearly rent, then it’s smart to agree to the subleasing of your apartment. On the flip side — if your apartment is in a location where you don’t easily get yearly tenants, and someone proposes an offer for long term rent, even IF they plan to use it as a sublease on Airbnb—it may make sense for you to agree to such proposition, since you’re reassured of a steady yearly rent

Image showing a group of people in agreement

Photo by: Fauxels

Again, on the flip side, if you aren’t comfortable with multiple people using your apartment, then maybe you shouldn’t consider allowing a tenant to sublease your apartment.

 

What Are the Financial Costs for Tenants Planning To Sublet in Dubai?

Let’s use a hypothetical 1-bedroom apartment in Dubai Marina:

 

Aspects Costs
Annual Rent AED 70,000
Potential Annual Income AED 120,000
Furnishing (one-time) AED 20,000
Cleaning and Maintenance  AED 15,000
Utilities AED 10,000
DTCM License AED 1,500
Net Profit In 1st year AED 23,500
Net Profit In 2nd year AED 43,500

 

FAQs on Subleasing Vs Renting In Dubai

1. What Are The Typical Lease Terms For Long-Term Rentals In Dubai?

Typical lease terms for long-term rentals in Dubai include:

  • Duration: Usually 12 months, though 6 or 24-month contracts exist
  • Security Deposit: Typically 5% of annual rent
  • Payment: Often in 1-4 cheques per year
  • Notice Period: 90 days for non-renewal
  • Rent Increases: As per RERA Rent Index, with 90 days’ notice

Some of these terms can be negotiated though. Don’t hesitate to discuss your needs with potential landlords or agents.

2. How Much Can I Earn From Subleasing My Property On Airbnb In Dubai?

Earnings from subleasing on Airbnb in Dubai can vary widely, depending on:

On average, you might earn 20-40% more than long-term renting. For example, an apartment with an annual rent of AED 80,000 could potentially generate AED 100,000-120,000 through short-term rentals.

However, remember to factor in additional costs like furnishing, cleaning, and management fees when calculating your potential profit.

3. What Are The Risks Of Subleasing As A Tenant In Dubai?

Key risks of subleasing in Dubai include:

  1. Higher wear and tear on the leased property
  2. Time-intensive management responsibilities
  3. Market fluctuations affecting occupancy rates
  4. Legal issues if not properly licensed or permitted
  5. Financial risks from property damage or unpaid rent
  6. Potential conflicts with building management or neighbors

Avoid these risks by ensuring full legal compliance, proper insurance coverage, and considering professional property management services.

4. Do I Need Special Permission To Sublease My Rented Apartment In Dubai?

Yes, you absolutely need special permission to sublease your rented apartment in Dubai. Here’s what you need:

  1. A holiday home license from DTCM
  2. Written permission from your landlord
  3. Approval from your building management (if required)
  4. Registration of your original tenancy contract with Ejari

Without these, you risk HEFTY fines and potential legal action. Scure all necessary permissions before listing your property for short-term rentals.

Transparency is key in Dubai’s real estate market.

And if you’re ever in doubt of any decision, consult with a local real estate expert, property manager, or legal advisor to steer you in the right direction.

Ciao :))

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