Dubai is undoubtedly enjoying the top spot globally in the tourism sector. The continued tourism growth has also bought in many options to provide accommodation facilities to visitors which include hotel apartments, hotels, and vacation home rentals.
While the real estate investors in Dubai already profit from high rental yields, the city has opened more possibilities in the short-term rental or holiday home segment. Dubai provides property owners and even tenants the option to earn even better returns while having more versatility to use or sell the property. If you are interested in taking up the short-term rental route, here are the vital things to know.
Holiday Homes in the UAE
Holiday homes are classified as furnished accommodations owned by management companies or individuals which are rented on short or long terms without the issuance of a tenancy contract and must be registered with the DTCM.
In simple terms, the DTCM classifies a holiday home as a furnished accommodation which is rented as a whole unit on a daily, weekly, monthly or annual basis without the issuance of an Ejari regulated tenancy agreement and must be registered with DTCM through licensed operators/tenants/individual homeowners. Once the homeowners or tenants apply for and receive the licence, they can then sub-let the property - whether an apartment or villa - to third parties on a short-term base (less than one year).
Dubai’s holiday homes and short-term lets rental enterprise - like that of many other global cities was once wholly controlled by large hoteliers and corporations. The industry is so potentially fruitful that Airbnb’s market share alone is estimated to make over USD 101 million in Dubai every year.
According to the studies, the net income from holiday homes is expected to be higher vs the annual rent as regular unit rental in Dubai. Consider it a country estate, or home far from home; individual retreat, holiday homes are trending the new method of procuring a profit on your property.
In Dubai, listing properties on sites such as Airbnb requires a license. The good news is, with the right support, it is easier to get this license, along with any other approvals and visas that you may need. Continue reading to find out how to get your holiday home license in Dubai.
Holiday Home Management Companies
Property Management Companies usually manage properties in Dubai. But, in the ear of short terms, renting Holiday Home Management Companies are having more significant reach and adequate marketing to showcase your Holiday Home in Dubai.
As the market, UAE is well known to adapt the newest trends and action to maintain the country to keep with top cities by being creative and innovative. Studies show Holiday Homes are soon becoming an essential and fast-moving concept in Dubai, contributing to more tourism attraction and development.
Advantages and Disadvantages of Holiday Homes in Dubai
- A right holiday rental property can cover the mortgage and create additional revenue
- A holiday rental can help offset the costs of your envisioned retirement home
- You can increase your prices due to high seasons and certain events
- Holiday rentals are growing more popular and are legal in Dubai
- Expo 2020 offers a beautiful opportunity for vacation homeowner
- Vacation home rentals can be costly to manage, and seasonal upkeep must be factored in
- Vacation rentals are affected by economic downturns and can leave you financially stranded if you are reliant on booking revenue
- Rules and regulations can change
- There is a fair amount of competition in the market with an estimated 1,600 vacation rentals in the market
- It is not always easy to vet prospective tenants, and there have been instances of less than stellar guests
How to Obtain a Holiday Home License in Dubai?
Here are the steps to consider while opening a holiday home and obtaining the license -
1. Decide on the Business Activities
It is essential to decide on business activities while opening your business in Dubai. Failure to do so can cause issues further down the line and carrying out unlicensed activities can lead to fines or even license revocation. The business activities mentioned must be from the list published by the Dubai Economic Department.
For your holiday rental business, the DED activity is ‘Vacation Homes Rental.’
2. Choosing a Business Name
Choose a business name. You must abide by a strict set of naming conventions. In short, you must avoid any offensive or profane language.
3. Obtain your License
Apply for a tourism license. The licensing activity of the company defined by the DED/DTCM is as follows -
- Vacation Home Rentals
- Activity Code - 551010
- Activity Group - Time Sharing
- License Type - Tourism
- Activity Description - Includes offering owned or rented furnished accommodation for renting to vacationers on a daily, weekly, monthly or annual basis. It requires the rental of the unit as a whole, and not partially as rooms or beds.
The documents to be submitted are -
- Completed application form
- Passport copy of the proposed shareholders
- Two colour passport size photos.
- Details of your property
You also need to get approval from the Department of Tourism and Commerce Marketing (DTCM). Once you receive your license and permission from DTCM, then only you can start your home rental business.
All DTCM licensed properties must be registered and inspected at regular intervals to ensure they comply with all standards. You will also receive an official certificate of registration from the DTCM which must be displayed within your rental property.
Requirements for Opening a Vacation Rental in Dubai
Following are the main parameters that you must know before opening your dream venture -
- The central licensing departments are DED and DTCM
- The holder of the license can rent homes located at different locations in Dubai, and each family has to be registered under DTCM as a holiday home
- License holder scope is restricted to the rental of the unit only and having the provision of a telephone line for Guests to use it in case of any emergency. The license holder cannot provide services which are out of the unit and located in the building where the holiday home is located.
- Holiday home units have to be rented as a whole only and cannot be rented partly or as a bed space.
- 10% municipality tax has to be collected separately from guests along with AED 10 for Dubai tourism dirham fees for a standard holiday home and AED 15 for deluxe holiday home per night.
- It is compulsory to obtain NOC from the unit owner that he has no objection for the unit to be subleased by the licensee.
- The license holder must have expertise in the hospitality sector.
- The DTCM will register, monitor and inspect holiday homes and hotel apartments to comply with set regulations.
- Each licensed property will have to display an official certificate of registration by the DTCM within the property.
- Licensed properties will have to be continually and adequately managed.
- Electricity and water must be offered to customers at no additional cost.
- Licensees will be obligated to participate in the electronic program of guest registration for hotel and tourism establishments.
- The license holder must provide statistics and data to the DTCM for guests.
- Licensees will need insurance to the expected specification of the DTCM for the duration of the license term.
Are you excited to Start your Holiday Home Business in Dubai?
This guide has hopefully made clear that if you are armed with the right knowledge, opening a holiday home business in Dubai doesn’t have to be overly complicated. To ensure your hassle-free procedure, we at Commitbiz can help you out.
Right from business incorporation to office space - we cover it all.
Contact us today for more information.