All About The New DIFC Leasing Law

In January 2020, His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President of the UAE and Ruler of Dubai enacted and enhanced multiple laws and legislations in the Dubai International Financial Centre (DIFC) area to improve the financial ecosystem of the country. The most recent enactment is the new leasing law in DIFC, which will regulate all leasing contract between lessors and lessees in the DIFC Dubai. Keep reading to find out more about the new DIFC leasing law and how it aims to protect tenants and landlords of rental properties in DIFC.

What is the new leasing law in DIFC?

On 7 January 2020, HH Sheikh Mohammed Bin Rashid Al Maktoum enacted the new leasing law in DIFC to regulate the legal relationship between lessors and lessees in the DIFC area. As stated by the official document released by the DIFC Authority, the leasing law will:

Define the statutory rights and obligations of lessors and lessees with respect to leased premises
Provide for the resolution of disputes with respect to leases in certain instances
Provide for a centralised system for the administration of security deposits
Define the powers and functions of the registrar in relation to leases

Law No. 1 of 2020 aka the Leasing Law 2020 will come into effect on the fifth business day after enactment, excluding the day of enactment. The law has been introduced to maintain consistency in terms of rental contracts in DIFC and the rest of Dubai.

The new law aims to protect both landlords and tenants — The DIFC leasing law is a regulatory framework to protect lessors/lessees renting in DIFC

What are some of the provisions of the new law?

Since DIFC possesses the status of an offshore jurisdiction, this new DIFC rental law will offer a regulatory framework that aligns with the common legislations of onshore Dubai practices by offering the following provisions:

Introducing general requirements for leases and general obligations for lessees and lessors;
Introducing a tenancy deposit scheme for residential leases to be administered by the Registrar of Real Property;
Requiring the production of condition reports in the format required by the Leasing Law by residential lessors;
Imposing a maximum limit on security deposits collected by residential lessors and further specific provisions for residential leases; and
Introducing clearer provisions relating to the termination of leases and the disposal of goods and chattels at the property following the termination or liquidation of the lessee.

These provisions of the new property leasing law in DIFC provide clear guidelines of how landlords and tenants must conduct business when dealing with rental properties in DIFC. These DIFC laws and regulation also aims to promote real estate transactions for both residential and commercial rental properties such as offices for rent in DIFC.

ARE THERE ANY EXEMPTIONS FROM THE NEW DIFC LAW FOR RENTING PROPERTIES?

There are two specific cases where the new DIFC renting law will don’t apply. They are:

If the leased premises are used primarily for serviced apartments or hotel inventory leased as part of a hotel, provided they are appropriately licensed to do so; or
If the lease is entered into by the parties to a mortgage of the leased premises in accordance with the terms of the mortgage.

And that completes this overview of the new leasing law in DIFC. Being a vibrant commercial district in the centre of the city, DIFC has a lot to offer and this new law for rental contracts in DIFC encourages tenants to consider the area as a viable residential option. If you are someone who is interested in renting here, browse through Bayut’s listings to identify the perfect place to rent flats in DIFC. If you’d like to find out more about the area, check out our article on the pros and cons of living in DIFC.

Following the release of the new DIFC tenancy law, a new gratuity law was also introduced move to enhance the end-of-service benefits for employees. To find out more, here’s our guide on the new gratuity law in Dubai.