UAE Law and Practice Contributed by: Duncan Pickering, Nicola de Sylva, Sean Cope and Marta Almeida, DLA Piper LLP
6.4 Typical Terms of a Lease The terms of a lease may be freely negotiated between the parties, provided that the contents of the lease agreement do not contravene law. Both the Abu Dhabi and Dubai landlord and tenant laws contain provisions in relation to repair and main - tenance, lease term, termination, and eviction, which apply where the lease is silent and/or to the extent required by law. Certain provisions are mandatory and cannot be contracted out of, while others operate as default rules and may be overridden by express con - tractual terms, provided such terms do not conflict with applicable legislation. In practice, most leases include detailed express provisions dealing with these matters. 6.5 Rent Variation The rent payable must be specified in the lease agree - ment, and is generally subject to fixed or index-linked increases at regular intervals. Turnover rents (along - side a base rent) are common in retail lettings. Market rent review provisions are included in some leases, but these are less frequently used than mature markets, since historically reliable comparable trans - actions can be difficult to establish due to the lack of publicly available market data. Recent initiatives have seen the DLD launch the Smart Rental Index for residential properties (which takes into account the building’s state of repair and condition). It is possi - ble this will be extended to commercial properties in the future. In addition, Abu Dhabi Real Estate Cen - tre (ADREC) launched the first official rental index in August 2024 with indicative rental values for residen - tial, commercial and industrial properties across the Emirate. 6.6 Determination of New Rent Revised rents may be determined by applying a fixed or index-linked percentage increase, or by determin - ing the open market rent. 6.7 Payment of VAT VAT applies to rent payable for a commercial property.
fructuary rights (and therefore not capable of being granted to a non-UAE national outside an investment zone). In Dubai, a long lease is one with a term of ten years or more, and these require registration at the DLD. For leases of less than ten years, registration is required In Abu Dhabi, for leases of less than four years, the DMT requires parties to use a mandatory form of lease that records key provisions (eg, parties, premises, rent and term, etc). It is common for parties to attach sup - plemental terms to this mandatory form. For leases of over four years, the form of lease is not mandated. In Dubai, for leases of less than ten years, the DLD requires parties to use a mandatory form of lease that records key provisions (eg, parties, premises, rent and term, etc). It is common for parties to attach supple - mental terms to this mandatory form. 6.3 Regulation of Rents or Lease Terms Rent in the UAE may be freely negotiated between the parties to the lease, subject to mandatory statutory controls on increases at renewal. In Abu Dhabi, Executive Council Resolution No 14 of 2016 on leasing of premises agreements prohib - its rental increases of greater than 5% per annum on renewal. (at a nominal cost) on the “Ejari” system. 6.2 Types of Commercial Leases In Dubai (excluding the DIFC), Decree No 43 of 2013 provides for the average market rent to be set accord - ing to the Rent Index for the Emirate of Dubai, as approved by the Real Estate Regulatory Agency. The percentage of the maximum increase in the real estate rents is determined on renewal according to the cur - rent annual rent amount compared with the average rent for a similar property. While these restrictions apply to both residential and commercial property, in practice, for commercial property, agreed-upon alter - native terms (such as fixed increases) are likely to be respected.
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