UAE Law and Practice Contributed by: Duncan Pickering, Nicola de Sylva, Sean Cope and Marta Almeida, DLA Piper Middle East LLP
6.2 Types of Commercial Leases 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 com - mon for parties to attach supplemental 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, par - ties, premises, rent and term, etc). It is common for parties to attach supplemental 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. In Abu Dhabi, Executive Council Resolution No 14 of 2016 on leasing of premises agreements prohibits rental increases of greater than 5% per annum. In Dubai (excluding the DIFC), Decree No 43 of 2013 provides for the average market rent to be set according to the Rent Index for the Emirate of Dubai, as approved by the Real Estate Regu - latory Agency. The percentage of the maximum increase in the real estate rents is determined on renewal according to the current 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 alternative terms (such as fixed increases) are likely to be respected.
Private JSC A private JSC must have a board of directors consisting of between three and 11 directors, and each director’s term must be no more than three years (subject to re-election). There must be a chairman from among the directors, and such chairman must usually be a UAE national. 5.6 Annual Entity Maintenance and Accounting Compliance The annual compliance costs for an entity invest - ing in real estate vary in line with the needs of each individual company. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time In Abu Dhabi, the law does not provide a clear distinction between a lease (a personal right) and a usufruct (a right in rem). The law states that long leases (ie, those with a term of 25 years or more) are property rights, but it does not clearly define the characteristics of leases with terms shorter than this. In practice, the DMT has deemed leases for a term of more than four years granted in favour of a non-UAE national (or a company owned in whole or in part by a non-UAE national) in relation to land outside an investment zone, and which contain rights to sublet, to be usufructuary rights (and there - fore 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, reg - istration is required (at a nominal cost) on the “Ejari” system.
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