The Dubai International Financial Centre introduced a new leasing law that stipulates requirements and provides a protection framework for owners and tenants in the financial hub of the emirate.
Enacted by Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, the DIFC Leasing Law No 1 of 2020, which comes into effect on Tuesday, “will enhance the DIFC’s property market and reflects the centre’s commitment to maintaining a legal and regulatory framework aligned with international best practice”, the DIFC said in a statement.
The law follows several legislative changes at the DIFC in the past year to keep up with global standards, including an insolvency law to address bankruptcy-related issues and a new employment law that replaced the one that had been in place since 2005.
“Enacting the new DIFC Leasing Law will not only provide clearer guidance for thousands of landlords and tenants in the DIFC, but advancing our legislation also represents a key step for delivering on our landmark expansion plan,” said Essa Kazim, governor of DIFC.
More than 24,000 professionals work across over 2,300 active registered companies at the DIFC. It is on track to triple in size by 2024 from 2014 levels.
Since the financial hub was established in 2004, real estate laws and regulations have included the Real Property Law of 2007, which was replaced by the Real Property Law in 2018. The DIFC’s Registrar of Real Properties is responsible for approving and registrating all types of transactions related to properties in accordance with the regulations.
The purpose of the new law is to regulate the legal relationship between “lessors” (landlords) and “lessees” (tenants) in the DIFC. For example, it imposes a maximum limit on security deposits to 10 per cent of the annual rent of a residential lease. It requires a landlord give a tenant written notice of a proposed rent increase at least 90 days prior to the expiry of a lease.
It also outlines general requirements and obligations, introduces a tenancy deposit scheme for residential leases to be administered by the registrar, requires the production of condition reports and specifies provisions relating to the termination of leases.
“With the added value of being based on internationally recognised Common Law, we have full confidence the new law will enhance protections for landlords and tenants alike while asserting the DIFC as a stable and enabling environment from which to reside and prosper,” Mr Kazim said.