Property for rent in Dubai can have a number of hidden costs associated with it. It doesn’t matter if you have lived in the UAE for a long time or if you are new to the country, most people are unaware of these hidden costs. 

In this blog, we will take a detailed look at the costs associated with houses for rent in Dubai and the hidden additional expenses that come with renting. This will help you set a proper budget for your renting as well as help you make an informed decision.

Costs Associated With Property for Rent in Dubai – An Overview

When you decide to look at apartments for rent in Dubai, it can be a great opportunity to find value for your money. You can find a wide range of villas for rent in Dubai that are not only luxurious but also offer great value for your money. 

However, before you get down to signing the lease, there are a number of things you need to consider such as being familiar with the RERA tenancy law, the Dubai Rental Law as well as the hidden expenses associated with the costs of buying property in Dubai.

Apartment hunting in Dubai does not need to be a complex task, as we can help make it even simpler for you with this guide of the costs associated with houses for rent in Dubai.

So, read on and make sure you make an informed decision that is in your best interest.

AGENCY FEES

For clients who use the services of real estate agencies in Dubai, agency fees become a highly important factor. 

One important thing to remember is that even though it is a standard practice for retailers to take agent fees from clients, the exact percentage is up to the agent. This is an area which may vary from agent to agent. 

Generally, the agent fees are between 2% and 5% of your annual rent. Being aware of this extra cost will enable you to manage your budget well and plan for your renting expenses accordingly.

EJARI REGISTRATION

In the rental process there is another hidden cost that you may need to incur.

It is the cost of an Ejari registration. Ejari is a government-run program governing all tenancy contracts in Dubai. The tenant normally covers the registration costs which comprise of both the application fee and the system charges.

Here is a breakdown of the fees for better understanding:

• Innovation fee: 10 AED
• Knowledge fee: 10 AED

Additionally, if you choose to register through Real Estate Services Trustees Centers, the costs are as follows:

• Registration fee: 219.5 AED with the VAT included.
• Innovation fee: 10 AED
• Knowledge fee: 10 AED

Knowing these deposit/fee requirements aids in transparency in your rental contract and ensures that your will not be taken by surprise.

HOUSING FEE

The hidden charges tenants encounter also include municipality housing charges.

These charges are among some of those costs that are almost always left out of consideration when a potential buyer is apartment hunting in Dubai. This fee is equivalent to 5% of your annual rent, which is deducted on a monthly basis through Dubai Electricity and Water Authority (DEWA) billing system.

Knowing the housing fee is a key element of budgeting for you monthly payments of all kinds which amount to the housing costs.

SECURITY DEPOSIT

In addition to the first rental cheque, a non-recurring security deposit which is refundable is also demanded by the landlord.

In most cases it will be about 5% for the apartments for rent in Dubai which are not furnished and 10% for the apartments which are provided with the furniture. In some cases it might also be equal to a month’s rent and in such instances you will have to pay the landlord upfront.

This deposit guarantees security to the landlord as he/she will not bear any unreasonable expenses after you leave the property, due to the poor condition of the house.

Remember that a landlord can deduct the funds which he/she spends for painting and minor fixes when returning the deposit. Keeping the property retained in a similar condition as when you moved in helps you get back your full deposit.

DEWA DEPOSIT

The refundable DEWA deposit for setting up utilities is another expense that must be taken into account.

In the case of apartments for rent in Dubai, the security is AED 2,000, whereas for villas for rent in Dubai, it is AED 4,000.

Beyond this, there are non-refundable fees for DEWA services:

• Electricity and water connection (small meters): One hundred AED
• Electricity and water connection (large meters): Three hundred AED
• Registration: 10 AED
• Knowledge fee: 10 AED
• Innovation fee: 10 AED

Knowing about these DEWA charges is significant while budgeting for your rental as what between the refundable and non-refundable parts are under consideration.

MOVING COSTS

Moving into a new place in Dubai, especially if you are moving into a rental, comes with extra costs of moving your stuff from your old place to the new one.

Most of the locals turn to full-service movers and packers with expenses averaging from AED 1,500 to AED 2,500 for a one or two-bedroom flat.

Please note that these costs can also differ depending on the size of your move and any extra services required, for instance, packing, storage and insurance.

Taking these factors into account will help you achieve an overall budget that reflects the complete financial aspects.

DISTRICT COOLING

Some districts in Dubai utilize district cooling systems to reduce electricity consumption especially for air-conditioning.

If your tenancy agreement requires it, you will most likely need to register with the district cooling company serving your area. This may include a refundable security deposit which makes for another cost hidden in the rental process.

UNDERSTANDING THE COST BREAKDOWN

To be able to get some perspective, let’s take a look at a realistic example and recap all the expenses briefly for better understanding.

Let’s take a look at the potential expenses that come in when we rent a 1-bedroom flat in Dubai Marina, which costs at least AED 54,000.

• INITIAL RENT PAYMENT:

If your rent is paid in three equal installments (quarterly), your first cheque would be AED 13,500.

• AGENCY FEE:

Suppose your choice of agency charges a fee of 3%, therefore an extra payment of AED 1,620. This includes the services rendered by the estate agency.

• EJARI REGISTRATION FEE:

Another crucial element is the Ejari registration fee, which in this case would be AED 219 approximately. This legal provision guarantees the registration of your lease contract.

• SECURITY DEPOSIT:

This represents a one month security deposit that will be AED 4,500 in advance to your landlord. This is insurance protection against damage for the property owners.

• DEWA DEPOSIT:

An additional upfront cost is DEWA deposit and it amounts to AED 2,000. This deposit guarantees your utilities and basic requirements are met.

• MOVING COSTS:

The estimated moving expenses are about AED 2000. This includes items associated with the actual process of moving your items to the new property.

The total sum of these components amounts to about AED 24,000 for the price range of properties you have chosen to rent in Dubai. It is essential to note that these costs are the bare minimum and there might be other bills not factored in the above costs.

TENANT AGREEMENT RENEWAL

When you are renewing your tenancy contract in Dubai, it is very important to take into account and understand the additional costs that may surface. We will take a closer look at these aspects to make sure you have adequate preparation for a seamless renewal process.

TIPS FOR TENANCY CONTRACT REVIEW

• Ask your landlord or real estate agent to explain any unclear terms.
• Look out for hidden fees that might exist although they are not visible at the first glance.
• Be very careful when you review your tenancy contract to locate any extra costs.

THE ADDITIONAL COSTS IN DUBAI TENANCY RENEWAL

Although we have talked about all the key expenses that you, as a potential tenant, must be aware of, there are some costs associated with tenancy renewal that might not seem that big of an expense at the first glance.

However, these expenses, when stacked together, make up for a substantial sum and this is why it is important to keep them in consideration while drawing a budget for costs of buying property in Dubai.

• RENT INCREASE

In the course of the renewal of your rental agreement, the landlord can decide to increase the rent. You can use the RERA Dubai Calculator to calculate this possible rise. It is important to take into account not just the rent increase but also the Dubai Municipality housing fee which is usually equal to 5% of the annual rent.

• EJARI RENEWAL

Ejari renewal is an essential step along with the renewal of your tenancy contract, usually on an annual basis. Renewal fee of Ejari is AED 155 (excluding VAT). The extra expense will need to be accounted for in your overall budget when the time for renewal comes.

• MAINTENANCE

Another often disregarded expense is how much the maintenance will cost you for the selected property of yours. Before you move in, you might need some repairs or additional services. It is important to be aware that these potential service charges may vary between villas for rent in Dubai and apartments for rent in Dubai. Keeping this in mind also allows you to have a broad idea of the total costs of your chosen home.

Read your tenancy contract carefully before renewing it. Make sure that you have a clear grasp of all charges and also remember that landlords might include the maintenance fees that come from developers to charge the tenants.