Security deposit in the property sector in Dubai
The security deposit plays a crucial role in Dubai’s property sector, both for tenants and landlords. It is a financial security deposit that is paid by tenants when signing a lease agreement. In this article, we will shed light on the different aspects of security deposits in Dubai, their importance, how they work, and common questions.
What is a security deposit?
The security deposit is an amount of money that the tenant pays to the landlord to cover any potential damage to the property, outstanding rent payments or other obligations during the tenancy period. This payment is usually made before moving in and is usually in the form of cheques.
Deposit regulations in Dubai
In Dubai, the security deposit is usually limited to 5% of the annual rental cost for flats and 10% for villas. These rules are set by the RERA (Real Estate Regulatory Agency) and are designed to ensure transparency and fairness in the rental process.
How does the deposit work?
- Payment: The deposit should be set out in a clear agreement in the tenancy agreement.
- Return: At the end of the tenancy, the deposit must be returned within 14 days, provided there are no damages or outstanding payments.
- Deductions: The landlord has the right to withhold the deposit to cover damages or outstanding rental payments.
Frequently asked questions about security deposits
How much is the security deposit in Dubai?
As mentioned above, the security deposit in Dubai is usually 5% of the annual rent for flats and 10% for villas.
When is the deposit refunded?
The deposit should be returned within 14 days of the end of the tenancy, provided the property is in good condition.
Illustrative example on the topic: Deposit
Imagine Fatima moves into a beautiful flat in Dubai. When she signs her tenancy agreement, she has to pay a deposit of 5% of the annual rent, i.e. AED 10,000. After a year, when her lease ends, she decides to move. Before she leaves, the landlord carries out a final inspection of the flat and finds that there are no damages. Within 14 days, Fatima receives her full deposit back, which helps her to cover the costs of the next rental flat. However, if some damage had been found during the move, the landlord would have been allowed to withhold a reasonable amount from the deposit to cover this damage.
Further information
To find out more about the property market and other important terms, visit our Estate Agency section.
