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Short Term Rentals in Dubai: The Investor's Strategy Guide

  • Writer: Stephen James Mitchell
    Stephen James Mitchell
  • Apr 24
  • 4 min read

Updated: May 26

Short term rentals in Dubai are excellent for passive income generation.

How to Get a Short-Term Rental License in Dubai and Start Earning from Holiday Lets


Dubai’s booming tourism sector and business-friendly regulations have made it one of the most attractive global destinations for short-term rental investment. With over 17 million visitors in 2023 and average hotel occupancy above 80%, the market for holiday homes and Airbnb-style rentals has surged.


This guide breaks down everything investors need to know—from applying for a short-term rental license in Dubai to managing listings and optimizing returns.


Why Short-Term Rentals in Dubai Make Sense for Investors


  • Higher Yields: In many areas, short-term lets earn 20–40% more annually than long-term rentals.

  • Full Foreign Ownership: No citizenship or residency required to own and lease property in designated freehold zones.

  • Strong Tourism Demand: Dubai is a year-round destination with seasonal price peaks.

  • Legal Framework in Place: Regulated by Dubai’s Department of Economy and Tourism (DET), offering investor peace of mind.


But to operate legally, you must first obtain a short term rental license in Dubai.


Step-by-Step: How to Get a Short Term Rental License in Dubai


To let out your apartment or villa for holiday stays on platforms like Airbnb or Booking.com, you’ll need a Holiday Home Permit, also known as a short term rental license.


You have two options: apply as an individual or use a licensed operator.


Option 1: Apply as an Individual Landlord


Eligibility:


  • You must be the legal owner of the property.

  • Short-term letting must be allowed by your building's owners’ association.


You must be the legal owner of the property to apply for licensing as an individual landlord.

Steps:


  1. Create an account with Dubai Tourism’s Holiday Home system.


  2. Upload required documents:

    • Title Deed

    • Passport and visa (or Emirates ID)

    • DEWA bill

    • Photos/floor plan


  3. Pay the licensing fee:


    • AED 1,500 per unit initial registration

    • AED 1,200–1,500 annual renewal


  4. Install required safety features:


    • Fire extinguisher

    • Smoke detector

    • First-aid kit


  5. Display your permit number on all listings (Airbnb, Booking.com, etc.)


Ongoing requirements:


  • Monthly guest and revenue reporting

  • Payment of the Tourism Dirham fee


Pro Tip: Ensure your mortgage provider is aware, as some restrict short-term letting.

Option 2: Use a Licensed Holiday Home Operator


If you want a hands-off investment, partnering with a DTCM-approved holiday home management company is often the easiest option.


They handle:


  • Licensing and DTCM registration

  • Guest bookings and check-in/out

  • Housekeeping and maintenance

  • Revenue reporting and Tourism Dirham collection


Fee model:


  • 20–35% commission on net rental income

  • Some operators offer a fixed annual rent option for guaranteed returns


Ideal for:


  • Overseas owners

  • Investors with multiple units

  • Landlords seeking passive income


Using a licensed holiday home operator is ideal for overseas owners and investors with multiple units.

Can You Let Any Property for Short-Term Stays?


Not always. Some buildings have homeowners' association (OA) rules that prohibit holiday lets.


Before proceeding:


  • Check with your building management or OA

  • Avoid properties in strictly residential communities unless confirmed


Areas generally friendly to short-term rentals include:


  • Downtown Dubai

  • Dubai Marina

  • JBR

  • Business Bay

  • Palm Jumeirah


Tourism Dirham Fee and Revenue Reporting


All short-term rentals must collect a Tourism Dirham from guests:


  • AED 10–15 per night, depending on the unit classification

  • Collected per bedroom, capped at 30 nights


Reporting Requirements:


  • Monthly submission of occupancy and income through the DTCM portal

  • Penalties apply for late or false reporting


Comparing Short Term vs. Long Term Rental Income

Feature

Short Term Let

Long Term Let

Annual Yield

7–10% (gross)

5–7% (gross)

Flexibility

High

Low

Hands-off Option

With Operator

Yes

Licensing

Required

No

Income Stability

Variable

Stable

While short-term rentals involve higher setup and operating costs, the net returns can be significantly greater, especially in tourism hotspots.


What You Need to Legally Operate a Short-Term Let


To summarize, here’s your compliance checklist:


  • Title deed or Oqood (if off-plan handover completed)

  • Short term rental license (Holiday Home Permit)

  • Safety compliance (fire extinguisher, detectors, first aid)

  • Clear guest terms & building rules

  • Monthly revenue reporting via DTCM portal

  • Collection and remittance of Tourism Dirham


If you’re using a licensed operator, they’ll handle all of the above on your behalf.


Financing Considerations


If you're buying a property with the intention of listing it on Airbnb or similar platforms, be aware of the following:


  • Bank Approval Required: Some banks restrict short-term letting in their mortgage terms.

  • Rental Valuation: Short-term income may not count toward mortgage affordability assessments.

  • Best Practice: Inform your lender and seek approval before listing.


Inform your lender and seek approval before listing.

Risks and Compliance Issues


Dubai has a transparent but strict regime around holiday lets. Violations can result in:


❌ Fines (starting from AED 1,000 and increasing)

❌ Listing removals

❌ License suspension or cancellation


Common Mistakes to Avoid:


  • Letting without a license

  • Failing to report guest data

  • Ignoring OA rules

  • Renting on a short-term basis as a tenant without landlord approval


Frequently Asked Questions (FAQ)


Can I rent out my apartment on Airbnb in Dubai as a foreign investor?


Yes, provided the property is in a freehold zone and you hold a valid short-term rental license in Dubai.


Can I let my apartment short-term if I am a tenant?


Only if you have written permission from your landlord and go through a licensed operator.


Can I manage the property myself?


Yes, but you must comply with all DTCM rules, including safety, cleanliness, and guest reporting.


Is capital gains tax payable on rental profits?


No, Dubai has no capital gains tax or income tax on rental profits.


What happens if I don’t get the license?


Operating without a permit can lead to heavy fines and blacklisting from holiday home platforms in the UAE.


Conclusion: Is Short Term Rental Investment Worth It?


If you own a well-located property in Dubai, the short-term rental market offers a high-yield investment opportunity, especially for units in tourism-friendly areas with strong demand.


However, success depends on:


  • Legal compliance

  • Strategic pricing

  • Professional management


Getting a short-term rental license in Dubai is not just a legal requirement—it's a gateway to tapping into the city’s thriving visitor economy.


Speak With Me Directly – Let’s Plan Your Short-Term Rental Strategy


I'm Stephen James Mitchell, Managing Director of Global Investments and a licensed broker with The Luxury Real Estate Brokers LLC.


With over 25 years in global finance and 18 years in the UAE, I help property investors like you:


  • Choose the right units for short-term letting

  • Connect with licensed holiday home operators

  • Structure deals for maximum ROI


Whether you’re in Dubai or overseas, I provide data-driven, regulation-savvy advice to help you let your property profitably and legally.


📞 Let’s have a conversation. No pressure, just clarity.





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