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How to Get a Holiday Home License in Dubai, UAE : 2024 Update

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How to Get a Holiday Home License in Dubai, UAE

Introduction

UAE’s Dubai, the fourth most visited city in the world according to Travel Medium, is on the bucket list of almost every traveller, without a doubt. After all who on earth doesn’t want to see the world’s record-breaking, iconic marvels and enjoy a fulfilling desert Safari at least once in their life?! Not just that, the city of opportunities has become the first choice for most entrepreneurs and businesspersons to set up their new ventures or expand the existing ones. The shift in tourists’ interest from traditional hotels to holiday homes for their stay in Dubai in recent years is pretty visible. Yes, the city which is infamous for its luxurious hotels, opulent resorts, and world-class hospitality is now encountering a transition in the industry. And it’s easy to see why. Not just the affordability but also there is a multitude of other reasons behind a host of tourists choosing to spend their vacation time in holiday homes over conventional hotels.

 

The appeal of holiday homes lies in their ability to provide a comfortable, personalised, and cost-effective alternative to traditional hotel stays. Whether it’s the allure of space and privacy, the flexibility and freedom to create your itinerary, or the opportunity to experience a destination like a local, holiday homes offer a unique and memorable way to enjoy vacations and travel experiences. Plus, technological innovations have also shaped the landscape of holiday home rentals. Need we say more why a holiday home in Dubai is a rewarding business opportunity?! Therefore if you have decided to become a part of a community offering world-class accommodation to discerning travellers in Dubai, the most tourist-friendly city in the UAE, then you are sure to be on easy streets. And we have got you with our years of expertise in the industry so your entrepreneurial journey is free of any bumps. Let’s start with this informational blog where we are covering important points related to your holiday home business in detail for a successful launch.

Starting a Holiday Home in Dubai

Common Reasons Why Travellers These Days Prefer Holiday Homes to Hotels

The concept of vacation homes has taken the hospitality industry by storm in Dubai and worldwide. And the reasons include:

 

1. Space and Privacy: 

Holiday homes typically offer more space compared to hotel rooms, with separate living areas, bedrooms, and often outdoor spaces like gardens or balconies. This extra space provides guests with more privacy and flexibility during their stay.

 

2. Home-like Comfort: 

Holiday homes are designed to feel like a home away from home, with fully equipped kitchens, cosy furnishings, and amenities such as laundry facilities and entertainment systems. This creates a comfortable and relaxed environment for guests, especially families or groups travelling together.

 

3. Cost-Effectiveness: 

In many cases, renting a holiday home can be more cost-effective than booking multiple hotel rooms, especially for larger groups or extended stays. Holiday homes often offer better value for money, as the nightly rate is typically lower when divided among several guests.

 

4. Flexibility and Freedom: 

Holiday homes offer guests the flexibility to come and go as they please, without the restrictions of hotel policies or schedules. Guests can cook their meals, host gatherings, and enjoy their vacation at their own pace, enhancing the feeling of independence and freedom.

 

5. Local Experience: 

Staying in a holiday home allows guests to immerse themselves in the local culture and lifestyle of the destination. Holiday homes are often located in residential neighbourhoods, providing guests with an authentic experience and opportunities to interact with locals and explore off-the-beaten-path attractions.

 

6. Personalised Service: 

Many holiday home rentals offer personalised service and attention to guests, with owners or property managers readily available to assist with any needs or requests. This customised approach can enhance the guest experience and create a sense of hospitality and warmth.

 

7. Special Occasions: 

Holiday homes are popular choices for special occasions such as family reunions, weddings, or milestone celebrations. The privacy and exclusivity of a holiday home provide the perfect setting for intimate gatherings and memorable moments with loved ones.

 

8. Pet-Friendly Options: 

For travellers with pets, holiday homes offer pet-friendly accommodation options that may not be available in traditional hotels. Having the ability to bring along furry family members can make the vacation experience more enjoyable and stress-free.

How Starting a Holiday Home in Dubai Can Be a Profitable Venture For You

Dubai’s roaring tourism industry, advantageous investment climate, tax-free environment, and strong capital appreciation potential make it an increasingly attractive proposition for investors looking to capitalise on the growing demand for holiday home properties in the city. Absolutely, investing in a holiday home property in Dubai presents a compelling opportunity for several reasons:

 

1. Booming Tourism Industry: Dubai is renowned as a top global travel destination, attracting millions of tourists each year with its iconic landmarks, luxury resorts, world-class shopping, and vibrant cultural scene. The city’s booming tourism industry ensures a steady demand for short-term accommodation options, including holiday homes.

 

2. High Rental Yields: Holiday homes in Dubai have the potential to generate attractive rental yields due to the city’s popularity among tourists and business visitors. The high demand for accommodation, especially during peak seasons and major events, can result in lucrative rental returns for property investors.

 

3. Tourism-Friendly Regulations: Dubai’s government has implemented tourism-friendly regulations and initiatives to support the growth of the holiday home sector. The introduction of licensing requirements, online booking platforms, and promotional campaigns has created a conducive environment for holiday home operators and investors.

 

4. Diverse Investment Options: Dubai offers a diverse range of holiday home properties to suit different preferences and budgets, from luxury beachfront villas and high-rise apartments to cosy desert retreats and suburban townhouses. Investors can choose properties in prime locations with excellent amenities and rental potential.

 

5. Tax-Free Environment: Dubai’s tax-free environment, including the absence of personal income tax and capital gains tax, makes it an attractive destination for property investors seeking favourable tax conditions. Investors can enjoy the potential for tax-efficient rental income and capital appreciation on their holiday home investments.

 

6. Strong Capital Appreciation: Dubai’s real estate market has historically demonstrated strong capital appreciation, driven by factors such as population growth, economic diversification, infrastructure development, and investor confidence. Investing in a holiday home property in Dubai offers the potential for long-term wealth accumulation and asset appreciation.

 

7. Quality of Life: Apart from its enticement as a tourist destination, Dubai offers residents and holiday homeowners a high quality of life with modern amenities, world-class healthcare, international schools, and diverse leisure and recreational activities. Owning a holiday home in Dubai provides investors with the opportunity to enjoy the city’s lifestyle benefits while earning rental income.

 

8. Resilience and Stability: Despite occasional market fluctuations, Dubai’s real estate sector has demonstrated resilience and stability over the years, supported by robust regulatory frameworks, proactive government policies, and a dynamic business environment. Investing in a holiday home property in Dubai can offer investors a secure and reliable asset in a rapidly growing market.

 

9. Technological Advancements: The integration of technological progress has played a significant role in the growth and evolution of the holiday home industry, particularly in Dubai. Mobile applications, availability of online platforms and marketplaces, ease of booking and comparison and secure payment systems have tansformed the holiday home industry in the Emirate, making it more accessible, efficient, and customer-centric than ever before. By embracing digital innovation and AI technologies, holiday home operators can deliver exceptional guest experiences, drive business growth, and stay competitive in the dynamic hospitality market.

 

Licensing Bodies for Holiday Home Business in Dubai

Below are the main regulatory bodies involved in the licensing process for holiday homes in Dubai:

 

1. Dubai Department of Tourism and Commerce Marketing (DTCM) is the primary regulatory authority responsible for overseeing the tourism industry in Dubai, including the licensing and regulation of holiday homes. The DTCM sets the standards, guidelines, and licensing requirements for holiday home operators and ensures compliance with relevant regulations and laws.

 

2. The Real Estate Regulatory Agency (RERA), as part of the Dubai Land Department (DLD), plays a role in regulating the real estate sector in Dubai, including holiday home rentals. RERA oversees the licensing and registration of real estate brokers, developers, and property managers, ensuring transparency, fairness, and accountability in the industry.

 

3. Dubai Municipality is responsible for enforcing building codes, zoning regulations, and health and safety standards related to holiday home properties. Dubai Municipality may conduct inspections of holiday homes to ensure compliance with building and hygiene requirements.

 

4. Dubai Economic Department (DED) is the main regulatory authority for business licensing and commercial activities in Dubai. Holiday home operators may need to obtain a trade license from the DED to legally operate their business, in addition to the specific holiday home license from the DTCM.

 

5. The Dubai Tourism Vision 2020 Committee is tasked with implementing the strategic objectives outlined in Dubai’s Tourism Vision 2020 initiative, which aims to position Dubai as the leading tourism destination in the world. The committee may play a role in shaping policies and regulations related to holiday homes in alignment with the overall tourism strategy.

 

6. Free Zone Authorities come into the picture when holiday home properties in Dubai are located within Dubai free zones, which are designated economic areas offering special incentives and regulations to attract foreign investment and business. Free zone authorities may have specific licensing requirements and regulations for holiday home operators within their jurisdiction.

 

Property Types Eligible to be Holiday Homes in Dubai

The property owners or operators seeking to convert their residential villas or apartments into holiday homes must undergo a licensing and approval process with the DTCM. This process involves submitting an application, providing necessary documentation, and potentially undergoing inspections to verify compliance with regulatory requirements. Plus, the intended property must comply with various regulations and standards set by the DTCM, including building codes, zoning regulations, health and safety requirements, and fire safety protocols

 

In Dubai, various types of properties can qualify for use as holiday homes, subject to certain regulations and licensing requirements set by the DTCM. To qualify for holiday home rental in Dubai, the chosen property can be any of the below types: 

 

1. Apartments and Condominiums: Apartments and condominium units are popular choices for holiday homes in Dubai, particularly in residential complexes and high-rise buildings located in popular tourist areas such as Downtown Dubai, Dubai Marina, Jumeirah Beach Residence (JBR), and Palm Jumeirah. These properties often offer amenities such as swimming pools, gyms, and access to nearby attractions and entertainment options.

 

2. Villas and Townhouses: Villas and townhouses provide spacious and private accommodation options for holidaymakers, especially families or larger groups travelling together. These properties are commonly found in gated communities, residential neighbourhoods, and luxury developments across Dubai, offering amenities such as private pools, gardens, and outdoor entertainment areas. Furthermore, commercial villas nestled on prominent roads also present a persuasive choice for holiday home rentals in Dubai. This is to note that the residential villas within gated communities must consist of at least four units (either hotel apartments or villas).

 

3. Serviced Apartments: Serviced apartments are fully furnished and equipped accommodations that offer hotel-like amenities and services, including housekeeping, concierge, and 24-hour security. This property type is ideal for guests seeking a combination of comfort, convenience, and flexibility during their stay in Dubai, with options available in various locations across the city.

 

4. Holiday Villas and Chalets: Holiday villas and chalets are standalone properties located in suburban or rural areas of Dubai, offering a tranquil retreat away from the hustle and bustle of the city. These properties are the perfect candidates to become holiday homes as they often feature picturesque surroundings, such as desert landscapes, golf courses, or waterfront locations, providing guests with a unique and immersive holiday experience.

 

5. Desert Resorts and Camps: Desert resorts and camps offer guests the opportunity to experience traditional Arabian hospitality and desert adventures in Dubai’s vast desert landscape. These properties provide luxury tented accommodations, cultural activities, and desert safari experiences, allowing guests to immerse themselves in the rich heritage and natural beauty of the UAE.

 

6. Waterfront Properties: Waterfront properties, including beachfront apartments, villas, and resorts, are highly sought-after holiday homes in Dubai, offering stunning views of the Arabian Gulf and direct access to pristine beaches and water sports activities. These properties provide guests with a luxurious seaside retreat and a chance to enjoy the sun, sand, and sea in a tropical paradise.

 

Holiday Home License Requirements in Dubai

The prerequisites for ownership and investment are sharply defined. The applicant of the holiday home license in Dubai should provide a copy of the title deed or sales purchase agreement, the latest DEWA bill, and a RERA-registered tenancy contract, if applicable, for registration. Furthermore, the chosen activity for the holiday home trade license must be ‘Vacation Homes Rental’ and the name on the property’s title deed or tenancy contract must be in agreement with the license holder’s name on the account used for registration. This is important to note that landlords are allowed to register up to eight units, however, tenants can register only one unit that too with their landlord’s permission. Ahead is an overview of the key ownership and investment requirements for obtaining a holiday home license in Dubai:

1. Property Ownership or Authorisation: 

To qualify for a holiday home license, the property owner must be the legal owner of the property or have authorisation from the owner to operate it as a holiday home. Proof of ownership, such as title deeds, or a no-objection certificate (NOC) from the property owner, may be required during the licensing process.

2. Property Eligibility: 

The property intended for use as a holiday home must meet certain eligibility criteria set by the DTCM. This includes compliance with building regulations, safety standards, and zoning requirements, as well as approval from relevant regulatory authorities.

 

3. Investment in Property: 

Property owners seeking to obtain a holiday home license must have made a significant investment in the property, either through purchase or long-term lease agreements. The investment in the property demonstrates the commitment of the owner to the holiday home business and ensures the property meets the required standards for guest accommodation.

 

4. Compliance with Regulations: 

Property owners must ensure that the holiday home complies with all regulations and standards set by the DTCM for holiday home rentals. This includes adherence to building codes, health and safety requirements, fire safety protocols, and other relevant regulations governing the operation of holiday homes in Dubai.

 

5. Financial Stability: 

Property owners must demonstrate financial stability and capability to operate a holiday home business effectively. This may involve providing financial statements, bank guarantees, or other evidence of financial viability to support the ongoing operation of the holiday home.

 

6. Insurance Coverage: 

Property owners are required to obtain appropriate insurance coverage for the holiday home property, including property insurance, liability insurance, and contents insurance. Insurance coverage protects against potential liabilities, damages, and unforeseen circumstances, ensuring the safety and security of guests and the property.

 

7. Investment in Amenities and Facilities: 

Property owners are encouraged to invest in amenities and facilities that enhance the guest experience and meet the expectations of holidaymakers. This may include furnishing the property with quality furnishings, providing essential amenities and utilities, and offering additional services such as housekeeping, concierge, and maintenance.

 

Financial Obligations for Holiday Home Business Owners in Dubai

Owning a vacation home in Dubai entails various financial obligations, including upfront costs, ongoing expenses, and potential taxes. Here’s an overview of the financial obligations associated with vacation homes in Dubai:

 

1. Property Purchase or Lease Costs: The initial financial obligation for acquiring a vacation home in Dubai includes the purchase price or lease costs of the property. Property prices vary depending on factors such as location, size, amenities, and market conditions. Additionally, if you opt for a lease agreement, you’ll need to consider the rental payments and any associated fees.

 

2. Registration and Licensing Fees: Property owners intending to rent out their vacation homes as holiday rentals are required to obtain a holiday home license from the Dubai Department of Tourism and Commerce Marketing (DTCM). This process involves paying registration and licensing fees, which vary depending on the type and size of the property.

 

3. Maintenance and Repairs: Maintaining a vacation home in Dubai entails ongoing expenses for repairs, maintenance, and upkeep. This includes routine maintenance tasks such as landscaping, cleaning, pest control, and HVAC servicing, as well as occasional repairs and renovations to ensure the property remains in good condition.

 

4. Utilities and Services: Property owners are responsible for covering the costs of utilities and services for their vacation homes, including electricity, water, gas, internet, and cable TV. Additionally, if the property is part of a gated community or homeowners association (HOA), there may be fees for community amenities and services such as security, landscaping, and waste management.

 

5. Insurance Coverage: It’s essential to obtain comprehensive insurance coverage for your vacation home in Dubai to protect against potential risks and liabilities. This includes property insurance to cover damage or loss to the structure and contents of the property, liability insurance to protect against legal claims from guests or third parties, and other specialised coverage as needed.

 

6. Property Taxes: In Dubai, there is no property tax levied on residential properties, including vacation homes. However, property owners may be subject to other taxes and fees, such as municipality fees, service charges, and housing fees levied by developers or homeowners associations. Not to mention the corporate tax (if applicable), introduced of late in 2023 at a standard rate of 9%.

 

7. Income Tax Implications: Rental income generated from vacation homes in Dubai is subject to income tax regulations in the owner’s home country. It’s essential to consult with tax advisors or legal experts to understand the tax implications of renting out your vacation home and ensure compliance with relevant tax laws and regulations.

 

8. Financing Costs (if applicable): If you financed the purchase of your vacation home through a mortgage or loan, you’ll have ongoing financial obligations for loan repayments, interest, and associated fees. It’s important to factor in these financing costs when budgeting for your vacation home expenses.

 

9. Tourism Dirham: Holiday homeowners are responsible for collecting the Tourism Dirham from their guests and remitting it to the DTCM. The amount of the Tourism Dirham varies from AED 7 to AED 20 depending on the type and standard of accommodation, with different rates for hotels, hotel apartments, and holiday homes. It is necessary to update the online tourism Dirham system by the 15th of each month to keep late fees at bay.

 

The Application Process for Obtaining a Holiday Home License in Dubai

Obtaining a license from the DET and DTCM for your vacation home in Dubai boosts your venue’s trustworthiness among potential guests by ensuring them that your property features vital safety features and conveniences and adheres to the high standards expected in Dubai. Here’s a step-by-step guide to the holiday home license application process in Dubai:

 

Step 1. Preparation and Documentation: 

Before starting the application process, ensure you have all the necessary documentation and information ready. This may include:

  • Proof of property ownership or authorisation from the owner (e.g., title deeds, lease agreements, or no-objection certificate)

  • Copies of valid identification documents (e.g., passport or Emirates ID) for the property owner(s)

  • Floor plans, photographs, and descriptions of the property

  • Any relevant permits, approvals, or NOCs from regulatory authorities

 

Step 2. Online Application Submission: 

Submit an online application for a holiday home license through the DTCM’s official website or online portal. Provide accurate and complete information about the property and its ownership, as well as any additional details required by the application form.

 

Step 3. Application Review and Verification: 

The DTCM will review your application and verify the information provided. This may involve conducting background checks, confirming property ownership, and ensuring compliance with regulatory requirements.

Step 4. Inspection and Compliance Assessment: 

If necessary, the DTCM may conduct an inspection of the property to assess its suitability for use as a holiday home and verify compliance with regulations and standards. Ensure that the property meets all safety, hygiene, and licensing requirements to pass the inspection successfully.

Step 5. Payment of Fees: 

Pay the required fees for registration, licensing, and any other charges associated with the holiday home license application process. The fees may vary depending on factors such as the type and size of the property.

Step 6. Issuance of License: 

Once the application has been reviewed, verified, and approved, the DTCM will issue the holiday home license to the property owner. The license will specify the terms and conditions of operation, including the duration of validity, permitted activities, and any restrictions or obligations.

Step 7. Compliance and Renewal: 

Ensure ongoing compliance with all regulations, standards, and licensing requirements set by the DTCM for holiday home operations. Renew the holiday home license as per the specified renewal period to maintain legal authorisation for operating the holiday home.

Step 8. Commencement of Operations: 

Once you have obtained the holiday home license, you can commence operations and start renting out the property to guests as a holiday home. As a licensed property you are also good to advertise your accommodation on some of the world’s top travel marketplaces such as Booking.com, Agoda, and Airbnb, to name some, to attract travellers seeking temporary housing options in Dubai. Adhere to all regulatory requirements, provide quality services to guests, and maintain the property in good condition to ensure a successful and compliant operation.

 

Meet With One of The Best Holiday Home Business Setup Advisors in Dubai

If you’re looking to engage with a reputable holiday home business setup advisor in Dubai who can help you transform your real estate investments into a profitable source of income, get in touch with our team at LFL Group, hands-on with Dubai’s thriving vacation home market and the licensing process.

Contact LFL International Group today and unlock your full potential in the UAE.

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● Email:dubai@lfl-group.com

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