Does the rent cap apply if I short-let?

Decree 43 governs the rent of a real property unit at renewal. I could not find an official page stating how it applies to a licensed holiday home, so I am not going to assert either answer here.

Can I switch a unit from a long let to a short let mid-tenancy?

Not while a registered tenancy is running. The permit applicant has to have the right to dispose of the unit, and a sitting tenant on a registered contract is in the way of that.

Is the 5% housing fee charged on a short let?

The federal portal states it as a tenant obligation at 5% of the yearly rental charges, added to the monthly electricity and water bill. A nightly booking has neither a yearly rental charge nor a tenant, and I found no official statement of how the fee applies there.

Answers · Returns, renting and running costs

Short-term or long-term rental: which earns more?

Neither answer holds for every unit. A short let normally produces a higher gross figure and carries costs a long let does not: a tourism permit, three years of guest records, an insurance policy, and income that sits inside Corporate Tax. A long let produces a lower number that arrives without an operating business attached.

Updated October 2026 · By Ahmed Kandil

The comparison people send me is almost always a gross short-let figure set against a net long-let figure, and once both sides are net the gap narrows a long way from what the projection showed.

Here’s the issue. A long let in Dubai is something you hold, and a short let is a licensed activity with a permit, ongoing filings and a tax position, which means the two are not the same kind of asset even when they are the same apartment. The permit mechanics are on the holiday home permit page and the yield figures on my rental yield page, so this page is only the comparison.

The two sides, on the same basis

	Long let	Licensed short let
Registration	Ejari. AED 177.75 through the Dubai REST app, AED 220 at a trustee centre	Holiday home permit from the Department of Economy and Tourism, from AED 370 a year for a studio or one-bedroom, AED 300 for each additional bedroom, capped at AED 1,270
Who holds it	The landlord registers the tenancy contract	The owner as an individual, an operator company, or a first-degree relative of the owner
Moving the price up	Capped at renewal by Decree 43 of 2013: nothing where the rent is up to 10% below the area average, then 5%, 10%, 15% and 20% as the gap widens past 40%	Not governed by that decree. Nightly rates move with demand
Getting the unit back	At expiry, on the Article 25 grounds, with at least 12 months’ notice served through a notary public or by registered mail	Between bookings
Records you keep	The registered tenancy contract	Guest information to the department in its prescribed form, plus paper and electronic guest records kept at least three years
Insurance	Not required by the tenancy law	A comprehensive policy from an insurer licensed in the Emirate, covering damage guests may sustain
Corporate Tax	Excluded as Real Estate Investment, and the turnover is outside the AED 1,000,000 threshold	Inside the scope, because the activity runs through a licence
Utilities and the 5% housing fee	The tenant pays, added to the monthly electricity and water bill	No tenant to pay it

What the long let gives you, and what it takes

The cap and the notice period get presented as tenant protections, and they are, which means on the owner’s side of the table they are limits on what you can do with your own unit. Decree 43 decides how far you can move the rent at renewal, and Article 25 decides how long you wait if you want the unit back at expiry.

What you get in return is a figure that arrives without you doing anything, with the utilities and the housing fee on the tenant’s bill rather than yours, and the income excluded from Corporate Tax because a residential tenancy registered on Ejari does not run through a licence.

What the short let costs before anybody stays

What decides this is not the permit fee, it is everything the permit brings with it: the guest information going to the department in its prescribed form, three years of records in both paper and electronic form, a comprehensive insurance policy from a locally licensed insurer, and the maximum occupancy stated on the permit.

Then there is the cost side the projection leaves out, because the furnishing, the utilities, the cleaning and all of that move onto you, and so does the vacancy between bookings. I am not going to put a figure on any of those, because the only honest figure is the one for your unit, your building and your operator.

The one official example that shows what actually changes

The Federal Tax Authority’s guide for natural persons runs a worked example that does this comparison for you. A person owns sixteen apartments. Fourteen are let as holiday homes on permits, and two are let on registered tenancy contracts. The fourteen are a Business Activity conducted through a Licence and the income is within the scope of Corporate Tax. The two are excluded as Real Estate Investment.

Same owner, same stock, two tax positions, and the thing that separates them is not the amount of rent, it is whether the letting needed a licence. It is the clearest statement of the difference I have found, and it sits in the authority’s own document rather than in anybody’s market report.

Why there is no occupancy figure on this page

No authority publishes a Dubai short-let occupancy rate or an average daily rate. Which means every short-let projection you are shown is somebody’s estimate built on somebody’s sample, and it is the input the whole comparison turns on. I would rather tell you the number does not exist in a form I can stand behind than hand you one and let you plan around it.

My take

Now if you ask me, the long let suits most owners most of the time, and that is not a verdict on the market, it is a verdict on what people actually want from a second property. If you are comparing the two on a spreadsheet, it is also the one whose inputs you can check today.

The short let is a real business and it fits fewer owners than the projections imply. It suits an owner with a well-located one-bedroom who either runs it themselves or has already picked an operator and seen that operator’s own numbers, and who is comfortable filing for Corporate Tax on the income. Of course there is a downside on the other side too, and on the long let it is that your upside at renewal is set by a decree rather than by you.

So before you choose, work out your own net figure on both bases using your unit’s service charge and your own cost of furnishing it, because the one comparison that means anything is the one where both sides are net.

Questions I get asked next

Does the rent cap apply if I short-let?: Decree 43 governs the rent of a real property unit at renewal. I could not find an official page stating how it applies to a licensed holiday home, so I am not going to assert either answer here.
Can I switch a unit from a long let to a short let mid-tenancy?: Not while a registered tenancy is running. The permit applicant has to have the right to dispose of the unit, and a sitting tenant on a registered contract is in the way of that.
Is the 5% housing fee charged on a short let?: The federal portal states it as a tenant obligation at 5% of the yearly rental charges, added to the monthly electricity and water bill. A nightly booking has neither a yearly rental charge nor a tenant, and I found no official statement of how the fee applies there.

CTA, must not be dropped: the WhatsApp line above.

Sources

If you want both bases run on a specific unit before you commit to furnishing it, send me the project and the service charge on WhatsApp.

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