Buying a Tenanted Property in Dubai — What You Need to Know

What you actually buy

When a Dubai property sells with a tenant in place, the buyer becomes the new landlord on the existing lease. The lease terms transfer in full: - Current annual rent (may be below market) - Cheque schedule (payment frequency) - Lease end date - Notice period and renewal terms - Maintenance responsibilities as defined in the contract - Security deposit (transferred to new owner)

Why tenanted properties trade at discount

A tenanted property typically sells 3–8% below comparable vacant for these reasons:

1. Below-market rent — if the current tenant's rent is 20% below market, the buyer can't immediately reset to market (RERA rent cap rules apply at renewal only)
2. No vacant possession — buyer can't move in, can't fully renovate
3. Tenant-related liability — buyer inherits any active disputes, late payments, maintenance obligations
4. Inspection limitations — viewing constraints during tenancy

When tenanted is actually preferred

For pure investors, tenanted can be better: - Immediate income from day one (no lease-up risk) - Already-vetted tenant (record of payment) - No vacancy gap during ownership transfer - Tenant relationship insulates buyer from short-term market rent volatility

We've sold tenanted units in Spain Cluster International City to investors who specifically want the income-from-day-one certainty.

Your rights as new landlord

You can: - Receive rent for the remaining contract term - Eventually raise rent at renewal (per RERA Rental Index cap) - Refuse renewal (with 90 days' written notice and valid reason) - Inspect the property with reasonable notice

You cannot: - Force the tenant to vacate before the contract ends - Raise rent mid-contract - Evict for "no cause"

Reasons that justify non-renewal (RERA Article 25)

A landlord can refuse to renew (with 90 days' notice) for: - Personal use by landlord or first-degree relative - Sale of the property (when the new buyer wants vacant possession — this is one possible negotiation) - Demolition or major renovation - Significant breach by tenant (non-payment, illegal use, sub-letting without consent)

Without one of these grounds, the tenant has a right to renewal — though new terms (rent within RERA cap) can be negotiated.

How to evaluate a tenanted property

Pre-MoU due diligence checklist:

Negotiating around the tenant

Two common approaches:

1. Buy with tenant in place, hold to maturity — best for yield buyers; price reflects below-market rent
2. Negotiate vacant-on-transfer — seller agrees to give tenant notice (or compensation to vacate); price closer to vacant comparable; closing 60–120 days

Approach (2) requires either current tenant cooperation or RERA-grounded notice, often combined with a "key money" payment to incentivise the tenant out.

What to put in the MoU

Specify: - Whether transfer is "with tenant" or "vacant on transfer" - Who pays NOC, service charges to handover date - Security deposit transfer mechanics - Tenant notice rights (if vacant-on-transfer) - Liability for tenant disputes pre-existing the sale

We mark these clauses up in every tenanted-property MoU we represent.

After transfer

• Notify the tenant in writing of the ownership change
• Ask them to update Ejari with the new owner name (online via the Dubai REST app)
• Have them re-issue any future cheques to the new owner's account
• Introduce yourself or your management team
• Honor the existing contract until renewal