Commercial Lease Disputes in Dubai: Tenant and Landlord Rights Under RERA

Commercial lease disputes in Dubai sit in a different legal category than residential tenancy. Under Law No. 26 of 2007, as amended by Law No. 33 of 2008, the law treats companies as sophisticated contracting parties. Statutory protections are narrower than in residential tenancies, contract terms carry more weight, and the consequences of a poorly drafted lease or a missed procedural step are material. For businesses leasing office space, retail units, or warehousing in Dubai mainland, this article sets out how the rules actually apply: what your lease binds you to, what the RDSC can and cannot do, and where the real risk sits.

This framework applies to companies occupying commercial premises in Dubai mainland, including foreign companies leasing as a branch or subsidiary, and to property managers and landlords of commercial assets. It does not apply to entities operating within DIFC, which is governed by its own Courts and property law, or within ADGM or other Abu Dhabi free zones, which operate under separate regimes. Hotel operating agreements and employer-provided staff accommodation also fall outside the scope of Law No. 26 of 2007.

What law governs commercial leases in Dubai

Commercial leases in Dubai mainland are primarily governed by Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai, as amended by Law No. 33 of 2008. Rent increases are separately regulated by Decree No. 43 of 2013. The Rental Dispute Settlement Centre (RDSC) was established by Decree No. 26 of 2013 and holds exclusive jurisdiction over all disputes arising from registered commercial tenancy contracts in Dubai mainland.

For a broader overview of how these laws sit within Dubai's property framework, see our UAE Real Estate Laws 2025 guide.

VAT at 5% applies to all commercial leases entered into after 1 January 2018 under Federal Decree-Law No. 8 of 2017. Leases should include express VAT provisions. Where they do not, both parties remain liable to account for VAT regardless.

Ejari registration is mandatory for all commercial leases. Under Article 4 of Law No. 33 of 2008, neither party can bring a dispute before the RDSC, the courts, or any government authority without a registered Ejari contract. For companies, Ejari registration is also required to obtain or renew a trade licence.

Can a commercial tenant exit a lease early in Dubai

This is the question most commercial tenants face when business conditions change. The position is that early exit is not a statutory right and is not cost-free.

Article 7 of Law No. 26 of 2007 provides that a tenancy contract is binding on both parties until expiry. The law contains no statutory right to early termination. A commercial tenant who vacates before the lease ends is in breach of contract unless one of the following applies:

• The lease contains a negotiated break clause specifying the conditions, notice period, and applicable penalty.
• Both parties reach a mutual agreement to terminate, documented in writing.
• The landlord has materially breached the contract, providing a legal basis to seek termination through the RDSC.

Where no break clause exists and no mutual agreement is reached, the standard exposure for a commercial tenant who exits early is a penalty equivalent to two months' rent, plus potential forfeiture of the security deposit. The RDSC may also award the landlord compensation for the remaining lease term where losses can be demonstrated.

For the rules around security deposit recovery in a dispute context, see our guide on tenant rights to security deposits in Dubai. For the specific procedural steps governing early termination, see Early Termination of Tenancy Contract in Dubai.

In practice, a company facing restructuring, downsizing, or relocation should review its lease for break clauses before taking any steps to vacate. Where no break clause exists, early negotiation with the landlord, supported by a formal written record, is the lowest-cost path.

What grounds can a landlord use to evict a commercial tenant before the lease ends

Article 25 of Law No. 26 of 2007, as amended, sets out the circumstances in which a landlord may apply to the RDSC for eviction before the lease expires:

• The tenant fails to pay rent, in whole or in part, within 30 days of the landlord's payment notice, unless the contract specifies a different period.
• The tenant subleases the premises without the landlord's written approval.
• The tenant uses the premises for illegal or immoral purposes.
• The tenant causes material damage to the property.
• The tenant abandons the premises for more than 30 consecutive days without notice, unless abandonment is attributable to the nature of the business.

For these grounds, the landlord may apply to the RDSC directly. The filing fee is 1% of the annual lease amount, capped at AED 5,000.

For reasons that fall outside Article 25, including sale of the property, major renovation, or self-use by the landlord or a first-degree relative, a minimum 12 months' written notice is required. That notice must be served by notary public or registered mail. A landlord who fails to comply with this requirement cannot enforce eviction.

How are rent increases regulated for commercial leases in Dubai

Under Decree No. 43 of 2013, rent increases at renewal are capped based on the gap between the current rent and the market rate as benchmarked by the Smart Rental Index. The Smart Rental Index replaced the prior RERA Rent Calculator in January 2025 and uses real-time data. It applies to both residential and commercial properties. Landlords and tenants can run a benchmark check directly on the Dubai Land Department portal before any renewal notice is issued.

A landlord must give written notice of a proposed rent increase at least 90 days before the lease renewal date. Where the 90-day notice is not served, the increase is invalid and the tenant is entitled to continue on existing rental terms.

Where a landlord applies an increase above the permitted cap, the commercial tenant can file a complaint with the RDSC. Supporting documentation should include the Ejari certificate, the tenancy contract, the landlord's notice, and the Smart Rental Index output for the property.

How the RDSC handles commercial lease disputes

The Rental Dispute Settlement Centre, operating under the Dubai Land Department, has exclusive jurisdiction over all commercial tenancy disputes in Dubai mainland. Parties cannot contract out of RDSC jurisdiction by agreeing to private arbitration for matters that fall within its scope.

Disputes follow a two-stage process. Cases are first referred to mediation. If mediation fails, they move to a tribunal, which issues a legally binding decision. That decision can be appealed to the RDSC Appeals Committee within the timeframe specified by the Committee.

The RDSC can issue interim orders to preserve the rights of either party pending a final decision. This is directly relevant for commercial tenants facing unlawful lockout or utility disconnection, both of which are prohibited under Article 34 of Law No. 26 of 2007.

Filing fees are calculated at 3.5% of the annual rent. Complex commercial disputes, particularly those involving high-value leases, multi-party arrangements, or contract interpretation, benefit materially from legal representation at the tribunal stage.

Documents required to file a case include: the Ejari-registered tenancy contract, payment records, all relevant notices from the landlord, the company's trade licence and Emirates ID copies, and any written correspondence exchanged between the parties.

For disputes that involve broader property rights or developer conduct, see our guide on Real Estate Disputes in Dubai and Abu Dhabi. Where the dispute involves a significant commercial value and the parties have a valid arbitration clause, the DIAC vs ArbitrateAD guide explains how arbitration clauses in commercial agreements should be structured.

What rights does a commercial tenant have against an unlawful eviction

If a landlord attempts to evict a commercial tenant without following the statutory process, the tenant is entitled to remain in occupation and file a complaint with the RDSC. Article 34 of Law No. 26 of 2007 prohibits landlords from disconnecting utilities, changing locks, or taking any action that prevents the tenant from using the premises during an active lease.

Where a landlord has enforced eviction through improper means, the RDSC can award compensation to the tenant. The tribunal takes into account the remaining lease term, the financial loss caused to the business, and the circumstances of the eviction. There is no fixed formula; the tribunal exercises discretion based on the facts.

For commercial tenants, a strong documentary record, meaning the registered Ejari contract, payment receipts, and all written communications, is the most important factor in pursuing a wrongful eviction claim effectively.

Key risks specific to commercial leases

Several issues arise more frequently in commercial tenancy than in residential.

Subletting and assignment. Article 24 of Law No. 26 of 2007 prohibits tenants from assigning or subletting without the landlord's written approval. For businesses that may need to assign a lease during a company sale or restructuring, an assignment right must be negotiated before signing. Without it, the tenant is entirely dependent on the landlord's consent at the time of the transaction. For companies considering M&A involving UAE entities with leased premises, this risk should be identified during due diligence. See our UAE M&A due diligence checklist for how this typically surfaces.

Renewal rights. The law does not automatically guarantee renewal on commercial terms. If a lease expires and the tenant remains in occupation without the landlord objecting, the lease renews on the same terms for the shorter of the original term or one year. A landlord who wants the premises back at expiry is not required to offer any replacement terms.

Fitout and reinstatement. Commercial leases frequently involve significant tenant fitout investment. The contract should specify who owns the fitout at the end of the lease and whether reinstatement is required. Absent a clear clause, disputes over reinstatement obligations are among the most common issues raised at the RDSC at the end of commercial tenancies.

Property sale mid-lease. If a landlord sells a commercial property during the lease term, the buyer takes subject to the existing tenancy. The tenant's right to occupy is not affected by the change of ownership. A new landlord who intends to recover the premises for self-use or renovation must still comply with the 12-month notice requirement under Law No. 26 of 2007.

VAT on rent. Commercial lease payments are subject to VAT at 5%. Where a lease does not contain a VAT clause, a dispute can arise at renewal or on early exit as to which party bears the VAT liability. This should be addressed expressly in the contract from the outset.

RDSC vs commercial arbitration: how the processes compare

What commercial tenants and landlords should do next

For tenants already in a dispute: confirm the lease is registered on Ejari before filing with the RDSC. Compile payment records, all notices received, and the full correspondence history with the landlord. If the dispute involves a potential unlawful eviction or utility disconnection, apply for interim relief from the RDSC before vacating the premises.

For tenants negotiating a new commercial lease: the contract terms that reduce long-term exposure include a break clause with defined notice and penalty terms, an assignment and subletting right subject only to the landlord's reasonable consent, a fitout ownership and reinstatement clause, a renewal mechanism linked to the Smart Rental Index, and an express VAT provision.

For landlords seeking to recover premises or enforce rent obligations: the statutory grounds and notice requirements under Article 25 are specific. A defective eviction notice, or one served by the wrong method, can defeat an otherwise valid claim at the RDSC. Landlords with higher-value commercial assets should also consider whether their standard lease terms adequately address assignment, subletting, and reinstatement at the drafting stage.

Legal advice may be required to assess how these obligations apply to your specific lease structure, property type, and circumstances. Kayrouz & Associates' Real Estate Law and Dispute Resolution teams advise commercial landlords and tenants on lease structuring, RDSC proceedings, and enforcement.

Regulatory update checkpoint

This article reflects the position under Law No. 26 of 2007 (as amended), Decree No. 43 of 2013, and the Smart Rental Index framework as of January 2025. The Smart Rental Index methodology may be updated by the Dubai Land Department. Parties should verify current benchmarks at the time of any lease renewal or dispute filing. The DLA Piper Real World UAE Commercial Leases reference provides a useful comparative overview of how the legal framework applies across property types.

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