If you’re a proud owner of an apartment in the UAE and are considering turning it into a source of passive income, it’s worth considering both available options with all the pros and cons of each.
Short-term rental (from 1 night)
[+] Easy entry and easy exit
Under the terms of the contract with the Property Management Company (PMC), you can notify them that, for example, in a month you intend to stop working with them and manage the apartment independently.
[+] Tenant search and handling all issues are the responsibility of the PMC
[+] Flexible and generally higher rental rates compared to long-term leases
[+] You can reserve specific time periods for yourself in advance and use the apartment personally or rent it out to whomever you wish
[+] Unfurnished apartments are not suitable. You’ll need to equip them at your own expense. You can rent out the apartment only if it's furnished and stocked with essential household items (appliances, tableware, microwave, toaster, hair dryer, iron, etc.). The PMC can take care of this setup for you, deducting the costs from your income
[+/-] Utility bills and service charges are handled by the PMC, but the expenses are covered by you. This also applies to cleaning services and the regular purchase of consumables
[+] Monthly settlement with the owner and transparent booking reports
[+] If you wish to sell the apartment, arranging regular viewings for potential buyers is easier
[-] The PMC does not guarantee revenue targets — they can always cite seasonality, low demand, etc.
[-] About ~20% of total revenue goes to booking platforms (Booking, Airbnb, etc.), and another ~20% is taken by the PMC
[-] Minor damages are possible. However, they are usually covered by guest deposits
Long-term rental (from 1 year)
[+] Initial understanding of expected income. However, even this can sometimes be uncertain
[+] Tenant search is usually the job of the real estate agency, but handling any arising issues is your responsibility
[+] Unfurnished apartments are suitable and, oddly enough, even preferred for long-term rentals. Additional furnishing is generally not required
[+] Utility bills may be assigned to the tenant
[+] A tenant deposit can allow you to refresh the apartment’s condition after the lease ends
[+] You can negotiate annual, semi-annual, or quarterly payment terms
[+] Minor repairs can be covered by the tenant
[-] Less flexible exit
According to the lease agreement, you must notify the tenant 90 days before the lease ends to terminate the contract
Early termination is only possible by mutual agreement
[-] Rent flexibility
Permitted rent increases depend on the initial contract rate and average market prices
Within the first 2 years, you cannot change the rental amount or other contract terms. After that, you can increase the rent no more than once a year, and only at the time of contract renewal
- If you decide to raise the rent, you must notify the tenant at least 90 days before the current contract ends
- If the tenant disagrees, they must notify you no later than 60 days before the renewal date
- If the rent increase notice was sent less than 90 days before the lease ends, the tenant has the right to reject the new rate
To help calculate permissible rent increases, Dubai’s Land Department provides a Rent Increase Calculator on the
DLD или в приложении Dubai REST.
[-] You cannot use the apartment personally during the lease term
[-] Service charges (apartment maintenance fees) are your responsibility
[-] If you want to sell the apartment, arranging regular viewings for prospective buyers is more difficult
If the combination of pros and cons isn’t clear to you yet, you might consider starting with short-term rental — given the option to shift toward long-term later on.
Good luck achieving your goals!
Stan Iceman