Foreign companies can lease property
anywhere within the Emirate of Abu Dhabi.

A condition to obtaining an Abu Dhabi
Trade Licence is that the prospective company either already owns or has already taken a lease of property from which to operate the business.

There are some exemptions to the Abu
Dhabi landlord and tenant legislation law, the main one being for property let to the hotel/tourist industry (including furnished apartments).

Unlike in the UK, Abu Dhabi landlord and
tenant law does not differentiate between residential and commercial property.

The Rental Disputes Committee of
Abu Dhabi deals with rental disputes - a panel, predominantly of local businessmen, apply their interpretation of the legislation to the circumstances before them and are not bound by previous decisions.

So, what is a lease in Abu Dhabi?

Again unlike the UK, they are personal
contracts of hire and not interests in land.

Alternative rights of occupancy that do
create rights in property are available to UK nationals within investment areas but generally a lease will be sufficient for most office users.

What are the key features of an Abu Dhabi commercial lease?

A 1 year renewable term is the norm,
although leases of 3 to 5 years are increasingly being offered.

Rents are payable annually in advance, although some landlords will now accept multiple cheques.

Most rents will include the costs of the services provided by the landlord (repair, security etc) but the tenant remains responsible for the utilities it uses.

Rents tend to be reviewed annually -
see below.

Rights to be aware of under local law

Leases automatically renew at the end
of the term for the same length as the initial term (unless notice to terminate is served). 3 months notice is required for commercial premises.

Tenants have the benefit of a 4 year period
of secure occupation during which the only grounds for removing a tenant are: non-payment of rent; unauthorised assignment; excessive occupation; unauthorised or unlawful use; redevelopment; or landlord’s own occupation. Alternatively, the landlord can ask the tenant to leave after 2 years on the basis that the tenant’s continued occupation would cause ‘grave loss’ to the landlord.

Rent reviews are subject to a capped
annual increase of 5%.

Leases of 4 years or more must be
registered.

Tenants are responsible for ‘minor’
repairs only.

Other consents and approvals

The Abu Dhabi Municipality restricts
the number of villas that can be used as offices. Evidence that the villa can be used for office use should be obtained from your landlord before signing the lease.

Renting in shared villas is not legal
unless the Landlord has obtained the necessary consents and has redeveloped accordingly to create separate properties. Evidence of this should be obtained.

The Landlord’s written consent to works of alteration should be obtained before signing the lease. Municipality and other statutory consents may also be required.

If services are not already connected, confirmation that the term of the lease will not start to run until all services are connected should be obtained.

Choosing your professional team

Use professional letting agencies and check their terms of business before engaging them.

You should have a lawyer look over the lease to check that your business is adequately protected.

Other things to look out for before signing the lease

Some landlords will try to get tenants to pay their agents’ fees - this is negotiable and you should resist where possible.

Check your landlord has the ability to let the property before handing over the rent.

It may be prudent to ask for evidence/ copies of: the landlord’s insurance; all statutory approvals relating to original construction and permitted use; and all documentation relating to any master community of which the property forms part.

The lease should refer to the property preferably by reference to a plan and any car parking bays or spaces that you are expecting to use should also be identified on it. Parking in Abu Dhabi can be a major source of disagreements.

Things to do before vacating the property

All utility bills should be settled. Sometimes, the landlord may require a certificate from the relevant utility companies confirming this.

Leave the property in the condition it was on entry.

Laura Hecht is Legal Consultant,
DLA Piper Middle East LLP
laura.hecht@dlapiper.com