Regularising the short-term rental segment

Abu Dhabi’s move to impose regulations for short term lets is a positive step to streamline the industry



While real estate investors in the United Arab Emirates (UAE) already benefit from high rental yields, the city is also open to opportunities for short-term rental or holiday home segment. The Department of Tourism and Commerce Marketing (DTCM) has established detailed legislative guidelines for operators of holiday homes in Dubai, and with Abu Dhabi bringing in new regulations, the industry is only going to get better.

In most markets that allow short-term properties to operate, the average daily rate increases have been below inflationary levels and/or recent historical trends.

These markets operate without regulations, which can flood a market during major events or peak seasons and then vanish from the market thereafter. It has also been observed that markets without regulations have sparked a kind of bidding war for properties that are up for sale and which would have been snubbed in past years.

The absence of tax regulations and rules does not just make life difficult for ordinary people trying to find a house to rent, it also threatens the prospects of online rentals.

As such, Abu Dhabi bringing in new regulations, which require owners to obtain a licence and pay fees to legally operate, is in the best interest of the industry and its visitors. While the move will ensure the safety of visitors and maintain standards, it also reflects the government’s futuristic thinking, realising the need for alternative accommodations.

In the coming years, more than 50 per cent of travellers will be millennials who simply don’t wish to stay in conventional hotel rooms with nothing to offer. Hence, having regulations in place will streamline the industry.

Having regulations will definitely put a check on unlicensed units too, since licences will be given out only to a select few. Additionally, holiday home companies will fall in line and comply because there will be amenities that each apartment must come equipped with.

That’s not all, regulations will also open an official channel for grievances; problems faced by guests or residents in the same building or the holiday home management company itself generally go unaddressed in the absence of requisite rules.

Overall, the move is a positive one that will ensure the classification, grading and maintenance of service standards.

Vinayak Mahtani is the CEO of bnbme – a holiday home management company