Made under Article 9 of the Leasing Law 2020, the Regulations explain how the Law applies to leases entered into before it commenced, when the security-deposit provisions (Articles 24 to 29) attach to pre-existing residential leases, and the penalties for offences under the Law and Regulations.
The DIFC Leasing Regulations are a short instrument made by the Board of Directors of the DIFCA under Article 9 of the Leasing Law, DIFC Law No. 1 of 2020. The consolidated version is stated to be in force on 22 February 2023 and the Regulations commence on the date of their issuance (Regulation 2). They apply to any person to whom the Leasing Law applies, which means lessors and lessees of premises in the DIFC and the Registrar (Regulation 1.1.2), and they borrow the Law's defined terms and rules of interpretation (Regulations 1.1.6 and 1.1.7).
The Regulations do three things. First, Regulation 3 lets the Registrar amend, add to or delete any Directive issued under the Law, provided a current version is maintained and made available to anyone who asks, on payment of a fee the Registrar considers appropriate.
Second, Regulation 4 settles how the Leasing Law applies to leases signed before it commenced. The general rule in Regulation 4.1 is that the Law applies to all DIFC leases entered into before its commencement, except where provisions requiring compliance with time and notice periods are incapable of being applied to such leases. Two carve-outs follow for residential leases. Where a security deposit was paid under a residential lease entered into before the Law commenced, the security-deposit provisions in Articles 24 to 29 of the Law apply only once the same parties enter into a new residential lease of the same premises (Regulation 4.2). The lessor's obligations in Article 37 of the Law do not apply retrospectively to a residential lease entered into before commencement (Regulation 4.3).
Third, Regulation 5 creates the offence and penalty mechanism. A person who does something prohibited by, fails to do something required by, or otherwise contravenes an Article of the Law or the Regulations commits an offence and is liable to the penalty in Appendix 1; the DIFCA, the Registrar and the President are excluded from the definition of person, and the Registrar may impose the penalty where the offence is listed. Appendix 1 fixes the amounts in USD: 10,000 for using leased premises for an illegal purpose or for a use other than the permitted use approved by the Registrar or the relevant authorities; 5,000 for a lessor failing to account to the lessee, or to the liquidator of an insolvent lessee, for the proceeds of sale of the lessee's assets after exercising a statutory lien; and 1,000 for a lessee causing nuisance or obstructing a lawful right of entry, and for a lessor disconnecting utilities, failing to give a repair notice under Article 35(2), entering residential premises without complying with Article 43 or failing to give notice of entry under Article 45.
The Regulations are in force and have no amending history recorded on their face.
Lessors and lessees of commercial and residential premises in the DIFC, including DIFC companies that lease offices and individuals renting DIFC residential units, particularly parties to leases signed before the Leasing Law 2020 commenced, and the Registrar of Real Property who enforces the penalties.
| Regulation 1.1 | The Regulations are the Leasing Regulations, apply to any person to whom the Leasing Law DIFC Law No. 1 of 2020 applies, and adopt the Law's defined terms and Schedule 1 rules of interpretation. |
| Regulation 2 | The Regulations commence on the date of their issuance; the consolidated version states it is in force on 22 February 2023. |
| Regulation 3 | The Registrar may amend, add to or delete any Directive, and must then maintain a current version and supply a copy to anyone who requests it on payment of a fee the Registrar considers appropriate. |
| Regulation 4.1 | The Leasing Law applies to all DIFC leases entered into before its commencement, except where provisions requiring compliance with time and notice periods are incapable of being applied to those leases. |
| Regulation 4.2 | Where a security deposit was paid under a residential lease signed before the Law commenced, Articles 24 to 29 of the Law on security deposits apply only when the same parties enter into a new residential lease of the same premises. |
| Regulation 4.3 | A lessor's obligations under Article 37 of the Law do not apply retrospectively to a residential lease entered into before the Law commenced. |
| Regulation 5 | Doing a prohibited act, failing to do a required act or otherwise contravening an Article of the Law or the Regulations is an offence carrying the Appendix 1 penalty, which the Registrar may impose; the DIFCA, the Registrar and the President are not persons for this purpose. |
| Schedule (Appendix 1) | Penalties in USD: 10,000 for illegal use of premises or use outside the approved permitted use; 5,000 for a lessor failing to account for sale proceeds of a lessee's assets after a statutory lien or to an insolvent lessee's liquidator; 1,000 for nuisance, disconnecting utilities, missing repair or entry notices, unlawful entry or obstructing a right of entry. |
Appendix 1 fixes penalties in USD that the Registrar may impose: 10,000 for using leased premises for an illegal purpose or for a use not approved by the Registrar or the relevant authorities; 5,000 for a lessor who fails to account to the lessee for the proceeds of selling the lessee's assets under a statutory lien, or to the liquidator where the lessee is insolvent; and 1,000 each for a lessee causing nuisance or obstructing a right of entry, and for a lessor disconnecting utilities, failing to give a repair notice under Article 35(2), entering residential premises in breach of Article 43 or failing to give notice of entry under Article 45.
Most of our DIFC clients are lessees of serviced offices or units, and a few individuals rent DIFC apartments. The questions this instrument answers are narrow but recur: whether a lease signed before the Leasing Law 2020 is caught by it (it is, under Regulation 4.1), whether a deposit paid under an old residential lease now has to be handled under Articles 24 to 29 (only once the same parties sign a new lease of the same unit, under Regulation 4.2) and what a lessor risks by cutting the power or walking in without notice (USD 1,000 per breach under Appendix 1). When we review a lease for a client's DIFC company we check that the permitted use matches the licensed activity, since using premises outside the approved use carries a USD 10,000 penalty and can also put the Article 13 Operating Law requirement to carry on the principal business in the DIFC in question.
DIFC Leasing Law
Governs leases of commercial, retail and residential premises within the DIFC: lease registration, landlord and tenant rights and obligations, security deposits held unde…
DIFC Real Property Law
Establishes the DIFC's own land registry and title system: registration of freehold and leasehold interests, mortgages, easements and off-plan sales within the Centre, th…
DIFC Real Property Regulations
Made under Article 175 of the Real Property Law 2018, the Regulations set the freehold transfer fee on transfers of real property interests and of indirect interests (sha…
DIFC Operating Law
Requires any person operating or conducting business in or from the DIFC to be registered under a prescribed law and to hold a valid licence or permission, and sets out t…
DIFC Insolvency Law
Repeals and replaces the Insolvency Law 2009 and provides for rehabilitation of distressed DIFC companies (including an administration regime), company voluntary arrangem…
Whether you are establishing a new venture, restructuring an existing enterprise, or exploring residency pathways — we are here to advise.
Arrange a Consultation →