Dubai: If you are about to get into a rental agreement you may come across the term ‘key money’. What is it exactly and what should you do if you are asked to deposit some key money with a landlord? A Gulf News reader faced such a situation and wrote in asking for advice.
He said: “Can you please tell me what ‘key money’ is? I am trying to rent a shop in Dubai and the landlord is asking for key money, which is separate from the rental fees. Is this legal? If so, how much can the landlord charge from me? Please advise.”
Gulf News raised the query with Raluca Gatina, Partner and Legal Director at UAE-based law firm Elnaggar Advocates, who spoke about the legality of such a practice.
What is key money?
“Key money is considered to be a fee paid to a manager or a landlord in order to secure a lease on a residential or commercial property. The term is often referred to as a security deposit. In fact, the key money is a payment that provides the owner of the property with a guarantee of the compliance with the term of the transaction. This payment can be seen as a guarantee that the tenant will not terminate the lease before the agreed term. However, in most of the competitive rental markets worldwide, key money is considered to be a gratuity or a bribe,” she said.
Gatina also spoke about the UAE’s rental laws and what a person can do in case they are asked for key money.
“In the UAE, such practice is not regulated by any law, hence it is not legal to ask for key money either by landlords, developers or brokers. The Dubai Land Department (DLD) does not encourage such a practice in any way. You may file a complaint with the Real Estate Regulatory Agency (RERA) against such individuals or companies demanding ‘key money’,” she added.
In the UAE, such practice is not regulated by any law, hence it is not legal to ask for key money either by landlords, developers or brokers.
How to file a complaint with RERA
To raise a rental complaint, you would need to raise the issue with the rental regulatory authority or rental dispute settlement committee in the emirate you are in. In Dubai, you can file a dispute with the Dubai Real Estate Regulatory Authority (RERA) on their online portal, through their ‘Dubai REST’ smart phone application or by calling them on 800 4488.