When renting a property in Dubai, you may come across the term “property blocking fee.” But what exactly does it mean and how does it work? In this article, we will explore the concept of a property blocking fee in Dubai and provide you with all the essential information you need to know.
Understanding the property blocking fee
A property blocking fee, also known as a reservation fee or a holding deposit, is a sum of money paid by a prospective tenant to secure a rental property before signing the lease agreement. It serves as a guarantee for the landlord that the tenant is serious about renting the property and will proceed with the rental process.
The purpose of a property blocking fee
The main purpose of a property blocking fee is to ensure that the property remains off the market for a certain period of time, allowing the tenant to complete any necessary paperwork, such as employment and reference checks, and to organize the payment of the remaining rent amount.
Additionally, the property blocking fee also protects the landlord from losing potential tenants during the negotiation and screening process. By securing the property with a blocking fee, the tenant signals their commitment to renting the property, reducing the chances of the landlord receiving other offers.
How much is the property blocking fee?
The amount of the property blocking fee varies depending on several factors, such as the rental property’s location, size, and rental value. Typically, the blocking fee is equivalent to 5 to 10% of the annual rent.
Important considerations:
- The property blocking fee is usually non-refundable, even if the tenant decides not to proceed with the rental.
- If the tenant proceeds with the rental, the blocking fee is often deducted from the first rental payment or the security deposit.
- It is crucial to ensure that the property blocking fee is documented in writing and included in the tenancy agreement to avoid any misunderstandings or disputes between the tenant and landlord.
The property blocking fee in Dubai serves as a commitment from the tenant to secure a rental property, allowing them to complete the necessary paperwork and ensuring that the property remains off the market for a certain period of time. While the fee is non-refundable, it is often deducted from the first rental payment or security deposit if the tenant proceeds with the rental. Understanding the concept of the property blocking fee is essential for anyone looking to rent a property in Dubai.