Security Deposit Law in the UAE: What Tenants and Landlords Need to Know

What does UAE law say about security deposits?

In Dubai, the security deposit is governed by Article 20 of Law No. 26 of 2007 (as amended by Law No. 33 of 2008), which regulates the relationship between landlords and tenants. It allows a landlord to collect a deposit to guarantee the condition of the property at the end of the lease — and obliges them to refund it, or whatever remains of it, when the contract expires.

Article 21 completes the picture: the tenant must hand the property back in the state they received it, except for ordinary wear and tear or damage caused by factors outside their control. Together, the two articles set the entire legal frame — the deposit is the tenant's money, temporarily held, and only verified costs can be taken from it.

Other emirates run their own tenancy regimes, but the same principle — refundable deposit, minus documented damage — applies across the UAE. This guide focuses on Dubai, where the rules are most developed. (General information, not legal advice.)

How much can a landlord take?

The law does not fix an amount. The figures everyone quotes — 5% of annual rent for an unfurnished property, 10% for furnished — are market convention, not statute. They are widely recognised in practice and reflected in how disputes get resolved, but a contract can lawfully set a different figure. On a typical AED 100,000 unfurnished lease, convention puts the deposit at AED 5,000.

What matters legally is that the amount is written into the tenancy contract, which must be registered in Ejari — more on why that matters in our guide to Ejari and your security deposit.

What can legally be deducted?

• Damage beyond ordinary wear and tear — a broken door, stained carpet, or holes in walls; not faded paint or worn flooring from normal living.
• Unpaid bills attached to the tenancy — utilities, chiller, or housing fees left outstanding.
• Restoration costs where the contract requires it — repainting or reversing alterations the tenant made.

Deductions must be justified and proportionate to real costs. A landlord who keeps a deposit without itemised, evidenced deductions is exposed at the Rental Dispute Settlement Centre — see what to do when a landlord will not return a deposit.

Is there a deadline for the refund?

The law sets no fixed number of days. In practice the contract governs, and 14 to 30 days after handover is the common written arrangement. If no period is agreed, the obligation to refund arises at expiry of the lease — a landlord cannot simply sit on the money indefinitely. Put the refund period in writing at signing; it is the single easiest way to avoid a dispute later.

The modern alternative: hold, do not hold cash

Much of this friction exists because deposits are still collected as cash or cheques that must be physically returned. Increasingly, UAE businesses secure deposits as a card authorization hold instead — the amount is reserved on the tenant's card, never charged, and released in seconds at the end of the agreement. That is what Akara does for rental and service businesses: the legal frame stays the same, but the refund becomes instant and the audit trail automatic. See how it works for property managers, or read the full guide to security deposits in Dubai.