Dubai, 22–23 August 2026 — the planned demolition of the iconic Toyota Building on Sheikh Zayed Road has put two separate but related rulebooks back on the agenda: the shared-housing regime (bed spaces, partitions) under the new Dubai Law No. (4) of 2026, and the demolition-eviction procedure under the long-standing Rental Law. The first is a new regulatory layer; the second is an old but frequently ignored process. Here is what has actually changed and what owners, operators and tenants — including SMEs — should do.
What is happening at the Toyota Building
According to Gulf News (22.08.2026), the Toyota Building on Sheikh Zayed Road is scheduled for demolition in 2027. The report says close to 70% of tenants have already moved out; some remaining rental contracts formally run until December 2026. The building management told Gulf News that no one had been forced to leave, but that electricity had been disconnected and attributed the matter to the Dubai Municipality. A building agent added that part of the disconnections was linked to a number of partitioned apartments — a point that could not be independently confirmed. One notable detail: according to the management, it does not have the right to enter a leased apartment once it has been handed over to the tenant and therefore cannot itself audit partitions from the inside.
What Dubai Law No. (4) of 2026 on shared housing regulates
As Khaleej Times reminded readers (story re-published 23.08.2026), Law No. (4) of 2026 was issued by HH Sheikh Mohammed bin Rashid Al Maktoum, Ruler of Dubai, and sets a single framework for the management and occupancy of units let by room or bed space. It covers private development zones and free zones as well as licensed establishments that lease or manage units on behalf of owners, or sublease them; collective labour accommodation is out of scope.
The key rule: a unit cannot be allocated for shared housing without a permit. Permits are issued by the Director General of Dubai Municipality, in coordination with the Dubai Land Department (DLD) and other relevant authorities. A permit is normally valid for one year and renewable for the same period; a two-year permit can be requested by the owner, and a renewal application must be submitted at least 30 days before the current permit expires. The unit must meet all technical requirements — building standards, maximum occupancy, space per resident, safety and infrastructure norms.
Who is allowed to lease
Only the owner or a licensed establishment — for example a company managing the unit on the owner’s behalf, or one that leases the unit from the owner and subleases it to residents — can operate a shared-housing unit. The tenant is not in that chain: a tenant is not allowed to divide the flat or space into rooms/bed spaces and sublet them, even with the landlord’s informal consent. As lawyer Ahmed Elnaggar (CEO, Elnaggar and Partners) told Gulf News, this changes the whole framing — the property itself must enter the regulatory system for shared housing, not simply a verbal deal between two parties.
Fines: Dh500 to Dh1m, and more
The law provides for fines ranging from Dh500 to Dh500,000. If the same violation is repeated within one year, the fine can be doubled, taking the maximum to Dh1 million. On top of money, administrative measures include suspending the activity for up to six months, revoking the permit, coordinating the revocation of the commercial licence, disconnecting public services at the property, restricting transactions involving the property and refusing to register lease or management contracts until the violation is rectified. In certain cases, the unit can be evacuated by decision of the Execution Judge. As lawyer Awatif Al Khouri (Awatif Mohammad Shoqi Advocates) told Gulf News, residents who simply rent a partitioned space typically risk eviction, while the fines themselves are directed at those who profit from partitioning — landlords, main tenants and property-management companies that fail to monitor the building.
“A real estate unit cannot be allocated for shared housing without obtaining a permit. This changes the conversation completely. It is no longer simply a question of whether the landlord agrees to subletting or whether several people can contractually agree to live together,” — Ahmed Elnaggar, CEO of Elnaggar and Partners, quoted by Gulf News.
What happens on demolition: Article 25 and Article 29
Demolition rules and shared-housing rules are two separate regulatory layers and are frequently confused. Under Article 25 of Dubai’s Rental Law, a landlord who wants to evict a tenant to demolish and reconstruct a building must give 12 months’ notice, stating the reason for eviction. The notice must be served through a Notary Public or by registered post. As Gulf News notes with reference to Ahmed Odeh, Managing Partner at MIO & Partners, an intention to demolish is not, on its own, enough to terminate a tenancy — the necessary permits from the competent authorities must also be in place. A separate tenant protection: Article 29 gives the tenant a right of first refusal to rent the unit again after demolition and reconstruction, renovation or refurbishment; that right must be exercised within 30 days of the landlord’s notice.
What this means for SME tenants and office owners
Practical takeaway for a small or medium business renting an office or space in Dubai: an unauthorised partition is no longer a grey but tolerated practice. Building management companies and the Dubai Municipality have fast-response tools — from disconnecting services to refusing to register new contracts. As lawyer Ahmed Odeh (Managing Partner, MIO & Partners) told Gulf News, a tenant who partitions without the landlord’s written consent breaches the tenancy law and is exposed to both eviction and the cost of restoring the unit. If a landlord discovers a partition, they can file an expert case before the Dubai Courts: a court-appointed expert visits the site and records what is there — the number of beds, the occupants and their Emirates ID numbers — and that report becomes the basis for eviction. The wider picture of how the Dubai property market is being repackaged for predictable regulation is covered in a separate piece on Dubai property yields.
Where disputes go
All disputes arising from Law 4/2026 on shared housing are referred exclusively to the Dubai Rental Disputes Center under its established rules and procedures. DLD manages the electronic shared-housing registry, linked to the Dubai Municipality platform: the registry captures details such as owner identity, number of residents, unit information and allocated space. Owners and operators already running shared-housing units before the law takes effect have one year to comply, with a possible one-time extension from the Director General of Dubai Municipality.
