Furnished Lease
Synonyms: Furnished Rental، Serviced Lease، Short-term Furnished
Last updated: 2026-10-05
Short Definition
Lease where property comes fully furnished, usually short-term, with higher rent than unfurnished due to included furniture and appliances.
Overview
Legal Basis
Furnished leases are governed by the lease provisions of the Civil Transactions Law and must be registered on Ejar to have administrative or judicial effect (Council of Ministers Decision 292). Article 30 of the VAT Implementing Regulations exempts the lease of a permanent home, furnished or not, but excludes hotels, inns, serviced accommodation and any building designed to offer temporary accommodation to visitors or travellers. Letting units to tourists for overnight stays falls under the Tourism Law issued by Royal Decree M/18 dated 26/1/1444H and the Ministry of Tourism’s Private Hospitality Unit Regulation.
Practical Example
A real estate office in Riyadh manages 15 furnished apartments. A businessman from the UAE arrives needing one full month during a project. The office offers an ordinary residential apartment at SAR 8,000 a month with a SAR 1,500 deposit and no VAT, since it is a home rather than serviced accommodation, and the lease is documented on Ejar. A furniture list annex (24 items) is attached, signed by both parties with detailed condition. At month-end, a furniture inspection is conducted, photos taken, and the deposit returned after confirming integrity. If an item is missing (e.g., an iron worth SAR 200), it's deducted from the deposit based on the annex.
Common Mistakes
- ✗Not preparing a detailed furniture annex — opens the door to disputes at period end on loss and damage.
- ✗Getting VAT wrong — furnishing or a short term does not make a residential lease taxable, while serviced accommodation, temporary accommodation and commercial leases are taxed at 15% when the lessor is VAT-registered.
- ✗Letting a furnished apartment to tourists for overnight stays without a Ministry of Tourism private hospitality unit licence — a Tourism Law violation that may incur fines.
- ✗Omitting periodic cleaning clause in short-term contract — may create disputes over quality standards.
- ✗Delivering the apartment without verifying actual furniture condition — the lessee may find non-functioning equipment and the lessor isn't blamed unless documented.
International Differences
In the UAE, furnished rental is very common via Ejari + DTCM for tourist areas. In Turkey, short-term furnished rental (via platforms like Airbnb) requires strict tourism licensing. In Egypt, furnished rental is digitally unregulated and relies on paper contracts. In Saudi Arabia residential leases are documented on Ejar, while overnight letting to tourists needs a Ministry of Tourism licence.
