Freehold or rent-to-own in Dubai, which is better?

Buying real estate is a fateful decision, whether you want to buy in Dubai or anywhere in the world. It is one of the most critical decisions in life. It is essential to see all matters related to the house in various aspects, as expatriates were not allowed in the past to buy real estate in Dubai. Now it is available, and ownership is divided into freehold and lease-to-own.

Freehold and lease-to-own

The Emirate of Dubai opened the doors of freehold ownership to expatriates. This matter brought about a positive change in the real estate market in Dubai. It was good news for expatriates who consider the UAE their home. The country is facing rapid growth in the number of expatriates. That indicates an increase in the rate of investments in it. Many worldwide still flock to the UAE for stability and investment, as owning a home in the Emirate of Dubai is a dream all residents seek.

Rent to own

In 2001, the Dubai government gave residents the right to buy rental properties ending with ownership. The property ownership period is 99 years, but it can sometimes be less. This property only allows expats to buy an apartment or a villa in Dubai.

Buying a rental property ends with ownership, meaning you have unrestricted rights to the house for 99 years or less. That type of ownership means that the buyer may own the house only, not the land on which the property was built. The ownership of the land belongs to the original owner of the property. After the conditional ownership period expires, the ownership of The house belongs to its original owner.

What are the advantages of buying a rent-to-own property?

• Expats can own property in specific places, so the rent-to-own feature provides greater options for areas and price ranges.
• At the end of the specified period and the ownership expires. You can renew the contract so you and your family cannot leave the house.
• Home-related repair costs are the original homeowner’s responsibility, significantly if they impact the ownership structure.

As for the disadvantages of buying a rental property ending with ownership, is that if you want to modify the property in terms of design or renovation, you will need the landlord’s written approval, that is, the owner of the land.

Freehold property

In 2002, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, may God protect him, issued a decree requiring the free purchase of real estate in Dubai.

Freehold real estate means the buyer owns the land and the house built on it. Here the ownership period lasts forever as the Dubai Land Department registers the buyer’s name in the registry and gives him a title deed for the property. He also gets full authority to rent or sell the property. In the event of the property’s owner’s death, the heirs can obtain the house, i.e., the property remains for the same family. The United Arab Emirates has specified certain areas in which expatriates are allowed to own property, and it is estimated at 23 residential neighbourhoods, including Palm Jumeirah, Dubai Marina, Emirates Hills, South Dubai, and Al Barsha.

This type of ownership in which the owners of freehold real estate and their families obtain renewable residence visas in the country by investing in freehold areas of Dubai. However, not all residents are required to buy a property, as the country allows foreigners outside the country to own freehold real estate. Buyers should purchase properties from real estate agents or developers approved by the government.

What are the advantages of freehold real estate in Dubai?

The owners have full authority to change and renew the property according to what they see fit, as free ownership means owning the land and the house built on it.

• The property belongs to the family in the event of the buyer’s death and remains inherited by them.
• The owner can sell or rent the property without requesting any prior permission.
• The owner of the property and his family have a renewable residence visa in the Emirates.

As for the negatives of freeholding a property in Dubai

• The owner must bear all expenses related to the property’s repair, renovation and maintenance. For example, if the landlord rents the property, he will be responsible for paying all costs associated with structural repairs.
• There are specific areas available in which the state allows expatriates to own the freehold.

Which is better to choose when buying a property in Dubai: freehold ownership or rent-to-own in Dubai? You can contact Frank Vito for free consultation before investing in Dubai real estate.