|Real Estate News|
The booming real estate market of Dubai is one of the most important real estate hubs in the world. Freehold ownership of selected developments in Dubai was opened to all nationalities in May 2002.There ground-breaking residential projects have elicited tremendous response from both nationals and expatriate buyers.
Freehold properties are attracting a large share of foreign ownership due to increased opportunities and quick returns on investments. Rental yields are expected to remain at high level as the freehold properties being offered are very unique on a worldwide scale and will continue to attract investors.
Investing in Dubai freehold properties is a profitable deal when it comes to location, tax efficiencies, leisure, quality of life, leadership and vision, an ambition where Dubai sees itself in the future. One of the main attractions for would-be buyers is the provision of residence visas for expatriate investors and their immediate family.
Whether you are looking for a holiday home, residence, retirement property, or an investment, Dubai now has substantial properties to offer with very high standards of living, amenities and services.
Should I hire a lawyer for my real estate needs?
Yes. It may well be advised for prospective real estate buyers and investors to consult a real estate lawyer regarding his real estate needs. A real estate lawyer does not only analyze, prepare, review and negotiate necessary documents but also provides legal services in all aspects of the acquisition and sale process on properties located throughout the UAE.Real estate lawyers can protect you from costly and irreversible errors, both in documentations and practice, errors in the figures and other related problems that could lead to disputes or other expensive legal action.
What is 'freehold ownership' system?
Freehold means the subject property is placed 100% in the buyer's name for life, and upon satisfying the full payment thereof, shall have the right to sell, lease or rent the property to a third person. A freeholder is considered to be the absolute owner of the land and buildings comprised in the title. Consequently, the buyer has the right to occupy, use and enjoy the property forever ( 'in perpetuity') and the buyer's heirs are entitled to inherit the title upon his / her death.
How does the freehold system work?
Since there is yet no specific federal law dealing with the issue of freehold ownership, the transaction must be entered in the form of a contract or agreement called 'Property Sale Agreement' by and between the buyer and the property developer. The Agreement grants the investor a contractual right ( short of ownership) over the property.
This Agreement defines the freehold nature of the property and confirms the sole responsibility of the developer to procure the registration of the buyer's title with the Dubai Lands Department. This likewise contains all the terms and conditions that binds the parties such as but not limited to payments, construction schedules, and the rights and privileges of the buyer and the developer.
What are the requirements and how much are the fees and charges?
When you buy a property in Dubai you sign a contract with the developer and this is your binding documentation. There is no stamp duty and certainly no tax. You can then apply for a residency visa which means you can open a bank account and ultimately trade tax free.
There is no hard and fast rule in complying with the requirements in the freehold ownership system especially for the locals. But in the case of expatriates, the only thing that is very important aside from your money is your visa and passport. Property owners and their immediate family will obtain renewable visas, which can cost AED 5,000 per person.
The Purchase Sales Agreement ( Contract ) stipulates that you will be entitled to receive a Residence Visa for as long as you own the property. In accordance with the normal Immigration laws in the UAE, your Residence Visa will be renewable every three years.
There are standard fees and charges to be incurred in the process including government fees which are expressly stipulated in the agreement. Aside from the standard fees and charges, others may be imposed such as Real estate agent fees and legal fees.
What do the Service Charges from the Developer's perspective relate to and will they increase?
In most developments there is a service charge payable after completion. These are only payable in relation to common areas such as parks within the Development - as well as for road maintenance. Clearly, as the cost of maintenance increases, then so will the charges but few anticipate huge increases. The maintenance of your own property and grounds is entirely separate - as you would expect with freehold property ownership.
What is the assurance that the freehold property owned is not illegal?
The execution of a valid Property Sale Agreement secures and protects the rights of the buyer over the property. It is binding between the parties and enforceable before any courts of Dubai. The owner of a freehold title of real estate enjoys the most superior form of private property ownership.
What will happen if the buyer fails to pay the installments? Will the buyer lose what He had already invested? Or can the buyer transfer the deeds to another person who will pay the principal amount already invested?
In the event the investor is unable to pay the monthly installment, he will not be able to withdraw from the agreement unless he finds a third party who is willing to assume the investor's obligations under the agreement.
In Principle, neither Emaar nor the Palm will object to the transfer of rights in the agreement to a third party. However, this transfer is conditional. Usually, the developer will only allow the transfer if the original investor of the property has fully paid 30% of the sale consideration. Some developers like The Palm charge additional fees on the transfer. As for Emaar, the transfer of the property in their Marina project is totally prohibited while in the other projects the transfer is possible but the conditions vary from one project to another.
Therefore, buyers can't get hold of the deeds until after the property has been completed. If, however, the buyer wishes to re-sell, transfer or assign the property before it is built or any time up to completion, then all he needs is the original contract with the developer.
Can the buyer register the property in his name? If not, how safe would the investment be?
Yes, the Government of Dubai is now in the process of issuing a new property law and is expected to be released soon, which will allow the investors or expatriates to register the property with the Lands and Property Department in Dubai.
What title will I be receiving with my property?
When the first tranche of properties came onto the market for sale, they were classified as leasehold. Most of these properties are now freehold.
Can I get financing for the purchase of my property?
Yes, there are various banks offering financing for properties, and they would be able to advise on the procedures to get financing.
Will I be able to sell my property?
Yes. But at present any transfer of ownership must be done thru and with the approval of the developer and an administrative charge is made by the developer for the transaction.
Are there any taxation issues a foreign buyer of property in Dubai needs to be aware of when purchasing freehold property?
The only tax payable on the transfer of property into the name of the new owner is a fee payable to the Land Department. The Department usually collects 0.5% of the purchase price from the Seller and 1.5% of the purchase price from the purchaser.
Will I be able to change any of the specifications on the property prior to completion?
This is extremely rare. On certain developments purchasers are able to choose finishings on items such as cupboards and worktops in the kitchen and tiling on the floors. Any upgrading would ordinarily be done after completion, in the same way as one might do anywhere else in the world. Developers tend to buy in bulk: thus keeping construction costs down, and enabling them to budget accordingly.