Important Factor To Know About Property Ownership Rules For Foreigners

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Real Estates

The UAE property market presents many opportunities for investors. It is one of the most regulated and transparent markets in the world.

What you get in the market are tax-free rental yields, lifestyle investments or healthy capital gains. Furthermore, the property ownership rules have changed in the recent past to allow more opportunities for foreign investors.

Leasehold Property Ownership

This type of property ownership gets ownership of the property for 99 years or less, depending on the agreement in the leasehold contract. This type of purchase only allows buyers the rights to a property but not the land it is built on.

Freehold Property Ownership

Expatriates are also allowed to buy freehold property in the UAE. This type of property will enable buyers to own both a unit and the land it stands on. However, it is essential to note that foreign nationals can only buy freehold real estate in designated areas. Therefore, if you are a foreigner, you should remember that your property purchase rules are different from those for nationals.

You should know the restrictions for non-UAE residents for acquiring mortgages to purchase property in the country. What is freehold property in Dubai, and what are the conditions for buying real estate for expatriates?

So, ensure that you acquaint yourself with the existing property ownership rules in the country before you buy a house in the United Arab Emirates.

What are the Rules for Foreigners Buying a Property in the UAE?

It was for a long time that foreigners were not allowed to own property in the UAE. But things have changed now.

Dubai was the first emirate to allow foreigners to own property. Subsequently, Abu Dhabi, Ajman, Sharjah and Ras Al Khaimah also allowed foreigners to own properties.

There can be two property ownership rules for expatriates in the UAE — freehold and leasehold. So, you need to have an overview of freehold versus leasehold property ownership rules for foreigners in different emirates.

Leasehold Property Ownership

This type of property means owning it for 99 years or less, depending on the duration stipulated in the leasehold contract. The buyer can get the right to the property but not to the land on which the property stands.

Freehold Property Ownership

Freehold property ownership allows buyers to have ownership of both the property and the land it stands on. However, foreign nationals are only allowed to buy freehold real estate in designated areas.

In addition, property ownership rules for foreigners are different from one emirate to another. The following are the property ownership rules applicable in other emirates:

Emirate-Wise Property Buying Rules

According to the existing laws, foreigners can buy only apartments and villas in the UAE. Four main legal systems govern the purchase of the real estate in the UAE. They are:

Musataha

Musataha contract allows expatriates to use, change or construct purchased housing units for a specific period. The contract also allows them to own residential units for up to 50 years. The renewal period can be done in agreement with the parties for the same period.

Ownership Deeds

Expats can get ownership deeds of residential units for 99 years. According to this law, foreign property buyers can sell off the villas and apartments they buy, excluding the land on which the property stands.

Long-Term Lease

A long-term lease is not less than 25 years for the initial period.

Usufruct

This law allows foreigners to own residential property for over 99 years. A usufruct contract also will enable owners to use the property and its facilities without changing it.

Amendment in Abu Dhabi Real Estate Law

In 2019, the Abu Dhabi Real Estate Law underwent an amendment to allow foreigners to own properties in investment areas. A notable change was that property owners who have “musataha” or “usufruct” contracts for more than ten years could dispose of their properties, including the right of mortgage, without the consent of their landlords. Moreover, landlords cannot mortgage the property without the permission of musataha or usufruct property owners.

Freehold Properties in Abu Dhabi

With the amendments in the Abu Dhabi property laws, foreigners can now make it possible for expatriates to buy freehold property in Abu Dhabi. The top investment zones for freehold property purchases in Abu Dhabi are Saadiyat Island, Yas Island, Al Raha Beach, and Masdar City.

Purchasing Property in Dubai

Foreigners can own property in freehold areas in Dubai. It means foreigners can get freehold property ownership rights without leasehold rights, usufruct rights and restrictions for up to 99 years. Moreover:

  • The Dubai Land Department(DLD) issues the title deeds
  • There is no age limit to property ownership

Popular freehold property areas in Dubai include Business Bay, Downtown Dubai, Discovery Gardens, and DIFC Dubai.

Purchasing Property in Sharjah

According to the current laws, according to the usufruct law, foreigners cannot own freehold property in Sharjah. However, they do have the right to usufruct for a maximum of 100 years after registering with the Sharjah Real Estate Registration Department (SRERD).

Moreover, the usufruct right must also be within the areas specified by the Government of Sharjah and is applicable only after acquiring special permission from the Ruler of Sharjah.

You can refer to the website of the UAE government for more information regarding the existing conditions of property ownership in the country.

Can Expatriates Get Residence Visa for Buying Property in the UAE?

In what could be regarded as good news for foreigners, they are eligible for a long-term UAE visa if they purchase property in the country. This law came into effect in May 2019.

But, you need to invest in a property of the minimum value of AED 5M to be eligible for a 5-year residency visa, which applies to the primary applicant and their dependents.

The foreign investor has to qualify for the following conditions:

  • The investment should not be a loan
  • The property must have a gross value of at least AED 5M
  • The property must have been retained for the last three years

Conclusion

Before you invest in a property in the UAE, you should know the laws that govern your investment. It will make your investment process smooth.