Payment structures
A feature of many freehold purchases worth noting here is the way that buyers pay
for new, off-plan properties. Normally, you pay a percentage on initial purchase
(10% perhaps) and make another payment a month later, followed by regular payments
while the property is being built. You then make a final payment (often 20%) when
you take possession.
This can enable you to avoid paying cash before the property
has been built, or having to take out a mortgage. But be careful with the terms
and conditions in your purchase contract. We recommend that you contact us when
you find a property you might consider buying. We will be able to help you through
the small print, and advise you on the cheapest, safest payment system.
Mortgages
With interest rates still relatively low (the typical borrowing rate in Dubai is
about 6.5%), mortgages are relatively affordable. You may wish to try obtaining
a mortgage in your home country (the UK, for example), if that is cheaper. In addition,
you may find that mortgage brokers there are more familiar with your needs. Local
mortgages were difficult to obtain until fairly recently.
However, changes during
2005 in legislation, and increasing market maturity have brought about the opening
of several local mortgage service providers. Local banks such as HSBC Dubai, RakBank,
Mashreqbank and the National Bank of Dubai have started offering mortgage facilities
for buyers of residential and buy-to-let properties. In addition, Amlak Finance
and Tamweel are two non-banking firms to enter this market. As the property sector
expands, we can expect to see more competition in mortgage provision, and this should
affect terms and conditions as well as fees.
Currently, expatriates can receive
up to 70% of the purchase price of their property as a mortgage. However, conditions
vary. With our expertise in the local market, we can update you on new financing
opportunities and guide you through the mortgage process.
Legal
The freehold property market in Dubai really started in 1998 when the Dubai Marina
project was launched. At that time there was no freehold property law, and villas
were sold "leasehold", on 99 year leases. In 2002 a decree was issued by the Dubai
government granting freehold rights to non-GCC nationals (The GCC is the Gulf Cooperation
Council, comprising Saudi Arabia, Kuwait, the UAE, Oman, Bahrain and Qatar.) This
provided the impetus that has led to the size and dynamism of Dubai's property market
today.
What exactly is freehold in Dubai? Purchasing a freehold property in Dubai
now means that you own the unit (the villa or building) forever ("in perpetuity")
- or until you decide to sell it. You are allowed to pass this property to your
heirs, and they enjoy the same level of ownership as you do. Most important for
investors, your resale rights are guaranteed, as is your freedom to rent out your
property to a third party, though some restrictions apply to individual developments.
You should note that although these are freehold properties, some conditions on
their owners apply, because they are "private community" developments.
These conditions
will restrict what owners can do with their properties, and oblige them to maintain
their properties to certain standards, according to the themes and quality of the
communities. When buying an apartment, the nature of ownership is different from
that of a villa, because an apartment is a unit in a building. These are normally
classed as "common hold".
Sale agreements for apartments do, however, usually warrant
effective full ownership of the unit, subject to restrictions applying to the building,
such as renting out the unit, and making modifications. Where can you buy freehold
properties? Most property developers in Dubai offer freehold, but so far most of
the freehold developments have mostly been limited to the Sheikh Zayed Road, and
the area of Jumeirah (including Palm Island). However, exceptions to this include
the Arabian Ranches and Emaar Towers in downtown Diera. Other future developments
include Nakheel's International City project.
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