The process of buying property in Dubai is relatively straightforward, whether you are looking for a property for residence or an investment opportunity.

Dubai is renowned for having some of the most generous property tax laws in the world, and real estate is no exception with its low tax environment. Anyone residing in Dubai under any form of visa or permit, you can buy property.

There are some areas where the old no-property rules still apply, but most are now accessible on the open market.

The legal aspects of buying property in Dubai for personal use or as an investment.

As a beginner, going through the process of buying property may seem a little intimidating.

Just like every other country, it is important to be aware of certain legal aspects of investment in Dubai Real Estate.

The legal aspects of buying property in Dubai are governed by the Real Estate Law No. 7 of 2006: Land Registry Act. Article (4) of Law No. 7 of 2006 regulates who can buy and own real property in Dubai. By law, you can buy property anywhere in Dubai if you are a:

• UAE Citizen
• GCC Citizen

Dubai Law allows foreign residents to purchase property, but only in areas designated for foreign property owners. There are different types of property titles for expats in Dubai, including freehold and leasehold titles. The difference between freehold and leasehold rights in Dubai is the rights of the buyer. Buying a home on a leasehold will grant you title for an agreed period of time.

There are three types of property purchases in Dubai.

1)     Freehold

As a Freehold property owner, you have the free will to do to anything you want. Most of the condos are single family homes, but some apartments and other condos are available for purchase. Resident and Non-Resident Foreigners may only purchase properties in designated condominium areas in Dubai. Dubai’s well-known owned neighborhoods include: Arabian Ranches, Palm Jumeirah, Dubai Marina, Downtown Dubai and more.

2)     Usufruct

This is like a leasehold property with an ownership period of 100 years, you are free to use this property as your own within this specific period. At the end of the lease, title to the property passes to the original seller. You cannot inherit this property type, nor do you have the right to demolish the building.

3)     Commonhold

The developer owns the building and all of her common areas, but you own the residence.

There are four main legal steps to buying property in Dubai:

1)     The Formulation of contract between buyer and seller

When considering buying a property in Dubai, there is a need for formulation of contract between buyer and seller.

2)     The signing of the sale of agreement

After the contract has been drafted between the buyer and seller, the next step is to sign his purchase agreement, also known as a memorandum of understanding (MOU).

MOU or Form F is one of his RERA real estate forms in Dubai. Form/Contract F is available on the official website of the Dubai Land Department.

3)     The application of a no objection certificate

The next step is to apply for a no objection clearance Certificate with your Agent, Buyer and Seller.

4)     Effecting the ownership transfer with Dubai Land Department (DLD)

Once you have received your NOC, the final legal step is to visit the Dubai Land Department office and meet the seller to effectuate the transfer. In order for the Ownership Transfer to be effective, the following documents must be available before going to the DLD office:

• A manager’s cheque for the property price payable to the seller.
• The original identification documents of buyer and seller (Emirates ID, passport and visa).
• The original NOC issued by the developer.
• Signed Contract F (MOU).

Apart from the conditions mentioned above, there are other rules for expats to consider in terms of property ownership in the UAE.

Considerations when buying property in Dubai as a foreigner

Buying an investment property is different than buying your own home. Setting expectations can go a long way in the decision-making process. The Dubai real estate market tends to fluctuate from time to time. Overall, it’s a stable industry with reliable rental and resale value. However, with the growing number of new developments, there are a variety of options. One will probably have a fairly good idea about what sort of property to buy if one is living in Dubai. If not, it is important to understand the notion of either buying a property for personal use or for investment putting into consideration some essential factors like;

• Location
• Facilities and amenities available in the community, including proximity to transport, education, childcare etc.
• Size
• Quality
• Market conditions and timing of purchase
• Maintenance costs

Each one of these factors are a tricky part on its own, and in order to get this right, you either need to do extensive research or save time by consulting with a property advisor.

Expats are free to sell, rent out or pass on ownership of the property just like a freehold, provided you keep up with the maintenance costs. Expats buyers don’t have any specific rules to comply with except; in some areas like Jumeirah, expats are not allowed to own property as they are not freehold.

This makes the process straightforward, without extra hoops to jump through. Many Dubai properties are sold as freehold, but leasehold properties usually have a lease period anywhere from 30 years to 99 years. In Dubai, as in other countries, real estate agents can help you find a property in your favorite area that fits your preferences, like budget, taste etc.

To buy property in Dubai you need:

• A Valid Passport.
• Proof of residency status proving that you can live in Dubai.
• Proof of current residential address.
• A pay slip to prove a steady income.
• A bank statement that proves you can afford to invest.

5 Mistakes to Avoid When Buying Property in Dubai

1)     Dealing with Unlicensed Real Estate Agents

According to the Dubai Real Estate Law, all real estate agents operating in the market, regardless of where they are located, must be registered in Dubai Land Department.

This is important because investors can simply go to RERA and file a complaint if something goes wrong with the broker.

2)   Not knowing the payment plan

It’s also important to understand the construction status (if you’re choosing an unplanned property) and if there are any delays to your planned dates. This gives great insight into developer credibility. At this point, you can also see if the contract defines or limits the use of the property.

3)     Forgetting to get a copy of your deed of ownership

Obtaining a copy of your deed of ownership is crucial to prove your ownership. Also, if you decide to sell or rent the property in the future to leverage your investment, this will make the process smoother.

4)     Not looking at the bigger picture

Even low-income earners make big profits investing in real estate in Dubai. Whichever real estate investment you choose, you need to realize that good rental income will take time. Patience is key to getting the most out of your investment when buying property in Dubai.

5)     Limiting yourself

You can find many attractive investment opportunities, both in the secondary market and in unplanned projects. Investing in commercial real estate may be a better option than investing in residential real estate. When investing in Dubai real estate, don’t limit yourself to one type of investment.

Conclusion

Dubai is a great city for real estate investment, personal or professional. With its low tax rates, Dubai attracts investors from all over the world.

Most buyers and investors make the most damaging mistake of not doing enough research when buying property in Dubai. Investors should understand the property they are buying and consult with their agent.

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