DUBAI REAL ESTATE FAQ'S

Why should I invest in the Dubai real estate market?
There are many reasons why Investors should invest in the Dubai .real estate market. The following are a few reasons:

  • Dubai is the financial and business hub of the Middle East.
  • Political and financial stability (the UAE Dirham has a fixed conversion rate to the US Dollar)
  • Excellent infrastructure, in a 21st century, multi-cultural and luxurious city by the enticing blue waters of the Gulf.
  • The pre-eminent real estate market in the Middle East and North Africa region.
  • No stamp duty or value added tax is payable when buying real estate. 
  • No income tax or capital gains tax is payable when selling real estate.
  • High rental yield (between 6-8%). 
  • No restrictions on currency trading or repatriation of funds.
  • Freehold ownership ·is available, as well as 99-year leasehold ownership, in Designated Areas.
  • Foreign real estate Buyers, subject to meeting certain conditions, are entitled to a two-year renewable visa.
  • The UAE has signed double tax treaties with most major economies 
  • Served by well-established real estate laws and crucial concepts protecting investors, including many new legal protections brought in after the 2008 credit crunch.
    The legal protections include Escrow Accounts for purchase funds for Off-Plan (ie. not yet completed) real estate and a Jointly Owned Property law that allows control of building maintenance by the Owners.
  • The Dubai Land Department ("DLD") is responsible for regulating the real estate sector, as well as the registration of real estate purchases and transfers in the Oqood (Interim) Register and the Real Estate Register

Can Foreign Nationals (non-GCC) own property freeho'ld in Dubai?
Yes, Foreign Nationals may own property freehold ·in Dubai in Designated (Freehold) Areas. Those areas include, but are not limited to, Burj Khalifa, Business Bay, Emirates Hills, Jumeirah lake Towers and Palm Jumeirah. Foreign ownership is also allowed in Dubai's various Free Zones, for example the Dubai International Financial Centre.

What kind of protections exist for an Investor?
In regards to the purchase of a completed property, the following laws protect Investors:

  • Ownership of real estate is registered in the name of the Buyer at the DLD.
  • The Owners in a Project control the maintenance and management of Common Areas through an "Owners Association". Every Owner is a Member of the Owners Association and elections are held amongst the owners to appoint the Board of the Owners Association

In regards to the purchase of an Off-Plan property, the following laws protect Investors:

  • Funds paid by a Buyer towards the purchase of Off-Plan real estate are deposited in a government-regulated Escrow Account.
  • Where a Developer has failed to start construction, or RERA feels that a Project is unlikely to be completed, RERA can cancel the Project. In the event of such cancellation, the Developer must provide all Buyers a refund. If the Developer fails to comply with this obligation, RERA may take whatever action is necessary to protect Buyer.
  • The Dubai Courts have a Special Judicial Committee that focuses solely on cancelled projects and how the assets of the Escrow Account are liquidated and refunded to the Buyer, as well as dealing with any complaints against a Developer regarding the cancel led project.
  • A Buyer has the right to seek termination of the contract (and a full refund) before the Dubai Courts, if a Developer is not performing its duties.

How can I do my due diligence when deciding whether to purchase a property in Dubai?
Below are a few ways for an Investor to do his due diligence in the purchase of a completed property:

  • Although the Real Estate Register is not open to the public, the Buyer and Seller can go together to the OLD to get confirmation whether there is a Mortgage over the real estate, and whether the Seller remains the owner of the real estate.
  • Prior to signing the contract, the Buyer should consider carrying out a physical inspection of the real estate, and getting information from the Owners Association or Management Company about the Service Charges.
  • If you are using a Broker, ensure that he/she is properly licensed by RERA, and that there is a written agreement detailing when and how much he/she is to be paid. A Broker's commission is normally 2% of the purchase price.
  • By law, the cost of transferring Title at OLD is 4% of the purchase price, split between Buyer and Seller at 2% each, unless otherwise agreed.

Below are a few ways for an Investor to do his due diligence in the purchase of an Off-Plan property:

  • Information on the construction status of a Project and whether the Developer and the Project are registered is freely available on the OLD website at www.dubailand.gov.ae..
  • Negotiate with the Developer to make changes to the standard contract, to ensure that the Buyer's interests are protected. It is advisable to seek the assistance of a qualified legal consultant.
  • When an Off-Plan property is purchased, the Buyer should ensure that the contract is registered in the Oqood (Interim) Register. Once the price is paid in full and the building is complete, the Buyer's interest (as owner) should be registered in the Real Estate Register, and the Buyer should receive the Title Deed.

I want to hire a property management company. How can I ensure that it is properly licensed?
There are many companies that perform property management services, but many are not properly licensed. Beware of such companies. Be sure to ask for a copy of the company's Trade License from the Dubai Department of Economic Development, as well as its approval from DLD.

I am purchasing a property with an Owners Association. What do I need to know about service charges?
In jointly owned properties, Owners Associations raise funds for maintenance, repair, management and administrative costs of the Common Areas through service charges. Service charges are charged on a monthly or yearly basis. Before charging the Owners, the Owners Association must get approval of the charges from the Real Estate Regulatory Agency. If an Owner fails to pay the service charges, the Owners Association may file a lawsuit against the Owner for the unpaid balance of the char ges, plus impose a 12% per annum penalty, calculated on a daily basis, until the paid in full.

How does real estate financing work in Dubai?
The basics of real estate financing in Dubai are a s follows:

  • Real estate can only be mortgaged to a bank licensed by the UAE Central Bank.
  • Financing can also be obtained from sources other than licensed banks. However, the lender will not be able to register the loan at the DLD.
  • The DLD's fee for registering a new Mortgage is 0.25% of the loan amount. This is typically payable by the Buyer.
  • To enforce a Mortgage, the Lender must obtain a Court Order allowing it to sell the real estate through Public Auction.
  • Various types of Mortgage products (both $haria-compliant and Conventional) are available.

What are the fees for a typical real estate transaction?
There are many companies that perform property management services, but many are not properly licensed. Beware of such companies. Be sure to ask for a copy of the company's Trade License from the Dubai Department of Economic Development, as well as its approval from DLD


 

Landlord-Tenant FAQ's

LEASE REGISTRATION (EJARI)

Must leases be registered in Dubai?
Yes, all leases must be registered in the Dubai Land Department's Ejari system.

Must the Lease take a certain form?
Yes, there is a form that is required by the Ejari system; however, any additional terms may be attached to the standard form.

Where can I find more information about Ejari registration?
More information about Ejari registration can be found at www.ejari.a e.

SUBLEASING

I have heard that subleasing is illegal in Dubai. Is this true?
No, Subleases are not illegal in Dubai, however, Landlord's written consent is required.

What happens when Landlord consents to a Sublease?
When Landlord consents to a Sublease, the Subtenant is protected from eviction, even if the original Tenant is evicted

What can Landlord do if he discovers a Sublease that he did not consent to?
If Landlord discovers that there is a Subtenant whom he did not consent to, Landlord may serve Subtenant with a Notice of Eviction.