Rules for foreigners buying property in the UAE

• Rules for Expats
• Freehold versus Leasehold
• Buying Property in Abu Dhabi
• Buying Property in Dubai
• Purchasing Property in Sharjah
• Taxation Rules
• FAQs

The UAE property market is one of the most efficiently regulated with transparent operations in the region. Be it lucrative rental yields, lifestyle investments or healthy capital gains, the UAE real estate market presents a wealth of opportunities for property investments. In recent years, changes in rules for foreigners buying property in the UAE have opened up the market for overseas investors. However, to start the process of buying a villa, apartment or any other type of real estate in the UAE, it’s important to be aware of the property ownership rules for foreigners.

RULES FOR FOREIGNERS BUYING PROPERTY IN THE UAE

Those interested in buying real estate as expat/overseas investors must remember that the rules for property ownership in the UAE differ for them. What are 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 expats?

For a long time, expats weren’t allowed to own property in the UAE. The first emirate to lead the change in this regard was Dubai. The capital city of Abu Dhabi and the other emirates, including Ajman, Sharjah and Ras Al Khaimah, followed suit soon after. Today, foreigners are allowed to own properties in Dubai and other emirates. Not to forget, there are many benefits for foreigners buying properties in Dubai.

Remember that expats’ property ownership is available in freehold and leasehold categories. An overview of freehold versus leasehold property ownership and property ownership rules for foreigners in different emirates can give you a better idea of your options.

Freehold versus Leasehold property ownership for expats

Leasehold property ownership

Buying a leasehold property means owning it for a period of 99 years or less, depending on the duration stipulated 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 allowed to buy freehold property in the UAE. This type of property allows buyers the means to have ownership of both a unit and the land it stands on. However, it is important to note that foreign nationals can only buy freehold real estate in designated areas. You can read our guide outlining the rules of freehold property ownership in Dubai.

Property ownership rules for foreigners differ from one emirate to another. Here is a rundown of the laws that govern buying a property in the UAE in different emirates.

Buying property in Abu Dhabi

According to the laws concerning the real estate sector in Abu Dhabi, expatriates are currently allowed to own property only as apartments and villas. Four main systems govern buying real estate in the country’s capital. These include:

1 – Musataha: Through Musataha contracts, expat buyers are entitled to enjoy the use, alteration or construction of purchased housing units for a specific time period.  They are allowed to own residential units for up to 50 years. The renewal period is made in agreement with the concerned parties for the same time period.

2 – Ownership Deeds: Expats are given ownership deeds of residential units for 99 years known as usufruct agreement. Excluding land ownership, foreign property owners can fully dispose of the villas and apartments they buy.

3 – Long-term lease: For an initial period, a long-term lease is not less than 25 years.

4 – Usufruct: Enabling expatriates to own residential property for over 99 years, a usufruct contract enables owners to use the property and its facilities without changing it.

Abu Dhabi Real Estate Law Amendment

In 2019, amendments to the Abu Dhabi Real Estate Law regarding foreigners owning property in investment areas were made. One of the changes stipulates that those who have “musataha” or “usufruct” contracts for more than 10 years have the right to dispose of their properties, including the right of mortgage, without the consent of their landlords. Furthermore, landlords can’t mortgage the property without the consent of musataha or usufruct holders.

Freehold properties in Abu Dhabi

The new amendments in Abu Dhabi property laws allow an expat to buy freehold property in the UAE’s capital city. Currently, investment zones with freehold properties in Abu Dhabi include Yas Island, Al Maryah Island, Saadiyat Island, Al Reem Island, Lulu, Sayh Al Sedairah, Al Raha Beach, Al Reef and Masdar City.

RULES FOR FOREIGNERS BUYING PROPERTY IN DUBAI

Foreign property ownership is permitted in areas that are designated freehold in Dubai. This means that expats and foreign buyers (who don’t live in the UAE) may acquire freehold ownership rights without leasehold rights, usufruct rights and restrictions of up to 99 years.

Remember that:

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

Popular freehold areas in Dubai include Business Bay, Downtown Dubai, Discovery Gardens and DIFC Dubai. It could be said that Dubai property buying rules are more relaxed than other emirates.

RULES FOR FOREIGNERS BUYING PROPERTY IN SHARJAH

According to laws governing the usufruct of real estate properties in Sharjah, foreign nationals in the UAE do not have the right to own freehold property in the emirate. However, they have the right to usufruct for 100 years after registering with the Sharjah Real Estate Registration Department (SRERD).

Also, the usufruct right must be within the areas outlined by the Government of Sharjah, and special permission from the Ruler of Sharjah is needed. Check out the top areas with properties for expats in Sharjah. One can for apartments or villas for sale in Sharjah.

For more information regarding conditions for foreign property ownership in the UAE, we recommend visiting the official UAE government website.

Taxation rules

The UAE is widely known for its expat-friendly taxation system. However, while the country doesn’t levy tax on purchased property, expatriates must consider legal liabilities that apply to their home countries.

Suppose you are a US citizen buying a property in the UAE. In that case, it’s important to consider possible ongoing tax liabilities on earnings like rental income, interest on savings, dividend payments and other requirements in the United States. In such a case, it is advisable to consult tax agents within your country and get a better idea of tax liabilities in foreign property purchases before buying a property in the UAE.

FAQS

Do I get a residence visa after buying a property in the UAE?

Since May 2019, foreign real estate investors purchasing a property in the UAE are one of the many categories eligible for a UAE long-term residency visa. Read our guide about UAE residency via property investment programmes to learn more.

Can expats get a mortgage to purchase a property in the UAE?

Expatriates can get a mortgage from lenders operating in the UAE, but conditions may apply. For example, expat investors can be expected to pay a minimum down payment of 20% to 25% of the mortgage value besides associated costs.

CAN I GET RESIDENCY IF I BUY PROPERTY IN DUBAI?

Yes, as discussed earlier, you may be eligible for a residency visa if you invest in a property.

HOW LONG CAN I STAY IN DUBAI IF BUY A PROPERTY?

There are different visas which can offer 2 to 10-year residency. However, if you continue to own a property, you can renew the visa.

CAN I OWN 100% OF A PROPERTY IN DUBAI?

Yes, foreigners can fully own a Dubai property in freehold areas.

That’s all for our guide to property ownership rules for foreigners in the UAE. Dubai property ownership rules and regulations for expats are said to be most relaxed. At the same time, as discussed, laws for buying property in the UAE for expats allow foreign ownership with some conditions.

If you have already bought a property in Dubai but don’t live in the country, our guide for property management for overseas investors in Dubai can help you manage your investment remotely. If you are a first-time investor, know the legalities around free zones and freehold properties in Dubai.

For more information on UAE property laws, stay tuned to MyBayut.