Expert Advice with Homes 4 Life Real Estate: All about rent-to-own properties in Dubai

• About rent-to-own properties
• Rent-to-own vs Lease-to-own
• Popular areas
• How to register
• Benefits for sellers

We’re delighted to return with our Expert Advice segment, where we sit down with industry experts and discuss emerging trends, new laws and pertinent topics in the UAE real estate market. Our latest episode features Ankit Gupta, Vice President – Sales at Homes 4 Life Real Estate, who discusses rent-to-own properties in Dubai.

Dubai’s diverse real estate market offers a variety of payment plans, schemes and offers to allow more tenants to transition to homeownership. One such scheme that is rapidly gaining popularity with buyers and sellers is the rent-to-own villas and apartments in Dubai.

Watch the video to learn more about rent-to-own schemes in Dubai as well as its payment plans, registration process and popular areas for such properties. Alternatively, continue reading for highlights from the video.

What are rent-to-own schemes in Dubai?

Dubai rent-to-own projects are designed for buyers who want to take out a mortgage to buy a property, but are facing difficulties putting up the initial down payment, says Ankit Gupta. The UAE’s banking law requires buyers to pay 20% to 25% of the purchase price upfront as the down payment, to get a mortgage for a property.

Rent-to-own projects in Dubai are an excellent solution for such buyers, says Ankit. When purchasing a rent-to-own property, 20% – 30% of the purchase price is paid as rent over three to four years, as agreed between the buyer and seller. At the end of this contract, this paid amount will be considered as the initial down payment on the property, allowing the buyer to complete the sale transaction through mortgage or cash.

Rent-to-own vs Lease-to-own: What’s the difference?

Rent-to-own properties in Dubai do differ slightly from lease-to-own properties, says Ankit. While rent-to-own schemes cover the initial down payment, lease-to-own contracts cover the entire purchase price. As a result, lease-to-own contracts are longer, typically ranging between 7 to 10 years, over which the buyer pays the purchase price in equal instalments.

Another key difference between rent-to-own and lease-to-own schemes is the mortgage. Rent-to-own schemes in Dubai are primarily designed for buyers looking to take out a mortgage. On the other hand, lease-to-own schemes in Dubai bind the buyer and seller with an MOU, meaning that third parties such as banks cannot get involved.

Where can you find rent-to-own properties in Dubai?

According to Ankit, many developers are now responding to the increased demand for rent-to-own properties in Dubai. Reputed real estate companies such as Emaar are also offering these options, while there are an increasing number of properties for rent-to-own in Dubai South. Bayut’s portfolio of properties for sale also reveals that notable communities such as Jumeirah Golf Estates, Al Furjan and Business Bay are offering rent-to-own options now.

You can browse our listings for rent-to-own properties in JVC, a family-friendly suburban community. Alternatively, there are options in rent-to-own properties in Al Furjan, which is located in the Jebel Ali area.

While Dubai and Abu Dhabi have taken the lead when it comes to rent-to-own apartments and villas, other emirates such as Ras Al Khaimah are also offering these attractive solutions to buyers.

If you are planning to purchase rent-to-own apartments in Dubai, bear in mind that these can be 10% – 15% more expensive than a traditional property for sale.

Are buyers treated as tenants or owners when it comes to rent-to-own properties in Dubai?

According to Ankit, buyers will be considered as tenants, during the initial contract for the first three or four years. Most developers and sellers prefer to formalise the agreement through a tenancy contract at Ejari registration centre.

The contract will also mention that these rental payments will be considered against the initial down payment. After this rental term, the purchase will be completed as a normal sale transaction, through mortgage or cash.

However, buyers should bear in mind that it is not possible to sublease a rent-to-own property, as the concept is designed with the buyer as the end-user.

Additionally, in the case of a rent-to-own villa or flats in Dubai, the buyer is considered a tenant, the seller (or landlord) is responsible for major maintenance works to the property. Meanwhile, the tenant typically takes care of ordinary wear and tear issues. Once the title deed is transferred at the end of the rent-to-own contract period, all charges will then be borne by the new owner.

Landlords can also offer rent-to-own schemes in Dubai to their existing tenants by deciding on the purchase price at the start of the contract, and stating that the rental payments will go towards the down payment.

How do rent-to-own properties in Dubai benefit the seller?

There are several benefits for sellers when it comes to rent-to-own properties in Dubai. Firstly, sellers can advertise higher sales prices while offering rent-to-own schemes, in exchange for more flexibility.

Ankit points out that sellers offering rent-to-own schemes in Dubai can also cater to a wider pool of buyers, including those who may not be ready to buy just yet.

Overall, it’s a win-win situation for sellers, when it comes to rent-to-own houses in Dubai. Even if the buyer chooses not to buy the property at the end of the rental contract, the seller still benefits from having earned a higher rental income.

About Ankit Gupta

Ankit Gupta is the Vice President – Sales at Homes 4 Life Real Estate. Ankit has a decade of experience in the UAE banking and real estate sectors and currently oversees the resale and off-plan team at Homes 4 Life.

About Homes 4 Life Real Estate LLC

Homes 4 Life Real Estate was established in 2008 and has since become one of Dubai’s leading real estate agencies. With over 50 experienced advisors, Homes 4 Life offers high-quality services in the sales and rental of residential and commercial properties in Dubai. This agency also offers comprehensive property management services that cover the sales, rental maintenance of the properties and information about rent-to-own properties in Dubai.

We hope our exclusive Expert Advice segment helps you to better understand rent-to-own properties in Dubai! This popular scheme offers an excellent opportunity for buyers to purchase their dream home with flexible payment terms.

Are you a tenant coming to the end of your contract and wondering if you should invest in Dubai real estate? Read up on the most important things to know before tenancy contract renewal in Dubai.

Before you decide on a property to buy, discover the different types of residential properties available in Dubai to find your perfect home.

Stay tuned to MyBayut for more expert advice on renting and buying property in Dubai!

Disclaimer: The views expressed in this article belong to the interviewee alone and do not reflect the opinions of Bayut.