What you need to know about usufruct properties in the UAE
Can expats and foreign investors buy property in the UAE? This is a commonly researched topic, given the exponential growth of the real estate sector. Many investors worldwide view the UAE as a promising market. The good news? Foreigners can buy property in most emirates. However, there can be ownership limitations, particularly for leaseholds. If ownership is restricted, expats have options like usufruct properties in the UAE and Musataha.
ALL ABOUT USUFRUCT PROPERTIES IN THE UAE
Several industries in the UAE have seen tremendous development in the past two to three decades. The real estate sector, in particular, has acquired a large share of foreign investment thanks to the launch of several exciting projects. The UAE government has introduced laws to attract investment and maintain the country’s internationally prestigious reputation. Usufruct property ownership is one such option for foreign investors in the UAE.
BUYING USUFRUCT PROPERTY IN THE UAE
When you buy a usufruct property in the UAE, it simply means you are signing a long-term lease. What’s important to note here is that all usufruct properties come with conditions.
Key Points About Usufruct Properties
- Long-Term Lease: The lease length for usufruct property in the UAE can range from 10 to 99 years for residential properties and up to 50 years for commercial units.
- Usage Rights: The usufructuary has the right to use the property, including generated income. However, One cannot destroy or turn the property into an unusable space (usual wear and tear aside).
- Maintenance Obligations: For all usufruct properties in the UAE, the preservation and maintenance of the property lies with the buyer. Maintenance is the owner’s responsibility in exceptional cases, such as heavy repairs.
- Inheritance: Usufruct rights can be inherited.
- Early Termination: Under certain circumstances, the usufruct agreement can be terminated before the expiry date. Destruction of the property and termination issued by the court due to misuse or waivers by usufructuary are typical reasons for early termination.
Articles 1333 and 1348 of the Civil Code of the UAE define usufructuary rights. Both parties can reach an agreement and amend certain provisions of the Civil Code. However, these changes can’t go against public policy.
While the general framework for usufruct properties in the UAE remains the same, individual emirates enforce additional rules.
Difference Between Usufruct and Musataha
While usufruct and musataha are similar concepts, there is a key difference. In a musataha agreement, the beneficiary has the right to build, own and use the building during the entire eligibility term. With the usufruct agreement, the beneficiary only has the right to use the existing property.
USUFRUCT PROPERTY IN ABU DHABI
Abu Dhabi is an attractive place for foreigners to buy properties. Expatriates can own usufruct residential properties in Abu Dhabi for up to 99 years. Such properties and their facilities can be used during this period; however, buyers cannot make any structural changes and additions.
Only properties like floors and apartments can be bought, and foreign land ownership is not allowed. This form of ownership is also restricted to investment areas such as Al Reef, Saadiyat, Yas Island, Al Maryah Island, Al Reem Island, Sayh Al Sedairah, Al Raha Beach and Masdar City.
According to the law, the landlord cannot mortgage the property without the usufruct’s consent. Hence, your rights as a buyer will be protected when buying usufruct property in Abu Dhabi.
Those interested in buying a property here can check out the list of top areas to buy a freehold property in Abu Dhabi.
USUFRUCT PROPERTY IN DUBAI
Compared to other emirates, foreigners have access to a broader portfolio of properties for sale in Dubai. They can buy freehold property in certain areas or usufruct property in Dubai without being in the country. These rights can be bought for up to 99 years. The title deeds in Dubai are all issued by the Dubai Land Department (DLD).
USUFRUCT PROPERTY IN SHARJAH
Like Abu Dhabi and Dubai, foreigners can buy usufruct property in Sharjah for a maximum of 100 years. Any usufruct property has to be owned on a freehold basis by a licenced developer. The foreign national must hold a valid residency in the UAE. In the case of a company, such an entity must hold a valid commercial licence to operate in the UAE.
In Sharjah, the differentiation between usufruct and Musataha is minor. Usufruct property in Sharjah can be altered or rebuilt if its allocated purpose doesn’t change.
Are you looking to buy property in the emirate? Here is a checklist of necessary contracts and documentation for buying a property in Sharjah.
FAQS ABOUT USUFRUCT PROPERTIES IN THE UAE
What are the usufruct rights in Dubai?
Usufruct rights in Dubai grant individuals or entities the privilege to use and benefit from a property owned by someone else for a predetermined period, typically up to 99 years. This allows you to live on the property, rent it out and enjoy any income generated.
The usufruct right is governed by Articles 1337-1348 of the UAE Civil Code.
What is the meaning of Usufruct?
Usufruct (pronounced yoo-zuh-frukt) refers to a legal right that allows you to use and benefit from someone else’s property for a set period. It’s like a long-term lease, with some key differences from owning property outright.
What is the difference between usufruct and lease?
When it’s about usufruct vs lease, both involve long-term property use. However, usufruct provides more comprehensive rights, including generating income and potentially transferring ownership.
On the other hand, a lease typically involves a rental agreement with limited rights. For more in-depth information about leasehold property registration, check out our guide on leasehold property registration with DLD in Dubai.
How do you apply for usufruct registration in Dubai?
For usufruct registration, visit the Dubai Land Department office on Baniyas Road. You can also apply online through their official website.
Can a usufruct be perpetual?
In strict legal terms, a usufruct cannot be perpetual. The word “perpetual” implies something that lasts forever, but usufruct rights always have a time limit.
However, the term “perpetual usufruct” describes a usufruct type that grants the right to use the property for a very long period, often for 99 years or even longer.
And that’s a wrap to our guide on Usufruct properties in the UAE. The laws for expats buying property in the UAE have been amended from time to time. If you want to buy a property in the UAE, keep an eye on all the changes as modifications impact market prices.
We have assembled a list of the best freehold areas in Dubai to make your search easier. Also, check out the top areas in Sharjah for foreign investment. Like any other investment decision, you must do the homework before committing to a long-term arrangement.
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