- Rules for expats
- Freehold versus leasehold ownership
- Property in Abu Dhabi
- Property in Dubai
- Property in Sharjah
- Taxation rules
- Residence visa
- Mortgage conditions
The UAE property market is one of the most regulated and transparent in the region. Be it tax-free rental yields, lifestyle investments or healthy capital gains, the UAE real estate market presents a wealth of opportunity for property investments. Recent changes in property ownership rules for foreigners have opened up the market furthermore for overseas investors.
Those interested in purchasing real estate as expat or overseas investors must keep in mind that the rules for property ownership 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? Before you commit to buying a villa, apartment or any other type of real estate in the UAE, it’s important to consider these property ownership rules for foreigners.
Rules for expatriates buying a property in the UAE
For a long time, expats were not 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.
However, keep in mind; property ownership for expats is available in two categories — freehold and leasehold. 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 that it is built on.
Freehold property ownership
Expatriates are also allowed to buy freehold property in the UAE. Basically, 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 are only allowed to buy freehold real estate in designated areas.
Property ownership rules for foreigners also 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 regulation of the real estate sector in Abu Dhabi, expatriates are currently allowed to own property only in the form of apartments and villas. There are four main systems that 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 also 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. 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 for 25 years.
4 – Usufruct: Enabling expatriates to own residential property for over 99 years, a usufruct contract also enables owners to use the property and its facilities without changing it.
Amended provision in Abu Dhabi real estate law
In 2019, amendments were made to the Abu Dhabi Real Estate Law regarding foreigners owning property in investment areas. 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 are not to mortgage the property without the consent of musataha or usufruct holders.
Freehold properties in Abu Dhabi
The new amendments in Abu Dhabi property laws now make it possible for an expat to buy freehold property in the UAE’s capital city. Currently, top investment zones for freehold purchase in Abu Dhabi include Saadiyat Island, Yas Island, Al Raha Beach, Masdar City and more.
Buying property in Dubai
Foreign property ownership is permitted in areas that are designated freehold in Dubai. What this basically means is that expats and foreign buyers (who don’t live in the UAE) may acquire freehold ownership rights without leasehold rights, usufruct rights and restrictions for up to 99 years. Furthermore:
- Title deeds are issued by the Dubai Land Department
- There is no age limit to property ownership
Popular freehold property areas in Dubai include Business Bay, Downtown Dubai, Discovery Gardens, Dubai International Financial District (DIFC) and others.
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 do have the right of usufruct for a maximum of 100 years after registering with the Sharjah Real Estate Registration Department (SRERD).
Additionally, the usufruct right must also be within the areas outlined by the Government of Sharjah and only after acquiring special permission from the Ruler of Sharjah.
To start, consider our picks for the top three areas where foreigners can invest in Sharjah.
For more information regarding conditions for foreign property ownership in the UAE, we recommend visiting the official website the UAE government.
Taxation rules
The UAE is widely known for its expat-friendly taxation system. However, while the country itself doesn’t levy tax on purchased property, expatriates must consider legal liabilities that are applicable to their home countries. For example, if you are a US citizen buying a property in the UAE, 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 getting a better idea of tax liabilities in foreign property purchases, before buying a property in the UAE.
Do I get a residence visa for buying a property in the UAE?
Since May 2019, foreign real estate investors purchasing a property in the UAE are among the many categories eligible for a UAE long-term residency visa. The minimum value for an investment, in this case, is AED 5M for a 5-year residency visa. This applies to the primary applicant and their dependents.
However, acquiring a residence visa as a property investor is subject to these conditions:
- The invested amount must not be in the form of a loan
- The purchased property must have a gross value of at least AED 5M
- The property must have been retained for the last three years
For a more comprehensive analysis, check out our guide for the UAE long-term Golden Visa.
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 in addition to associated costs.
That’s all for our guide for property ownership rules for foreigners in the UAE. If you have already bought a property in Dubai, but don’t live in the UAE, our guide for property management for overseas investors in Dubai can help you manage your investment remotely. If you are a first-time investor, make sure that you are also aware of the legalities around freezone and freehold properties in Dubai.
For more information on UAE property laws, stay tuned to MyBayut.
