Embarking on a journey to buying a property in UAE is a significant undertaking. As a diverse and dynamic nation, the UAE offers a range of opportunities for real estate investment. Whether you’re considering a property in the bustling metropolis of Dubai, the cultural charm of Abu Dhabi, or other emirates, understanding the rules and regulations governing property ownership is crucial. This guide will walk you through the various aspects of buying a property in UAE, including ownership options, and legal considerations.
Rules regarding property ownership for expatriates vary among different emirates. This article offers insights into the regulations for buying a property in UAE.
Buying a Property in UAE
Rules For Expats Buying a Property In UAE
For an extended period, foreign residents were restricted from property ownership in the UAE. The initial emirate to initiate this transformation was Dubai, followed by the capital city of Abu Dhabi and other emirates like Ajman, Sharjah, and Ras Al Khaimah. At present, non-citizens have the privilege of owning property in Dubai and various other emirates. It is important to note the numerous advantages that come with foreign property ownership in the UAE. It is worth noting that expatriates can own property under two categories: freehold and leasehold.
Property Ownership Options for Expats: Freehold vs. Leasehold
Leasehold Property Ownership
When you buy a leasehold property, you have ownership for a period of 99 years or less, as specified in the leasehold agreement. This form of ownership grants you rights to the property itself, but not to the underlying land.
Freehold Property Ownership
Foreign residents are permitted to purchase freehold properties in the UAE. With freehold property, buyers gain ownership of both the property unit and the land it is situated on. Nevertheless, it is essential to understand that non-citizens can acquire freehold real estate only within specific designated areas.
Buying a Property in Abu Dhabi
As per Law No. 19 of 2005, which pertains to the Regulation of the Real Estate Sector in Abu Dhabi, expatriates in the UAE are permitted to own properties in the form of floors and apartments, but not land. There are four primary property ownership systems available to expatriates:
Ownership:
Expatriates are granted ownership deeds for residential units, valid for a duration of 99 years. This ownership allows them to have full control over the apartments and villas they purchase, excluding land.
Musataha:
Expatriates can own residential units for a 50-year period, which can be renewed by mutual agreement for an additional similar period. Musataha contracts enable the property owner to utilize, construct, or modify the property within the specified timeframe.
Usufruct:
Expatriates can own residential units for a period of 99 years. The usufruct contract permits the property owner to enjoy the use of the property and its amenities, although structural changes are typically restricted.
Long-term lease:
Long-term lease agreements are initially granted for a period of not less than 25 years.
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Specific Locations for Property Ownership in Abu Dhabi
Abu Dhabi designates nine areas where foreigners are permitted to own real estate properties. These areas include Yas Island, Saadiyat, Reem, Mariya, Lulu, Al Raha Beach, Sayh Al Sedairah, Al Reef, and Masdar City. For additional information on the rules governing expatriate property ownership in Abu Dhabi, please refer to the relevant regulations.
Revisions to the Abu Dhabi Real Estate Law
In April 2019, an amendment was introduced to the Abu Dhabi Real Estate Law, allowing foreign individuals to own real estate properties within designated investment areas in Abu Dhabi.
The revised law specifically alters Articles 3 and 4 of the aforementioned legislation.
Article 3 (i) outlines the categories eligible for property ownership:
- Emirati citizens, whether they are natural individuals or legal entities.
- Public holding companies, with the condition that ownership by non-nationals does not exceed 49 percent.
- Any individual authorized by a decision issued by the Abu Dhabi Crown Prince or the President of the Executive Council.
Article 3 (ii) establishes that non-UAE nationals, whether as natural individuals or legal entities, possess the right to own and acquire all original and in-kind property rights within investment areas.
Article 4 stipulates that individuals holding a ‘usufruct’ or ‘musataha’ for a period exceeding 10 years have the right to dispose of the property, including the option of mortgaging it, without requiring the landlord’s consent. However, the landlord cannot mortgage the property unless the usufruct or musataha holder consents. In both cases, any alternative arrangements must be agreed upon by the involved parties.
For additional details, you can read the full article on the Abu Dhabi Government website (Tamm).
Buying a Property in Dubai
In Dubai, foreign ownership is allowed in areas that have been designated as freehold. This rule applies to both foreigners who do not reside in the UAE and expatriate residents. They have the option to acquire freehold ownership rights over property without restrictions. This can involve usufruct rights or leasehold rights, with leasehold rights extending up to 99 years.
The specific land plots that are designated as freehold properties can be found in Article 3 of Regulation No. 3 of 2006, which pertains to Determining Areas for Ownership by Non-Nationals of Real Property in the Emirate of Dubai (pages 129-132).
The title deeds for these properties are issued by the Land Department in the emirate. It’s worth noting that there is no age limit for property ownership in Dubai.
For more in-depth information regarding property ownership and leasing regulations in Dubai’s real estate legislation, you can refer to the relevant resources.
To gain additional insights on purchasing properties in the UAE, you can contact:
- Dubai Land Department – Dubai
- Real Estate Regulatory Agency – Dubai
Additionally, you can search for approved brokers in Dubai to assist you with your property transactions.
Buying a Property in Sharjah
As per Executive Council Resolution No. 26 of 2014, which concerns the Usufruct of Real Estate Properties in the Emirate of Sharjah, foreign nationals and companies owned by foreign nationals in the UAE are not entitled to direct ownership of real estate. However, they have the right to obtain usufruct rights for a maximum duration of 100 years. To secure such usufruct rights, the process involves registering them with the Sharjah Real Estate Registration Department (SRERD).
Furthermore, this resolution specifies that usufruct rights are granted exclusively within the areas designated for this purpose by the Government of Sharjah. Such rights are granted only after obtaining special approval from the Ruler of Sharjah.
Taxation Regulations
The UAE is renowned for its tax-friendly environment for expatriates. Nevertheless, although the country does not impose taxes on property purchases, foreign residents should be mindful of legal obligations in their home nations.
If you are a US citizen planning to acquire property in the UAE, it is crucial to assess potential tax obligations related to earnings such as rental income, interest from savings, dividend payments, and other requirements in the United States. In such circumstances, it is advisable to seek advice from tax professionals in your home country to gain a clearer understanding of tax responsibilities associated with buying property abroad in the UAE.
