Locals and expatriates alike may take advantage of unique real estate opportunities for investment in Dubai. However, the limitations for expat property ownership differ slightly from those for residents. Expats are only permitted to acquire freehold property in specific zones, although their possibilities expand with the provision of leasehold ownership. The Dubai Government granted the ability to own leasehold properties in 2001.
Let’s take a deeper look at leasehold property ownership in Dubai and what it might offer investors.
Leasehold properties, as the name implies, can be leased from the owner for a minimum of 10 years and a maximum of 99 years. Leasehold property owners have complete ownership of the property but not the land on which it is built. As a result, any transformation, renovation, or substantial construction work on the property requires the approval of the owner.
The property will be returned to the owner after the lease expires. However, the leaseholder is permitted to rent during the lease duration.
Expats in Dubai may buy leasehold property. Leasehold properties are available in specified areas as defined by Regulation No. 3 of 2006 on Area Designation. The Palm Jumeirah, The World Island, Downtown Dubai, Business Bay, Dubai Silicon Oasis, Dubai Marina, Emirates Hills, and Jumeirah Beach Residence are among the most prominent designated districts.
Now that you know what leasehold property is, let’s look at the benefits of buying leasehold property in Dubai.
LIMITATION OF LIABILITY
A leasehold property’s maintenance and construction are the responsibility of the landlord (lessor). However, lessees have minimal obligation for property upkeep and building work. In fact, the landlord is accountable not only for managing but also for paying for repairs. Lessees, on the other hand, can conduct maintenance and repair work on the property after obtaining permission from the landlord.
LOWER UP-FRONT COST
The lessee is only given limited ownership of the property in leasehold properties, which is also time-limited. As a result, when compared to other kinds of foreign land ownership, the initial cost of leasehold assets is often cheaper. Furthermore, lessees are frequently provided with flexible payment plans that are separated into many installments.
Leasehold property is leased for a certain period of time, shielding it from market swings and reducing financial risk. This is why leasehold properties are deemed solid, with only foreseeable financial concerns posing a hazard.
Leasehold properties are typically part of a larger community, with lessees having access to common amenities and services. This might include a swimming pool, a gymnasium, parks, covered parking, and recreational amenities that help to improve the quality of life.
RENEWAL OF LEASE
When the lease term expires, both parties have the option to extend the lease, negotiate new terms, or terminate the contract. Furthermore, renewing a lease eliminates the headache of finding and registering a new home.
The following are the disadvantages of buying leasehold houses in Dubai:
DIFFICULTY IN REMODELLING
Lessees are not permitted to make any improvements to the property without the landlord’s written permission. Despite property ownership, lessees are prohibited from making any structural improvements to the property.
Lessees are not entitled to sublease their properties as leasehold properties.
RESTRICTIONS ON CONTRACTS
The leasehold property contract has several terms that prevent lessees from doing a variety of activities. Some leasehold agreements, for example, include a provision that prohibits the property from being resold before the lease contract expires.
IN DUBAI, WHERE CAN I BUY LEASEHOLD PROPERTY?
Expats may buy leasehold property in some parts of Dubai. Dubai Silicon Oasis and Green Community are two of the most popular regions to acquire leasehold houses in Dubai.
WHAT HAPPENS IF THE LEASE ENDS?
The leasehold property is returned to the landlord after the lease ends. However, the lessee and lessor might mutually agree to extend the lease.
WHO IS RESPONSIBLE FOR PAYING LEASEHOLD PROPERTY SERVICE CHARGES?
In most cases, the lessee is responsible for paying the leased property’s service charges. It can, however, be modified by first discussing it with the landlord.