Amir
Are you considering purchasing property in Dubai but unsure about the difference between a freehold and a leasehold property in Dubai? Or perhaps you’re already living in Dubai and want to know more about the legalities of property ownership. In this article, we’ll explore the difference between a freehold and a leasehold property in Dubai and provide some helpful insights for those looking to invest in Dubai real estate.
Dubai’s real estate market has been steadily growing over the past few years, with a 2020 report stating that the sector accounted for almost 7% of the city’s gross domestic product (GDP). According to data from the Dubai Land Department, freehold properties made up approximately 65% of all transactions in the first half of 2023. However, there is still some confusion surrounding the differences between freehold and leasehold ownership, particularly among those new to the Dubai property market.
In this article, from the Dubai Home website, we’ll dive into the details of difference between a freehold and a leasehold property in Dubai, including what these terms mean, how they differ, and the pros and cons of each type of ownership. Whether you’re a first-time buyer or a seasoned investor, this guide will help you make an informed decision when it comes to buying property in Dubai.
You may be an expat living in Dubai or a foreign investor looking to buy a property there. Before you select your dream home or investment property in Dubai, you must understand the difference between a freehold and a leasehold property in Dubai which are available to foreigners.
The purpose of this article is to help prospective homebuyers and investors understand the difference between a freehold and a leasehold property in Dubai so they can make an informed decision regarding their future residential property purchase.
If you would like to find out more about the property ownership rules in Dubai, including the pros and cons of the different types of ownership, as well as popular areas in Dubai where you can find both leasehold and freehold property, you should keep reading.
Difference between Freehold and Leasehold Property in Dubai
There is no doubt that the real estate market in Dubai has greatly increased in the past few years, making it one of the prime foreign investment districts in the world. There are plenty of new developments in different parts of the city, providing locals, and foreigners with many options for buying, renting and investing in properties.
In the Emirate, purchasing real estate is not an easy process, as it is subject to a multitude of rigid rules and regulations that must be followed. It is easy for buyers to get overwhelmed by the number of factors that need to be considered before making the decision to buy a property.
You need to know a few things about UAE real estate before you invest. For instance, it’s important to know the difference between a freehold and a leasehold property in Dubai.
Dubai leasehold vs. freehold property may seem like a battle between two totally different types of land, but in reality, both of these options have their pros and cons. So, here’s a breakdown of difference between a freehold and a leasehold property in Dubai to help you decide.
Difference between Freehold and Leasehold Property in Dubai
The first thing to know is that these two types are legal property ownership. Any expats who want to invest in Dubai’s real estate often have to make a choice between these two. You have to know their technicalities because both require a lot of money.
FREEHOLD PROPERTY
It is important to note that if you purchase a freehold apartment or villa, you will be the owner of it not only as well as the land on which it is located.
The Dubai Land Department (DLD) registers the freehold buyer as the “Landowner” in the registry and also provides them with the title deed for the property. This is stated in the UAE law on property ownership and has been followed until this point in Dubai.
The advantage of purchasing a freehold property is that you have much greater control over what happens to the property as you own both the building unit and the land, so you can carry out renovations as you wish and change the structure according to your preference.
Expats and foreigners living abroad in Dubai can buy freehold property in designated zones primarily from expats and foreigners living abroad. It’s important to remember that you can only buy freehold properties from government-approved real estate agents and developers.
There is no doubt that Dubai is the first city to offer freehold properties to internationals and expats. Interestingly, the Dubai government allowed expats to get a 99-year lease on Dubai freehold lands in 2001 for the second time in its history.
After the Freehold Decree was issued in 2002, foreign nationals over 21 could buy, sell, lease, and rent properties in designated areas of Dubai that had freehold ownership.
ADVANTAGES OF PURCHASING FREEHOLD PROPERTIES IN DUBAI
In Dubai, you can enjoy a wide variety of benefits by buying a property, but you should also take into consideration the pros and cons of freehold properties before making your purchase decision. This kind of property gives you complete control over the unit as well as the land.
Accordingly, the owners can remodel, renovate, or reconstruct the unit in any way they deem fit within the guidelines of development, as long as all other parameters are met.
PROPERTY INHERITANCE
In the event of the death of the original owner, there is no rule prohibiting his or her heirs from inheriting the property. All freehold properties belong to their rightful heirs after the original owner passes away. This means freehold properties never go out of family ownership.
FREEDOM OF CHOICE
The owner of a freehold property in Dubai has the option of selling, leasing, or occupying the property.
VISA
As long as your family meets certain conditions, they will be eligible for a renewable UAE residency visa if they own a freehold property in your name. Freehold property owners are now able to apply for 5 and 10-year visas after long-term residency visas were issued in the UAE. Furthermore, if you are an expat interested in buying a property for investment purposes, you will be able to acquire a Dubai investor visa by investing in a freehold property.
PLENTY OF FREEHOLD PROPERTY OPTIONS
Several different options are available in different zones for prospective buyers to select from when it comes to picking a property in Dubai that is freehold. Freehold areas in Dubai offer a wide variety of property choices in varying price ranges and different specifications. Freehold areas in Dubai comprise several property options suitable for various budgets and requirements.
DISADVANTAGE OF PURCHASING FREEHOLD PROPERTIES IN DUBAI
A freehold property in Dubai has only one disadvantage which is that only the owner is responsible for maintaining and taking care of the property, which makes freehold properties more expensive than leasehold properties.
If the unit is rented or leased, it will be the tenant’s responsibility to maintain or repair the unit as long as the unit is not in the tenant’s possession.
WHERE CAN I BUY A FREEHOLD PROPERTY IN DUBAI?
The Meadows is one of the popular areas in Dubai where you can find freehold property for sale.
You can buy freehold property in Dubai in a lot of different areas. There are many renowned places in Dubai where you can buy a freehold apartment. There are also The Springs, JBR, Downtown, The Meadows, Dubailand, Business Bay, Jumeirah Village Circle (JVC), and Dubai Marina.
Further, the city has also seen recent developments of freehold property developments in previously non-freehold areas of the city. Therefore, if you are looking for a townhouse, apartment, or villa for sale in Dubai, it is possible to search for freehold property in the following areas. These areas include City Walk and La Mer.
LEASEHOLD PROPERTY
This type of property is classified as leasehold, which means the unit is leased from its legal owner for 99 years or less. As the ownership is based on a lease, the purchaser only has rights to his or her unit, and not to the land.
What Are The Advantages of Buying Leasehold Property in Dubai?
It is True That You Won’t Own The Land, But There Are a Lot of Benefits That Make It a Better Option for Some People Despite Not Owning The Land.
Renewal of a Contract
There is no risk associated with moving out of a leasehold property when you can renew the contract at the end of each term and continue to live in the property without any risk of having to move out.
No Responsibility for Maintenance
In the previous section, we mentioned that the biggest difference between a freehold property and a leasehold property is that all repairs, maintenance work, and the responsibility of upkeep are the responsibility of the freehold owner, as we mentioned above. If you own a leasehold property, you have limited liability for repairs depending on what caused the damage to the property structure.
Affordability
The main difference between leasehold and freehold properties in Dubai is that leasehold properties are priced somewhat lower than freehold properties, which makes them more affordable than freehold properties.
CONS OF BUYING A LEASEHOLD PROPERTY IN DUBAI
PERMIT REQUIRED FOR IMPROVEMENTS
There is no possibility of making structural changes to a leasehold property. Therefore, residents who would like to remodel their property, make repairs, or make alterations affecting the structure of the property must get a permit from the freeholder before they can do so.
RESTRICTIONS ON SUBLETTING
Leasehold properties cannot be sublet, and pets may even be required to be allowed to live there. If you violate those regulations, you will be facing legal charges. Furthermore, there are laws governing shared accommodation in Dubai, and you are not permitted to sublet a property without the landlord’s permission.
WHERE CAN I BUY A LEASEHOLD PROPERTY IN DUBAI?
There are many areas of Dubai where you can find leasehold properties, for example, Dubai Silicon Oasis and Green Community, and you may also be able to purchase leasehold properties in other areas where foreigners are allowed to buy apartments in Dubai or villas in Dubai as well.
A discussion on the pros and cons of freehold vs leasehold ownership led us to discover that both forms of ownership come with their own set of pros and cons. Apart from evaluating the pros and cons of these two types of ownership, determining which is the better option depends on the return you intend to obtain.
So it’s important to do your research before you buy a property in Dubai because you’re going to make a big financial commitment. Keep in mind that there are a lot of specific terms in real estate in Dubai, so avoid making mistakes.
It is a good idea to follow the UAE’s popular property blog if you are interested in finding out more about property buying and selling, ownership rules for expats, and many other things.
FREQUENTLY ASKED QUESTIONS ABOUT DIFFERENT BETWEEN A FREEHOLD AND A LEASEHOLD PROPERTY IN DUBAI
Freehold property ownership is indefinite and allows the owner to own both the property and the land it sits on, while leasehold property ownership is limited to a specified period and grants the owner the right to occupy the property but not the land.
Buying freehold property in Dubai gives you full ownership rights, which means you have more control over your property and can make alterations or improvements without seeking permission from a landlord. It also provides long-term financial security, as the value of freehold properties generally increases over time.
Leasehold property in Dubai is often more affordable than freehold property, making it an attractive option for those on a budget. It also offers flexibility, as lease terms can be negotiated with the landlord, and may include options to renew the lease or purchase the freehold at a later date.
Freehold property ownership is becoming increasingly common in Dubai, particularly for new developments, while leasehold property ownership is more prevalent in older buildings and areas with established communities.
Conclusion
In this article, we discussed the key differences between freehold and leasehold properties in Dubai. We highlighted the advantages and disadvantages of each type of property ownership to help readers make an informed decision when purchasing a property in Dubai.
Thank you for taking the time to read our article. If you have any questions or concerns about the topics covered in this post, please feel free to leave a comment below. We are always happy to help and provide support to our readers
