Buying and renting property in Dubai

MOST FREQUENTLY ASKED QUESTIONS ARE ANSWERED BY IMEX REAL ESTATE SPECIALISTS

Question: Can foreign citizens buy property in Dubai?

Answer: Citizens of foreign states that are not members of the Arab Gulf Cooperation Council (GCC) are entitled to acquire property in Dubai in full ownership (“freehold”) only in specially designated territories, in the so-called freehold zones. The list of such zones is established by Decree of the Ruler of Dubai No. 3 of 2006. These include almost the entire territory of "new Dubai", including such popular areas as Dubai Marina, The Palm Jumeirah, Emirates Living, Jumeirah Lakes Towers and others.

Question: Is real estate registration in Dubai required and who is involved in it?

Answer: The registration of rights to real estate in Dubai is handled by the Land Department. Today, property rights, long-term leases, real estate pledges and other transactions are subject to registration in the corresponding register. Registration is carried out both on ready-made and commissioned facilities, as well as on construction sites (“off-plan”). In the first case, the owner receives a registration certificate for real estate (Title Deed), and in the case of registration of property not yet completed (Oqood Registration) - the initial contract of sale (Initial Contract of Sale). When registering ownership in the Dubai Land Department, a registration fee of 2% of the value of the property plus a small fixed payment for the preparation and printing of the necessary documents is paid.

Question: What taxes should a property owner pay in Dubai?

Answer: There are no property and income taxes in the United Arab Emirates. Therefore, the possession of real estate in Dubai, as well as the receipt of income, for example, from its rental, does not entail any tax consequences for the owner within the UAE jurisdiction. However, it must be understood that the owner of the real estate is responsible for its proper maintenance and is obligated to pay the costs of its maintenance (the so-called Maintenance Fees or Service Charges) established by the management company or the association of homeowners (if such an association has already been created). As a rule, such payments are charged annually a year in advance and for Dubai, depending on the project, they are somewhere between 20 and 80 dollars per square meter. m per year.

Question: How is the purchase of real estate in Dubai?

Answer: In the most general terms, the procedure for buying property in Dubai in most cases is as follows:

1. The buyer selects the property that he wishes to purchase.

2. The seller and the buyer sign a contract of sale, which reflects all the parameters of the transaction, in particular:

  • the value of the acquired property,
  • additional payments related to the transaction (agents' commissions, payments to the developer, registration fee, reimbursement to the seller of the costs of maintenance paid in advance, etc.),
  • the period during which the purchase and sale transaction must be completed,
  • terms and procedure for making settlements,
  • responsibility of the parties in case of failure to fulfill the conditions of the contract.

3. When signing the sales contract with the seller, the buyer makes a deposit (usually 10% of the value of the acquired property).

4. The seller draws up a permit from the developer for the sale of his property (No Objection Certificate, NOC), which is necessary for registering the transaction with the Dubai Land Department.

5. After the permission to sell is obtained, the seller and the buyer register the property in the name of the new owner in the Land Department. Usually, at the time of registration, transactions are also settled.

Question: Can a property owner in Dubai rent it out?

Answer: Relations between landlords and tenants in Dubai are regulated by Law No. 26 of 2007, as well as amendments to it. According to current legislation, any owner of real estate in the territory of the Dubai Emirate has the right to lease his property for a period of at least 1 year. In the case of renting for a period of less than a year, such a rental is considered short-term and requires the owner to have the appropriate license (for the activities of a hotel or hotel apartments). In this case, usually, the owners turn to a licensed management company, which they transfer their property to management, and which already rents real estate on its own behalf.

Question: What rental income can a property owner in Dubai expect?

Answer: If we talk about the average market indicators of the current return on investment in real estate, for housing in Dubai today the indicator of net rental income (that is, income minus the cost of servicing real estate) is on average 5-10% per annum.

The spread in profitability is due to differences in the type and category of real estate, its location and cost of services. Moreover, more expensive exclusive real estate, as a rule, gives less return in the form of rental income than mass housing in affordable projects. As for the office real estate market, today such investments are less attractive in terms of rental income than the purchase of housing.

Leasing of retail space (this includes not only shops, but also service points, cafes, restaurants, etc.) is potentially capable of generating higher incomes (up to 15%), however, this depends on the parameters of the property itself, and from factors external to it.

Question: Are there any restrictions on the cost of renting in Dubai?

Answer: By concluding a real estate lease agreement, the parties to the transaction have the right to agree on any conditions that do not contradict the current legislation. There are no direct restrictions on the rental price, which is indicated in the contract between the lessor and the lessee. However, there are legislatively established restrictions on increasing the cost of renting when renewing a contract for the next term. So, for example, in respect of residential real estate, there is a rule according to which the landlord does not have the right to increase the rent if less than two years have passed since the conclusion of the initial contract. In addition, when revising leases upward, the landlord should be guided by the index of the Dubai Real Estate Regulatory Authority (RERA), which reflects the average rental rates for various types of housing depending on the area.

Question: What are the requirements for tenants in Dubai?

Answer: A tenant of real estate in Dubai (if we are not talking about short-term rental housing) can only be an individual or legal entity with resident status in the United Arab Emirates. That is, a lease agreement can only be concluded with a citizen of the UAE or a country that is a member of the Council for Cooperation of the Arab States of the Persian Gulf, or with an expatriate with a resident visa. Accordingly, the lessee is a legal entity, must have the appropriate registration in the UAE. This can be a local organization, a company registered in a free economic zone, or a branch (representative office) of a foreign company.

Question: Is registration of a rental contract for real estate in Dubai required, and who is involved in it?

Answer: In accordance with the legislation of the emirate of Dubai, all leases of real estate on its territory must be properly registered. The registration of rental contracts is handled by the Dubai Real Estate Regulatory Agency (RERA). Especially for these purposes, the agency created the Ejari system, which allows registering contracts via the Internet. Online registration on the Ejari website is simple, requires minimal technical knowledge, and involves the introduction of only basic information about the lease contract, which includes: information about the property and participants in the transaction, as well as the terms of the contract. Each registered contract is assigned a unique barcode for the duration of its validity. Registration is free, and both the lessor and the lessee can register a lease. So far, liability has been established for non-compliance with the requirement of mandatory registration, but according to the provisions of the law, all participants in transactions that have not been registered are automatically deprived of the right to apply to the judicial and government bodies for the protection of their interests.

Question: How is the rental property in Dubai?

Answer: In its most general terms, the procedure for renting real estate in Dubai, in most cases, is as follows:

1. The landlord himself, or with the help of a real estate agency, is looking for a tenant.

2. When the tenant is found, the lessor signs a lease agreement with him, which reflects all the parameters of the transaction, in particular:

  • rental price and terms of payment,
  • rental period and terms of its extension,
  • additional costs associated with the operation of the property and their distribution between the parties,
  • responsibility of the parties in case of failure to fulfill the conditions of the contract.

3. When signing the contract, the tenant pays the rent for the year (usually by check), as well as a security deposit (usually 5% of the annual rent).

4. Having received payment from the tenant, the landlord gives him the keys, key rings, access cards, etc., necessary for unimpeded access to the rented premises and related infrastructure (pool, gym, etc.), as well as copies of documents ( certificate of ownership, passport of the owner, etc.) required by the lessee to connect water, electricity, air conditioning, telephone, Internet and other services.

Question: How is rent paid for property in Dubai?

Answer: In the rental market in Dubai, as well as in the rest of the UAE, it is customary to pay rent a year in advance. As a rule, all payments are made by bank checks. Depending on the terms of the contract, the annual rental amount is paid by one or more checks. In the latter case, checks are dated by future dates. For example, if the number of checks is 4, then the dates of the checks will correspond to dates in the future every quarter, and if the number of checks is 12, they will be dated at intervals of a month.

Accordingly, upon the date indicated on the check, the lessor can present it to the bank and receive money from the tenant's account. The issuance of unsecured checks in the UAE is a criminal offense, so paying with checks, although it does not give a 100% guarantee of rent, is a fairly reliable and convenient way to make payments.

Question: Can a landlord who is not a resident of the UAE receive money on a check?

Answer: It must be remembered that the period during which a check can be presented for payment is 6 months, after which it is canceled. If the check is written in the name of an individual and there is no mark on it only on the recipient's bank account, then the person indicated on the check, regardless of the presence of a resident visa, can receive cash at any branch of the issuing bank. Otherwise, or if the check is written in the name of the company, money on it can only be received in a bank account, and the account must be opened in one of the banks in the UAE. Resident status is also not required. A number of banks in the UAE easily open accounts for non-residents (including foreign companies). The procedure for opening an account with a bank takes less than an hour, and the minimum requirements for depositing money into an account to open it are currently 5 thousand dirhams (about $ 1400).

If the listed rental options are not suitable for the landlord, he can conclude an agreement with the real estate agency through which the rental was made. Then the checks can be issued in the name of the agency, and after receiving money from them, the agency transfers them (or transfers them in cash) to the lessor. The main thing in this case is to competently approach the issue of choosing a partner company.

Question: Who pays a commission to a real estate agency?

Answer: When the intermediary in the transaction is a real estate agency, he is paid a commission. According to existing practice, the tenant pays the commission to the real estate agency. Usually, this is 5% of the annual rental amount. Agency services end after signing a lease. If the lessor needs additional agency services (representing his interests in the UAE during the term of the lease, accepting payments from the tenant, paying real estate maintenance costs, etc.), their cost is negotiated additionally.

Question: Who pays for the operation and maintenance of rented property?

Answer: The lessee and the landlord can agree on any rental conditions, however, as a rule, the landlord is responsible for paying maintenance costs (Maintenance Fees / Service Charges) and overhaul of real estate. All current expenses associated with the operation of the leased object, such as: payment of water, electricity, air conditioning, telephone, Internet connection, etc., as well as ongoing repair of real estate, are borne by the tenant. Moreover, the tenant connects utilities from the respective suppliers independently and in their own name. The tenant also pays the so-called. “housing fee”, which is a municipal fee of 5% of the annual rent. The fee is charged by the Dubai Electricity and Water Authority (DEWA) in equal installments throughout the year, along with payments for electricity and water. If the real estate unit is not connected to water and electricity (i.e. is not populated), then the housing tax is not charged. Despite the fact that the housing tax was introduced a long time ago, so far it has not been universally levied, and it is still not included in many DEWA accounts.

Question: Is it possible to do without agents in real estate transactions in Dubai?

Answer: Almost no real estate transaction is complete without the participation of agents in Dubai, as, indeed, in the rest of the world. It is in real estate agencies, most often, clients who wish to contactto rent, rent, buy or sell real estate. Working in the market, agents, like no one else, possess information about who, what and how much they want to rent, rent, sell, or buy. However, far from all professional market participants are duly registered and operate legally.

Question: What are the requirements for real estate agents in Dubai?

Answer: First of all, it must be borne in mind that, in accordance with the Order of the Chairman of the Dubai Land Department No. 85 of 2006, all real estate agencies operating in Dubai must have a license for this type of activity and must be registered in the Agency’s special register for Dubai Real Estate Market Regulation (RERA).

Since business entities in the UAE do not have universal legal capacity, the permitted type of activity must be clearly indicated in the license.For example, for mediation in the sale, purchase or lease, these types of activities must be explicitly indicated in the license. At the same time, all agents of the company must undergo an appropriate training course and receive personal brokerage cards with an individual number. Such measures are primarily aimed at protecting the rights and interests of clients and are designed to minimize the possibility of fraud on the part of agents.

Question: Why is it important that an agent is properly registered?

Answer: Dubai's real estate market is multinational. Buyers, sellers, landlords and tenants are usually foreign nationals. Where can they look for each other in case something goes wrong? Therefore, a real estate agency with a registered office in Dubai is a serious guarantor of the transaction. In addition, an important factor is the requirement of legislation on 100% ownership of such a company by local residents - citizens of the UAE.

Indeed, in most cases, the real estate agency acts as a third party in the transaction between the seller and the buyer, guaranteeing the interests of both. For example, as a rule, it is the agency that accepts the deposit from the buyer and holds it until the final settlements and registration of the transaction. For the buyer, this guarantees a return of the deposit if the transaction does not take place due to the fault of the seller. And the seller, in turn, can count on the payment of the deposit amount as compensation if the transaction does not take place due to the fault of the buyer. PR

You can get additional information about real estate in Dubai from IMEX Real Estate specialists by tel. in Moscow +7 495 5100008, toll-free number in the UAE 800-IMEX (800-4639) or by sending a request by e-mail [email protected]

Watch the video: Dubai Real Estate: FAQ for first time buyers (April 2020).