Key rules and standards in real estate in Dubai for buyers and investors 

real estate in Dubai

An increasing number of buyers and investors choose to purchase profitable properties in Dubai’s elite neighbourhoods, such as apartments in Royal Atlantis Resort and Residences in the Palm Jumeirah. Before making a transaction, they should learn the basic rules and regulations in force in a fast-developing city. Despite many benefits of investments in Dubai real estate, it comes with some risks. That is why the correct information about the laws in this field is important for potential buyers.

The Dubai Land Department was established in 1960 to help regulate real estate transactions. The government has established rules and norms to clarify the various legal issues connected with owning, buying, and selling residential and commercial units. The main purpose of these rules is to protect investors’ interests and provide them with opportunities for a quick and smooth process of conducting a transaction.

Who can buy property in Dubai?

Buying real estate in Dubai used to be an incredibly difficult process for foreign buyers and investors. Because of their growing interest in local residential and commercial properties, Prince Mohammed bin Rashid Al Maktoum announced a new property law that allows foreign citizens to rent accommodation for 10 to 99 years in certain locations in the city.

Foreigners who have obtained ownership can own the acquired assets forever in case of timely updates of the rent contract. Moreover, they are allowed to pass it on to others by inheritance. If a foreigner fails to exercise this right, the beneficiary will be able to recover these assets after the foreigner’s death.

In order to obtain full ownership of properties in certain areas of Dubai, buyers must receive approval from the government. But in location-freehold zones, any foreign natural and legal person can already freely own residential or commercial units with no additional procedures.

Currently, the Dubai government allows foreigners to own local accommodation under three types of conditions:

  1. Freehold. Freehold allows a foreigner to own a residential or commercial real estate and do anything they want with it. The property is registered in the name of the purchaser and his successor can get ownership of the property after the death of his ancestor. Only government-approved construction companies should put a new property for sale in Dubai.
  1. Usufruct. Usufruct allows a foreigner to rent a property long-term. In this case, he can also do whatever he wants with the unit, except destroy it and make it unhabitable. Long-term leases vary from 10 to 99 years for a residential unit and up to 50 years for a commercial unit.

3.Commonhold. Apartments are usually sold under commonhold terms. In this case, the buyer, along with other residents of the apartment building, should pay fees for the maintenance of common areas which are usually charged by the building owner (most often it is a real estate developer). As with freehold, commonhold allows the owner to sell and transfer his property as an inheritance.

Dubai property laws

Most of the legal acts adopted since 2006 have increased the customer’s trust in real estate in Dubai. For example, amendments to the Tenancy Law encourage homeowners to invest and make a profit by renting out their homes. A new decree adopted by the Real Estate Regulatory Agency (RERA) also places restrictions on rent increases.

Dubai is the most densely populated and famous city in the UAE. The foundation of the local economy is not oil, but the real estate industry, the tourism industry, and financial services. The city’s residential and commercial real estate markets used to be the fastest growing industry. But the recent global financial crisis and the pandemic have taken their toll on its development. In the end, asset prices dropped, and buyers and investors had a good chance of getting the best deal.

Now is the best time to buy housing units in Dubai. To close a successful deal, each buyer should be aware of the specific rules and regulations about purchasing, owning, and selling local properties. The following are three key property laws. They serve as the foundation for a contract’s profitable and secure conclusion.

The property Law No. 7

The Real Estate Law No. 7 was passed by the Dubai government in 2006. He loosened restrictions for foreigners on the ownership of residential and commercial entities in the city. Previously, citizens of foreign countries were not allowed to own land in Dubai. After the introduction of the Law No. 7, foreigners and non-residents got the right to register ownership of real estate for a period specified in the contract (up to 99 years), and approved by the government of the emirate.

Property rental laws

In Dubai, a rental agreement is usually signed for one year. Landlords are not allowed to raise rent. The only exception is the case when the contract duration comes to an end and it is time for its extension. But even in this situation, the landlord does not have the right to increase the rent by more than 15%.

In case of disputes and conflicts between the tenant and the homeowner, it is necessary to file a claim with the Rent Control Committee in Dubai Municipality. The commission figures out the problem from both sides and makes an appropriate decision. The tenant and the landlord will have to submit to the decision made by the Committee.

The Property Inheritance Law

This law may seem more complicated than other real estate laws in Dubai. Inheriting properties owned by a foreigner proceeds in accordance with the jurisdiction of the state where this foreigner has died. Civil competence takes place in accordance with the jurisdiction of the state where this foreigner is used to have citizenship. The inheritance of immovable property will be regulated according to Shariah laws. These laws, as most of you know, are not very loyal to non-Muslims.

Assistance with buying property in Dubai

Knowing the rules and standards for real estate in Dubai is very important for foreign buyers and investors. Anyone who is about to purchase, sell, or rent out private housing unit should follow local laws. This will help to secure and put to full use the assets located in the emirate. Also, with the help of awareness on this issue, homeowners will be able to leave property to their heirs.

Ax Capital accompanies its clients through the entire life cycle of owning and living in a housing unit, buying, selling, renting, managing, maintaining it and much more. The agency provides an extensive database with thousands of exclusive residential and commercial properties, and the services of specialists with in-depth knowledge and rich experience in the housing market in the emirate. Visit the official website to take your first step towards your dream home in sunny Dubai.

About Amanda

I love to buy a lot of products for the home, and dissect them out. I split them into duds and winners, and share the findings here on my site. As a reader of my site, I'm aiming for your next purchase to be an informed and inspired one.

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