Property in Dubai
When you start thinking about buying villas in UAE for expats there may appear a million questions. We will answer five most frequent questions about real estate in Dubai.
Can foreign citizens buy real estate in Dubai
Citizens of foreign states that are not members of the Gulf Cooperation Council (GCC) have the right to acquire housing in Dubai in full ownership only in specially stipulated territories, in the so-called freehold zones. The list of such zones is established by the Decree of the ruler of Dubai No. 3 of 2006. These include almost the entire territory of such popular areas as The Palm Jumeirah, Emirates Living, Jumeirah Lakes Towers, etc.
Is property registration required in Dubai and who does it
Registration of rights to real estate in Dubai is handled by the Land Department. Today, property rights, long-term leases, pledges of real estate, etc. are subject to mandatory registration in the relevant register. Registration is carried out both for ready-made and put into operation facilities, and for those under construction (“off-plan”). In the first case, the owner receives a registration certificate for real estate (Title Deed), and in the case of registration of housing that has not yet been built (Oqood Registration), the initial contract of sale (Initial Contract of Sale). The cost of registering a transfer of ownership of housing with the Land Department is generally 4% of the sale price plus AED 4,000 (approximately USD 1,100) for the services of a transaction processing center (DLD Trustee) plus a small fixed fee (depending on the type of property registered) for issuing a certificate.
What taxes must the owner of a property pay
There are no taxes on property and income in the United Arab Emirates. Therefore, the ownership of housing, as well as the receipt of income, for example, from its rental, does not entail any tax consequences for the owner within the jurisdiction of the UAE. However, it must be understood that the owner of the property is responsible for its proper maintenance and is obliged to pay the costs of its maintenance (the so-called Maintenance Fees or Service Charges).
The amount of maintenance fees is set by the management company in agreement with the owners association (if such an association has already been established), and approved by the Dubai Real Estate Regulatory Agency (RERA).
The maintenance fee includes the costs of:
- building security,
- cleaning common areas,
- garbage collection,
- maintaining infrastructure (parking lots, swimming pools, gyms, recreation areas), etc.
As a rule, such payments are charged annually for a year in advance and for Dubai are, depending on the project, somewhere from USD 20 to 80 per sq. m. per year.
Can a property owner in Dubai rent it out
Relations between landlords and tenants are regulated by Law No. 26 of 2007, as well as additions to it. According to the current legislation, any owner of real estate in the territory of the emirate has the right to rent out his property on a long-term lease. Usually, real estate is rented for a period of one year with a subsequent extension. Owners can also apply to a licensed company and transfer their property to it. In this case, the management company takes care of all issues related to relations with tenants.
What rental income can a property owner expect in Dubai
If we talk about the average market indicators of the current profitability of investments in real estate, then for housing in Dubai today the rate of net rental income (that is, income minus housing maintenance costs) averages 5-8% per annum. The spread of yields is due to differences in the type and category of real estate, its location and the cost of maintenance. At the same time, more expensive exclusive property, as a rule, gives a lower 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 retail space (this includes not only shops, but also service points, cafes, restaurants, etc.) is potentially capable of generating higher income (up to 15%), however, this depends both on the parameters of the property itself, and on external factors.
Real estate agency in Dubai
All of these and many other questions can be answered by the professionals. Contact Ax Capital agency and they will assist you in purchasing real estate and help you with the every step of the deal.
