The Ultimate Guide:  Rules for Foreigners to Buy Properties in UAE

The property market in UAE is one of the most regulated and transparent in the area. Be it tax-exempt rental yields, lifestyle investments, or solid capital gains, the UAE housing market presents an abundance of chances for property investments. 

Ongoing changes in property ownership rules for outsiders have opened the market for abroad financial investors. 

Those keen on buying real estate as expat or abroad financial backers or persons who like to buy property in UAE should remember that the guidelines for property ownership differ for them. What are the limitations for non-UAE residents for obtaining home loans to buy properties in the country?  

What is freehold property in Dubai? What are the circumstances for purchasing land for expats? Before you focus on buying a villa, apartment or some other sort of land in the UAE, it’s essential to consider these property ownership rules for foreigners. 

Rules for Foreigners for Buying Properties in the UAE

Earlier, foreigners or expats weren’t allowed to buy property in the UAE. The first emirate to bring this change in this regard was Dubai. Dubai, which is the capital city of Abu Dhabi and other emirates including Ajman, Sharjah and Ras AI Khaimah followed suit one after the other.  

However, the main thing to keep in mind is that property proprietorship for expats is accessible in two classes – freehold and leasehold.  

An outline of freehold versus leasehold property ownership and property proprietorship rules for foreigners in various emirates can provide you with a superior thought of your choices:   

Types of Properties in Dubai

As per a residential perspective, there are basically three property types that you can purchase as an outsider in Dubai. Every one of these properties connects to a different style of home or land inside Dubai. Prior to purchasing land in Dubai, you ought to completely assess the market. 

Freehold Properties

With continues development of freehold properties, the process of buying properties in Dubai for foreigners has become very much easier than ever.  

Freehold properties are generally preferred by outsiders who are keen on putting investments into the UAE, or who intend to purchase a flat in Dubai. People living in the UAE approach freehold properties that can be leased, sold, and acquired whenever required. 

Freehold properties that are available to be purchased in Dubai have likewise been related to general parcels of land as opposed to homes or apartments. This permits owners to foster a property of their choice on the land. 

Since the financial backer enjoys full responsibility for the property in perpetuity, the property can be utilized for any reason. It likewise requires less amount of paperwork and doesn’t require consent from the state. 

If you are wanting to buy a freehold property in Dubai or buy an apartment in Dubai, you should buy this through a govt administration-endorsed property or land developer. 

Commonhold Properties

One more type of property that can be bought by possible financial backers in Dubai is commonhold properties. These properties consist of primary apartments, condominiums, and non-residential units in a building.  

Buying a commonhold property furnishes you with the singular ideal for purchasing, selling, or leasing a property with the end goal of inheritance. 

Commonhold properties are similar to freehold properties. However, these commonhold properties are very similar to apartments, owners must make fee payments for the property upkeep as well as for its common areas. These buildings are usually owned by real estate or property developers.  

Usufruct Properties

A typical kind of game plan for property within the UAE is called usufruct. This is essentially viewed as rent for long-term investment. The occupant of the property doesn’t reserve the right to correct or change a usufruct property in any capacity. 

Leases for usufruct properties have a daily existence that could go as long as 100 years. 

Purchasing Property in Abu Dhabi

As per the regulations concerning the guideline of the real estate sector in Abu Dhabi, foreigners are presently permitted to possess property just as apartments and villas. They are allowed to buy a villa in Abu Dhabi and also an apartment in Abu Dhabi.

There are four fundamental systems that administer purchasing land in the country’s capital. These include:

1. Musataha: Through Musataha contracts, expat purchasers are qualified to enjoy the utilization, modification or development of purchased housing units for a particular time frame period. They are likewise permitted to own residential units for as long as 50 years. The renewal period time frame is pursued in concurrence with the concerned parties for a similar time span.
2. Proprietorship Deeds: Expats are given possession deeds of private units for a very long time. Barring land ownership, foreign landowners can completely dispose of the villas and apartments they purchase.
3. Long-term rent: For an initial period, a long-term lease isn’t exactly for a considerable length of time.
4. Usufruct: Enabling expatriates to possess the private property for more than 99 years, a usufruct contract likewise empowers proprietors to utilize the property and its offices without changing it.

Abu Dhabi’s Real Estate Law

In the year 2019, there were some changes made to Abu Dhabi’s real estate law regarding foreigners owning property in investment areas.  

One of the progressions specifies that the people who have “musataha” or “usufruct” contracts for over 10 years reserve the right to discard their properties, including the right of home loan, without the consent of their property managers.  

Moreover, landowners are not to contract the property without the assent of musataha or usufruct holders. 

Freehold Properties in Abu Dhabi

The new changes in Abu Dhabi property regulations presently make it feasible for a foreigner to purchase freehold property in the UAE’s capital city.  

As of now, top investment zones for freehold buying in Abu Dhabi include Saadiyat Island, Yas Island, Al Raha Ocean side, Masdar City, and many more. 

Purchasing Property in Dubai

Foreign property ownership is allowed in regions that are designated freeholds in Dubai. What this fundamentally means is that expats and foreign purchasers (who don’t live in the UAE) may get freehold proprietorship privileges without leasehold rights, usufruct rights and restrictions for as long as 99 years. Moreover:

• Title deeds are given by the Dubai Land Office.
• There is no age cutoff for property ownership.
• Well-known freehold property regions in Dubai incorporate Downtown Dubai, Business Bay, Discovery Gardens, DIFC Dubai and others.

Purchasing Property in Sharjah

As per regulations administering the usufruct of land properties in Sharjah, foreigners aren’t allowed to own freehold property in the UAE. However, they have the right to usufruct for a limit of 100 years in the wake of registering with the Sharjah Real Estate Registration Department (SRERD).

Moreover, the usufruct right must likewise be within the areas illustrated by the Government of Sharjah and solely after securing unique authorization from the ruler of Sharjah.

Taxation Rules Foreign Investors Must Know

The UAE is popular for its expat-friendly taxation system. Nonetheless, while the country doesn’t levy tax on bought property, expatriates should consider legitimate liabilities that are applicable to their home countries. 

For example, in case you are a US resident purchasing a property in the UAE, it’s essential to consider possible ongoing tax liabilities on profit like rental income, interest on savings, profit instalments and different necessities in the United States.

In such a situation, it is advised to consult tax specialists within the country and get a better idea of duty liabilities in unfamiliar property buys, prior to purchasing a property in the UAE.