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Leasehold vs Freehold Property in Dubai

What is Freehold property vs. Leasehold property?

Dubai is the first emirate of the Unites Arab Emirates to open its arms to property ownership of foreign nationals other than GCC and UAE nationals. In the year 2001 Dubai government allowed a 99-year leasehold of Dubai real estate properties for foreign nationals. in 2002, Dubai Crown Prince, Sheikh Mohammed bin Rashid Al Maktoum, issued the freehold property decree allowing non-GCC and non-UAE  nationals full ownership of specified real estate areas in the Dubai whether residing in the emirates or not. This freehold property decree created a massive residential property boom in Dubai’s real estate sector and settled Dubai’s status high in the property market globally.

The two types of legal real estate ownership for expats in Dubai are freehold and leasehold ownership, and buying a property in Dubai is a huge financial decision, so it is going to be worth your while to do a thorough market and system research first, especially of your entitlements, as an owner before making the commitment as Dubai properties are worthwhile.

What is Leasehold property ownership?

Leasehold means a property can be taken on a lease from a freeholder for a period of 99 years or 50 years in some cases. Technically, it is buying the right to occupy or live in property for a set period of time, with which within the duration of the contract, paying ground rent to the landowner. The ownership of the property however, after the end of lease, will revert back to the landowner.

As an example, if you are an owner of a villa or an apartment offered as leasehold property, this meant that you own the said property for the next 99 years, however, the land it was built upon is owned by someone else. So, at the end of the lease, the landowner owns everything that is built on the land, including your purchased villa.

A leasehold property can be sold, used or rented in exactly the same manner as a Freehold with all the same benefits. Leasehold property ownership could be renewed after expiration of the lease contract for another 99 years.

Getting upgrade on a leased property such as additions, alterations, remodeling, or renovations is a bit complicated. As a leaseholder this would require approval in writing from the landowner of the building. For repairs, in most cases, the landowner is the one responsible for repair arrangements especially if the problem affects the structure of the building or shared areas in general. At the end of the lease, improvements and other up-gradations become the property of the landowner without any cost or obligation.

What is Freehold property ownership?

Freehold means taking complete ownership of the property outright including the structure and the land it stands on, with your name registered as the “land owner” at Dubai Land Department land registry. There are designated Dubai freehold properties, which must be purchased from government approved developers or real estate agents.

Freehold property owners can upgrade and do additions as they see fit on their property, have full rights to sell or lease the property at their own discretion, and an inheritor may inherit it upon the owner’s death.

Normally houses are sold as freehold. Freehold property owners and their family members could get renewable Dubai residence visas for a cost of five thousand AED, although they can choose not to reside in the property as Dubai residency is not a requirement to purchase and maintain a Freehold property in UAE.

Which one is for you?

The terms are not without legal obligations and the decision to invest will require a huge financial commitment, but still, there are a few things far more important about your home than just whether it is leasehold or freehold. The most outright difference between the two is obviously the control. Freehold owners have more control over their property than leasehold owners have. Even though, make sure you have a complete understanding of the rights and responsibilities that entail each type of ownership. Whether freehold or leasehold, you wouldn’t want to end up in a property you regret buying, so sort it out early on base of your use, need, and budget for the property.

Looking for property in Dubai?

Looking for a Leasehold or Freehold property in Dubai? At Greenhouse Real Estate, our senior agents can help you select the right property in Dubai. Buy and sale all kind of leasehold and freehold property in Dubai with Greenhouse, contact us now for best freehold residential and commercial properties in UAE.

 

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