Freehold vs Leasehold Ownership in Dubai

Out of all the seven emirates in the UAE, Dubai was the first to involve itself with freehold properties. In 2001, the government allowed expatriates to get a 99 year lease of Dubai freehold properties. It was in 2002 the government issued the Freehold Decree, which permitted foreign nationals within minimum 21 years of age, to buy, sell, lease and rent properties on freehold ownership in specially designated areas around Dubai. Emaar Properties was the first real estate developer in the city to get freehold properties.Shortly after, real estate investors and foreigners started taking interest in the UAE’s real estate market.

Freehold and leasehold are two forms of legal property ownership available to expats wanting to buy in the city. It is a substantial financial commitment so it’s important to understand the difference and the pros and cons before making an informed decision:

Leasehold Property Ownership

Buying property on a leasehold basis means that it can be leased from its owner for a period of 99 years or less. This type of property ownership only allows the buyer rights to the units for a long-term and not the land itself. If the resident would like to make the remodelling, repairments, alterations or anything else, permission is required from the freeholder.

PROS

1. Expats in Dubai are not permitted to own properties on freehold in non-designated areas, purchasing properties on leasehold offers buyers more options in terms of price and area selection.

2. Owners of leasehold properties have limited liability when it comes to property maintenance. it is the landlord’s responsibility to pay for repairs.

3. Once the lease is over, the property goes back to its freeholder. However, the lease can be renewed at the end of the term once it expires.

4. CONS

   1. Changes and improvements such as remodelling, alterations or renovation, will need written approval from the original holder of the property. Subletting will not be allowed in this case.

   Freehold Property Ownership

   Freehold property ownership in Dubai allows the owner to have complete ownership over the home in addition to the land that the property stands on. Dubai Land Department (DLD) registers the buyer’s name as ‘landowner’ in the registry as well as grants a title deed for the property. The unit can be freely leased, sold or occupied on the will of the owner, unless they decide to resell to anyone.

   Expats can buy freehold properties in specific freehold areas in Dubai that include such as Dubai Hills Estate, Downtown Dubai, Arabian Ranches and Dubai Marina.

   PROS

   1. The owner has full ownership and control over the property and doesn’t require permission before making any renovations or minor changes. If it’s the facade of the property, then permission is needed from the respective developer.

   2. Freehold property owners and their families are entitled to renewable UAE residence visas if the value of the property is above AED 1 million.

   3. It can be inherited by the family if the owner passes away with or without a presence of a will.

   4. The property can be sold or rented out at the owner’s own discretion

   5. Foreigners residing outside UAE can also buy freehold properties.

   CONS

   1. Buyers can only buy properties from designated freehold areas in Dubai. They have limited options.  

   2. The freehold property owners are complete liable and responsible on a maintenance basis and structural repairs.

   3. Lastly, there is an additional expense. Annual maintenance charges are billed to the freehold owner.

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