Dubai is under construction. Dozens of major development companies operate in the emirate, building skyscrapers and villas. Each of them is interested in the rapid sale of square meters and the turnover of funds. Mortgage remained the main method of acquisition until recently, but the government decided to reduce the debt load and increase the down payment size. This caused a glut in the market – not everyone who wants to live with a view of the Persian Gulf has the funds even for a fifth of the cost of a studio or apartment. Long-term rentals, offered as an alternative to buying, do not suit those who want to spend much time in Dubai.
Rent-to-own Dubai is a unique scheme that benefits both the developer and the buyer. The tenant eventually acquires ownership of the selected property in Dubai by paying the amount monthly. And although the payment is usually higher than for a simple lease, the benefits are obvious – with each tranche of the rent to own account, the buyer brings the date of obtaining flats for investment in Dubai Marina or any other district.
Features of renting real estate with the right to purchase in the UAE
Mortgages in the UAE have some peculiarities. It is possible if the applicant’s solvency and seriousness of intentions are proved, but an initial payment is required. The buyer is obliged to repay at least 25% of the cost at his own expense. Only after that, the bank will consider the possibility of providing the missing amount on credit. Given the cost of Dubai real estate, you can calculate what amounts are involved.
The rent-to-own scheme in Dubai is only two years old. It was first proposed by the premium developer Dubai South, who assessed how much space is idle due to the lack of potential buyers of the amount for the first installment. Representatives of the company developed and carried out a simple and profitable scheme through the administrative authorities.
The initial payment rent to own (still the same 25-30%) is divided into equal shares for 2-3 years. These payments are the cost of rent. Given the large amount, these shares often exceed the price of equal rental property.
Having paid this part of the rent to own Dubai, the tenant has the right to receive a mortgage and pay off the balance of the cost or continue to pay the amount in installments. Specific agreements and options are all spelled out in the same contract.
Both parties are responsible for fulfilling their part of the contract, and each stage is reflected in an additional agreement – the share paid under the rent-to-own contract is deducted from the initial fixed cost of the lot. With each step, the remainder decreases.
Dubai banks provide a high percentage of mortgage loan approval to those who have already paid 25%, so there are practically no failures due to the fault of financial institutions. Experienced lawyers the real estate agents provide for unforeseen circumstances in the contract so that customers are insured even in such situations. Almost all major developers work under the rent-to-own Dubai scheme – Nakheel Properties, NSHAMA, Emaar Properties, DAMAC Properties, and others. You can buy with the right to buy residential and commercial real estate in any corner of the emirate.
Registration of the procedure – stages and obligations
When making a transaction under the rent-to-own scheme, both parties are protected by contracts and obligations; therefore, the obligations are bilateral. The developer undertakes to immediately provide access to the premises and give basic rights to use it. The entrant cannot only do a radical redevelopment and resell the object without the landlord’s consent. However, with the appropriate registration of the new rent to own participant, such a right may be provided for by the contract. The original tenant may be entitled to a partial investment refund in this case.
The main guarantees are given to the purchaser. He gets:
- the fixed final cost of a particular object;
- the opportunity to move in and use the apartment/house without delay;
- exact terms and amounts of payments for the first stage;
- the right to repay with a mortgage or continue payments in shares in the second stage;
- guarantee that the lease agreement will not be terminated.
After the first share’s redemption, the ownership transfer takes place. From that moment on, the actual tenant becomes the property owner, although restrictions on transactions with objects remain – the apartment or villa is still pledged but already with the bank. In any case, after the payment of the last tranche, the rent-to-own Dubai tenant receives all rights to the property.
Advantages of the rent-to-own format
There are many more advantages to such a deal:
- Unlike a mortgage loan, the client does not need to look for a large amount for a down payment.
- The rent-to-own agreement is concluded without the bank’s participation, and the homeowner’s rights are protected by the very fact of ownership. If the client does not pay, he is simply evicted. Therefore, transactions are concluded faster and more willingly, and credit history is less important.
- In the rent-to-own agreement, you can prescribe the forms of payment at the second stage – this will be complete mortgage repayment or similar equal payments within a specified period.
- All rent-to-own conditions are signed and registered with the Dubai Land Department. Violating any conditions entails serious sanctions for the developer, up to refusal to continue working according to such a scheme.
- The client has a guarantee that the developer will transfer the rights to the object to him, even if the property’s value increases significantly.
The rent-to-own Dubai form is becoming more and more popular. Now, you can buy an apartment, flat, or villas in Dubai with this installment plan in almost any corner of the emirate.
Want to know more? Contact Emirates.Estate specialists, and they will tell you about all the features of such transactions, advise on the necessary documents and make a selection of properties for sale in Dubai that suit your requirements, which can be purchased.
