The land of architectural wonders, Dubai, is known is known for its high-rise towers and villas offering the coveted idyllic lifestyle. In the recent years, due to the reformation of its property laws, Dubai has been the center of attraction for investors in the real estate market.
In 2002, freehold ownership was introduced causing a flurry of investments in residential and commercial properties in UAE. With the onset of successful reforms by Dubai, other emirates like the Northern Emirates and Abu Dhabi followed suit.
While you might be considering an investment in the Dubai real estate industry, it would be prudent to be aware of the property laws and terminology that is frequently used:
Introduced in 2006, Law No. 3 states that non-UAE nationals can own properties in designated areas for a period of 99 years, either in the form of a freehold property or leasehold right over a real property.
Freehold means that the buyer has full ownership of the land. Leasehold means that a third party has an interest in the new property. Dubai offers both kinds of developments for sale.
NOTE: Leasehold developments do not provide a residential visa to property owners.
3 scenarios warrant for the sale and transfer of property in Dubai:
The procedure is simple and acts as a safety net against any possible administrative or human error.
In “Secondary Market” sales, no transfer fee charge by developers is permitted; the transfer fee is only payable to the Dubai Land Department.
The Dubai Government has stepped in to ensure that all Dubai property ownership is recorded in one central place, i.e. The Dubai Land Department.
Law 8 2007, also known as Escrow Law, was passed in June 2007. This law provides guarantees and reassurances to property investors in order to create a safe environment for feasible investment. With 400 RERA licensed real estate developers to provide the best investment opportunities, the Law 8 2007 applies to any individual or company receiving off-plan payments for property that is not yet completed.
The buyers deposit all payments for the purchase of any off-plan units into a specific bank account which is operated in accordance with the predetermined conditions and terms approved by the Dubai Land Department (DLD). The responsibility of the DLD is to monitor and locate any infringement of the provisions regulating the establishment and operation of the escrow account.
Dubai Government takes defaulters very seriously. A fine of AED 100,000 or/and imprisonment can be inflicted if the developer fails to respect the registration with the DLD; does not carry on with its activities; and provides false documentation for the purpose of obtaining a license.
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