ANSWERS TO MOST FREQUENTLY ASKED QUESTIONS May Do foreign citizens buy property in Dubai?
Citizens of foreign countries who are not members of the Arab Gulf Cooperation Council (GCC) are entitled to acquire full ownership of real estate in Dubai ("freehold") only in specially designated territories, in the so-called freehold zones. The list of such zones is established by the Decree of the ruler of Dubai No. 3 of 2006. These include almost the entire territory of "new Dubai", including such popular areas as Dubai Marina, The Palm Jumeirah, Emirates Living, Jumeirah Lakes Towers, etc.
Is required registration of real estate in Dubai and who is involved in it?
Real estate rights registration in Dubai is handled by the Dubai Land Department. Today, property rights, long-term leases, real estate pledges, etc. are subject to mandatory registration in the relevant register. Registration is carried out both on ready-made and commissioned facilities, and on construction projects (“off-plan”). In the first case, the owner receives a registration certificate for real estate (Title Deed), and in the case of registration of property not yet completed (Oqood Registration) - the initial contract of sale (Initial Contract of Sale). The cost of registering the transfer of ownership of real estate in the Land Department in the general case is 4% of the sale price plus 4000 drx UAE (approximately US $ 1100) for the services of a transaction processing center (DLD Trustee) plus a small fixed payment (depends on the type of registered property) for issuing a certificate.
What taxes should a property owner pay in Dubai?
There are no property and income taxes in the United Arab Emirates. Therefore, the possession of real estate in Dubai, as well as the receipt of income, for example, from its rental, does not entail any tax consequences for the owner within the UAE jurisdiction. However, it must be understood that the owner of the real estate is responsible for its proper maintenance and is obligated to pay the costs of its maintenance (the so-called Maintenance Fees or Service Charges).
The size of service charges is set by the management company in agreement with the owners association (if such an association has already been created), and approved by the Dubai Real Estate Market Regulatory Agency (RERA).
The maintenance fee includes the costs of guarding the building, cleaning of common areas, garbage collection, maintenance of infrastructure (parking lots, swimming pools, gyms, recreation areas), etc. As a rule, such payments are charged annually for a year in advance, and for Dubai, depending on the project, they range from US $ 20 to US $ 80 per square meter. m per year.
Can a property owner in Dubai rent it out?
Relations between landlords and tenants in Dubai are governed by Law No. 26 of 2007, as well as its amendments. According to current legislation, any owner of real estate in the territory of the emirate of Dubai has the right to lease his property for long-term rent. Usually, real estate is rented for a period of one year, followed by renewal. Owners can also turn to a licensed company and transfer their property to it for management. In this case, the management company takes care of all issues regarding relations with tenants.
What rental income can a property owner in Dubai expect?
If we talk about the average market indicators of the current return on investment in real estate, then for housing in Dubai today the indicator of net rental income (that is, income minus the cost of servicing real estate) is on average 5 - 8% per annum. The spread in profitability is due to differences in the type and category of real estate, its location and cost of services. Moreover, more expensive exclusive real estate, as a rule, gives less return in the form of rental income than mass housing in affordable projects.
As for the office real estate market, today such investments are less attractive in terms of rental income than the purchase of housing. Leasing of retail space (this includes not only shops, but also service points, cafes, restaurants, etc.) is potentially capable of generating a higher income (up to 15%), however, this depends on the parameters of the property itself, and from factors external to it.
Are there any restrictions on the cost of renting in Dubai?
By concluding a real estate lease agreement, the parties to the transaction have the right to agree on any conditions that do not contradict the current legislation. There are no direct restrictions on the rental price, which is indicated in the contract between the lessor and the lessee. However, there are legislatively established restrictions on increasing the cost of renting when renewing a contract for the next term. When revising leases upwards, the landlord should be guided by the index of the Dubai Real Estate Regulatory Authority (RERA), which reflects the average rental rates for various types of housing depending on the area.
What are the requirements for tenants in Dubai?
A tenant of real estate in Dubai (if we are not talking about short-term rental housing) can only be an individual or legal entity with resident status in the United Arab Emirates. That is, a lease agreement can only be concluded with a citizen of the UAE or a country that is a member of the Council for Cooperation of the Arab States of the Persian Gulf, or with an expatriate with a resident visa.
Accordingly, the lessee is a legal entity, must have the appropriate registration in the UAE. This can be a local organization, a company registered in a free economic zone, or a branch (representative office) of a foreign company.
Is registration of a rental contract for real estate in Dubai required and who is involved in it?
In accordance with the laws of the Emirate of Dubai, all leases of real estate on its territory must be properly registered. The registration of rental contracts is handled by the Dubai Real Estate Regulatory Agency (RERA). Especially for these purposes, the agency created the Ejari system, which allows registering contracts via the Internet and specialized service centers. Both the lessor and the lessee can register a lease. So far, liability has been established for non-compliance with the requirement of mandatory registration, but according to the provisions of the law, all participants in transactions that have not been registered are automatically deprived of the right to apply to the judicial and government bodies for the protection of their interests. Also, registration of rental contracts in the Ejari system is required for the opening of family residence visas.
How to pay rent for real estate in Dubai?
In the rental market in Dubai, as well as in the rest of the UAE, it is customary to pay rent for the year ahead.
As a rule, all payments are made by bank checks. Depending on the terms of the contract, the annual rental amount is paid by one or more checks. In the latter case, checks are dated by future dates. For example, if the number of checks is 4, then the dates of the checks will correspond to dates in the future every quarter, and if the number of checks is 12, they will be dated at intervals of a month. Accordingly, upon the date indicated on the check, the lessor can present it to the bank and receive money from the tenant's account. The issuance of unsecured checks in the UAE is a criminal offense, so paying with checks, although it does not give a 100% guarantee of rent, is a fairly reliable and convenient way to make payments.
Can a landlord who is not a resident of the UAE receive money on a check?
It must be remembered that the period during which a check can be presented for payment is 6 months, after which it is canceled. If the check is written in the name of an individual and there is no mark on it only on the recipient's bank account, then the person indicated on the check, regardless of the presence of a resident visa, can receive cash at any branch of the issuing bank. Otherwise, or if the check is written in the name of the company, money on it can only be received in a bank account, and the account must be opened in one of the banks in the UAE. Resident status is also not required. A number of banks in the UAE easily open accounts for non-resident property owners.
The procedure for opening an account with a bank takes less than an hour, and the minimum requirements for depositing money into an account to open it are currently 5 thousand drx (about US $ 1,400). If the listed rental options are not suitable for the lessor, he can conclude an agreement with the management company or with a real estate agency through which the rental was made. Then the checks can be issued in the name of the agency, and after receiving money from them, the agency transfers them (transfers in cash or in any other convenient way) to the lessor. The main thing in this case is to competently approach the issue of choosing a partner company.
Who pays a commission to a real estate agency? When the intermediary in the transaction is a real estate agency, he is paid a commission. According to existing practice, the tenant pays the commission to the real estate agency. Usually, this is 5% of the annual rental amount.
Agency services end after signing a lease. If the lessor needs additional agency services (representing his interests in the UAE during the term of the lease, accepting payments from the tenant, paying real estate maintenance costs, etc.), their cost is negotiated additionally.
Who pays for the operation and maintenance of rented property?
The tenant and the landlord can agree on any rental conditions, however, as a rule, the landlord is responsible for paying maintenance costs (Maintenance Fees / Service Charges) and major repairs of the property.
All current expenses associated with the operation of the leased object, such as: payment of water, electricity, air conditioning, telephone, Internet connection, etc., as well as ongoing repair of real estate, are borne by the tenant. Moreover, the tenant connects utilities from the respective suppliers independently and in their own name. The tenant also pays the so-called “housing fee”, which is a municipal fee of 5% of the annual rent. The fee is charged by the Dubai Electricity and Water Authority (DEWA) in equal installments throughout the year, along with payments for electricity and water. If the real estate unit is not connected to water and electricity (i.e. is not populated), then the housing tax is not charged. Despite the fact that the housing tax has been introduced a long time ago, its widespread collection has not been properly established, and it is still not included in some DEWA accounts.
Is it possible to do without agents in real estate transactions in Dubai?
Almost no real estate transaction is complete without agents in Dubai, as indeed in the rest of the world. It is in real estate agencies, most often, clients who want to rent, rent, buy or sell real estate apply. Working in the market, agents, like no one else, possess information about who, what and how much they want to rent, rent, sell, or buy. However, far from all professional market participants are duly registered and legally operating.
What are the requirements for real estate agents in Dubai?
First of all, it should be borne in mind that, in accordance with the Order of the Chairman of the Dubai Land Department No. 85 of 2006, all real estate agencies operating in Dubai must have a license for the relevant type of activity and must be registered in the special register of the Market Regulatory Agency Dubai Real Estate (RERA). Since business entities in the UAE do not have universal legal capacity, the permitted type of activity must be clearly indicated in the license. For example, for mediation in the sale, purchase or lease, these types of activities must be explicitly indicated in the license.
At the same time, all agents of the company must undergo an appropriate training course and receive personal brokerage cards with an individual number. Such measures are primarily aimed at protecting the rights and interests of clients and are designed to minimize the possibility of fraud on the part of agents. Check the registration of a real estate agency and its agents on the official website of the Dubai Land Department at www.dubailand.gov.ae.
Why is it important that an agent is properly registered?
Dubai's real estate market is multinational. Buyers, sellers, landlords and tenants are usually foreign nationals. Where can they look for each other in case something goes wrong? Therefore, a real estate agency with a registered office in Dubai is a serious guarantor of the transaction. In addition, an important factor is the requirement of legislation on 100% ownership of such a company by local residents - citizens of the UAE.
Indeed, in most cases, the real estate agency acts as a third party in the transaction between the seller and the buyer, guaranteeing the interests of both.
For example, as a rule, it is the agency that accepts the deposit from the buyer and holds it until the final settlements and registration of the transaction. For the buyer, this guarantees a return of the deposit if the transaction does not take place due to the fault of the seller. And the seller, in turn, can count on the payment of the deposit amount as compensation if the transaction does not take place due to the fault of the buyer.
HOW DOES REAL ESTATE PURCHASE IN DUBAI
In its most general terms, the procedure for buying property in Dubai in most cases is as follows:
1. The buyer selects the property that he wishes to purchase.
2. The seller and the buyer sign a contract of sale, which reflects all the parameters of the transaction, in particular:
- value of acquired property
- additional payments associated with the transaction (commission of agents, payments to the developer, registration fee, reimbursement to the seller of the costs of maintenance paid in advance, etc.)
- the period during which the purchase and sale transaction must be completed
- terms and procedure for settlements
- liability of the parties in case of failure to fulfill the conditions of the contract
3. When signing the sales contract with the seller, the buyer makes a deposit (usually 10% of the value of the acquired property).
4. The seller draws up a permission from the developer to sell his property (No Objection Certificate, NOC), which is necessary for registering the transaction with the Dubai Land Department and confirms that the seller has no arrears in payments related to real estate.
5. After the permission to sell is obtained, the seller and the buyer register the property in the name of the new owner in one of the registration centers of the Land Department (DLD Trustee).Usually, at the time of registration, transactions are also settled.
HOW REAL ESTATE FOR RENT IN DUBAI
In its most general terms, the procedure for renting real estate in Dubai in most cases is as follows:
1. The landlord himself, or with the help of a real estate agency, is looking for a tenant.
2. When the tenant is found, the lessor signs a lease agreement with him, which reflects all the parameters of the transaction, in particular:
- rental price and payment terms
- rental period and terms of its extension
- additional costs associated with the operation of the property and their distribution between the parties
- liability of the parties in case of failure to fulfill the conditions of the contract
3. When signing the contract, the tenant pays the rent for the year (usually by check), as well as a security deposit (usually 5% of the annual rent).
4. Upon receiving payment from the tenant, the landlord gives him the keys, key fobs, access cards, etc., necessary for unhindered access to the rented premises and related infrastructure objects (pool, gym, etc.), as well as copies of documents ( certificate of ownership, passport of the owner, etc.), necessary leases
Atoru for connecting water, electricity, air conditioning, telephone, Internet, etc.
You can get any additional information about the acquisition and management of your property in Dubai from the specialists of IMEX Real Estate by tel. in Moscow +7 495 5100008, toll-free number in the UAE 800-IMEX (800-4639) or by sending a request by e-mail [email protected]
