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Legal considerations when purchasing a home as a foreign national in UAE?

Property purchasers might find several attractive options in the UAE real estate market. Real estate in the UAE draws both residential and non-residential investors since rental income and capital gains are tax-free. Additionally, changes to several emirates' property rules have made it possible for foreigners to purchase property in the UAE (non-resident or expat).

(April 17, 2019) Sheikh Khalifa bin Zayed Al-Nahyan, the president of the United Arab Emirates (UAE) and governor of Abu Dhabi, released a new, unnumbered law that modifies Law No. 19 of 2005, which governs the ownership of real estate properties. The new amendment permits foreign nationals and foreign legal organizations to own and obtain full ownership of real estate in Abu Dhabi's investment zones. Previously, foreigners were only permitted to own the property itself, not the land upon which the property was constructed (Sheikh Khalifa bin Zayed Issues Law Amending Real Properties Law in Abu Dhabi, AL-EMARAT AL-YOUM (Apr. 17, 2019) (in Arabic).

The new law has received the support of Shaikh Khalid bin Mohammad bin Zayed Al-Nahyan, the son of the president of the United Arab Emirates and the head of the Abu Dhabi government's Executive Committee of Investment Zones, who declared that it adheres to the government of Abu Dhabi's economic vision for the country through 2030. The Abu Dhabi Economic Vision 2030 (The Government of Abu Dhabi, November 2008) also urges investors to increase their real estate investments and land holdings in the Abu Dhabi investment zones. Property Ownership in Abu Dhabi, Khalifa Issues Law Amending Real Estate Regulations, GULF NEWS (Apr. 18, 2019).

Here are some key legal considerations to keep in mind:

  1. Freehold Areas: Foreign nationals are generally allowed to buy properties only in designated freehold areas. These areas are specified by each emirate, and ownership in these zones grants full ownership rights to the property, including the land it sits on.

  2. Leasehold Areas: If the property is located in a leasehold area, foreigners can acquire the property through a lease agreement with the landowner. Leasehold arrangements are typically long-term, ranging from 30 to 99 years.

  3. Ownership Restrictions: Non-GCC (Gulf Cooperation Council) citizens may not own land or properties in certain areas, like agricultural land or areas of strategic importance.

  4. Property Value Threshold: Some emirates may impose a minimum property value threshold for foreign buyers, meaning they can only purchase properties that meet or exceed a certain value.

  5. Registration and Documentation: Purchasing property in the UAE involves various legal documents and registrations. It's essential to engage a reputable lawyer or legal advisor to handle the transaction and ensure all documentation is in order.

  6. Mortgage Regulations: Foreign nationals may face different mortgage regulations and interest rates compared to UAE citizens. Be sure to understand the terms and conditions of any mortgage if you plan to finance your property purchase.

  7. Tax Considerations: The UAE generally does not levy property taxes; however, there may be other fees involved, such as registration fees and maintenance charges.

  8. Title Deed: The Title Deed is a crucial legal document that proves property ownership. Ensure that the Title Deed is registered under your name and accurately reflects the details of the property.

  9. Real Estate Agent: When working with a real estate agent, choose a licensed and reputable agent who understands the specific rules for foreign buyers.

  10. Inheritance Laws: Familiarize yourself with UAE inheritance laws, as they differ from those in many other countries. Proper estate planning can ensure your property passes on to your desired beneficiaries.

  11. Legal Consultation: Given the complexity of property transactions, it's advisable to seek legal consultation throughout the process to ensure compliance with all relevant laws and regulations.

It's crucial to conduct thorough research and seek professional advice before proceeding with a property purchase in the UAE. The legal landscape may evolve, so staying updated with the latest regulations is essential.

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