Ask the Agent - How is buying property with Islamic mortgage different from conventional mortgage?

Ask the Agent - How is buying property with Islamic mortgage different from conventional mortgage?Sanket Khanna

- I own a shell and core space in TECOM which I intend to use as my office. I have heard horror stories of time and money drain in fit-out permits. What's the best way forward?

TECOM freehold offices come under TECOM-DED rules which are similar to the DED system but different in their own way. A fit-out approval for any shell and core office usually has a grace period of 90 days because it needs various permissions including from the planning and fire departments. You also need to apply a load and metre at DEWA and cooling services (as applicable). All these processes, starting from the submission and approval of plans and drawings to having a completion certificate, need to route through independent government bodies. The best way forward would be to hire a professional. Whether the fit-out is for domestic, retail, hospitality or leisure purposes, there are one-stop solution contractors who provide quality work.

- I just finished my apartment contract on Palm Jumeirah (we are moving to a villa), but my landlord is giving me a hard time with the rental deposit refund. Any suggestions?

Giving the landlord notice is a good practice to ensure he can check the property for damages. Any damage in the property during your stay should ideally be deducted from the security deposit. If the landlord is giving you a hard time on rental deposit refund, check your contract. Based on the terms and conditions, you have the right to ask the landlord a valid explanation for the delay. Ideally, a tenant must give a three-month notice before the contract expiry, or the contract is deemed to be renewed and the tenant is liable to pay the same rent as per the previous contract with RERA escalation (as applicable). If the tenant has given such notice and if it is established that there are no damages post-joint inspection, the landlord should refund the deposit in full. Otherwise, the tenant can lodge a complaint at RERA and the Rental Committee.

- Looking at the global instability and the sluggish European real estate market, do these have a positive impact on the Dubai market?

The crises in the neighbouring countries surely have a positive impact on the Dubai real estate market. Investors are seeking stability and safety from currency fluctuations. The UAE dirham's peg to the US dollar protects and secures investors from currency fluctuation challenges.

Ultra net worth individuals are reportedly seeking new investment havens following the crisis in Russia and the cooling of the Chinese economy. Luxury residential properties in the Dubai real estate sector have a history of good returns on investment. Besides this, Dubai provides a high standard of living with no visible issues, and its politically safe and secure atmosphere is ideal for raising families. These have and will keep on attracting a lot of nationalities to migrate to for a stable life.

- Do you see any positive impact of the Dubai Tram or the proposed Metro extensions on property prices?

The Dubai Metro has greatly affected the lifestyle of the residents. Given the time and expansion, the usefulness of the Tram will soon be appreciated the same way as the Metro. There was an initial upsurge in property prices with the announcement and inauguration of the Tram, which has been neutralised by the downward market sentiments. In the long run, this will surely give an edge to the neighbourhood and we expect a clear price variance in areas with Tram and Metro access compared to far-off areas with no such facilities. Dubai Marina (including JBR) and JLT are the main areas which have benefitted from such public transport systems.

The Dubai Trolley will soon become operational in Downtown Dubai, connecting the boulevard and various buildings to strategic points in the neighbourhood. The impact on pricing will be clearly visible the moment the market starts showing signs of stability and growth.

- Question of the Week: How is buying property with Islamic mortgage (Sharia-compliant) different from conventional mortgage (home loan)?

Mortgage seekers and potential new homeowners often wonder whether Islamic home financing is truly better than a conventional mortgage.

The conceptual difference between the two types of financing is that conventional mortgage is based on interest, which clearly contradicts with the Islamic faith.

However, in Islamic financing, the bank buys the property and leases (eventually sells) it back to the buyer at a price calculated using an agreed formula (which adds to the original value of the property a profit percentage).

The homeowner functions like an investor buying stock in the company over time until he attains complete ownership of the tangible asset, in this case, a home.

The best part about this is that it is not only Sharia-compliant home buying, Islamic home financing is also just as affordable as a conventional mortgage.

There are a lot of mortgage consultants in the market and the ideal way is to get quotes from two to three banks to compare the ideal mortgage that will suit your needs and requirements in line with your religious beliefs.

Ask the Agent - What are the measures taken by RERA to improve investor confidence?

Source: Sanket Khanna, Special to Freehold

The writer is CEO and Founder - SNS Properties

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