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In early 2001, Dubai made the historic decision to open up its property market. It started gingerly, allocating areas for foreigners to own property on leasehold basis. A year later, perhaps due to the favorable response, more areas were allocated for foreign ownership, but this time on freehold basis. As if the floodgates had opened, there was an explosion of builders, contractors, ambitious projects, new jobs and tourists. Dubai had arrived.
Other emirates soon followed and now, all seven emirates have designated areas where foreign nationals can own properties, both on leasehold and freehold basis. Foreigners who do not reside in the UAE, upon purchasing property, can obtain a special residence visa that entitles them to a six-month to a three-year stay in the country.
Leasehold, as the term implies, is leasing on a long-term basis. The term of lease can range from 40 to 99 years. During this period, the tenant pays an annual ground rent, maintenance fees and other miscellaneous fees to the owner. If the lessee does not wish to reside in the property, he may sublet it, ensuring that the house ''pays for itself'' through the new tenant's rent.
Freehold, on the other hand, implies outright ownership of the house and the entire lot on which it stands. Maintenance and repair are the responsibility of the owner as are paying taxes and periodic updates. This kind of property can be passed down through generations, sold and even rebuilt.
When buying property in the UAE, always go through a registered property agent. Mortgage middlemen come in handy when zeroing in on the money lender of choice. They do the research, proofread contracts, go through the volumes of fine print and connect you with the right people.
Lawyers specializing in property law can also help you better understand your duties and responsibilities as a homeowner in the UAE. They can keep you updated with the laws that will affect you as owner.
• Leasehold means leasing property on long-term basis from 40 to 99 years
• Freehold property is the responsibility of the owner, who has the right to sell it
• Enlist a property agent, mortgage middleman and lawyer when buying property
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Source: Bushra Hameduddin, Special to Properties
The writer is a freelancer