The decision to provide foreign citizens with the opportunity to purchase housing became a conditional signal for the development of ambitious projects. These are the miracle islands of Palm Islands, and the tallest building on the planet Burj Dubai, and the giant crescent island of Dubai Waterfront, and the areas of skyscrapers Dubai Marina, Jumeirah Beach Residence and Jumeirah Lake Towers. And these are not all projects in which foreigners can buy real estate with freehold rights.
Freehold in law
So, the 2002 decree on property marked the beginning of attracting foreign investment in Dubai real estate. Despite the lack of legal documents regulating the status of foreign owners and their property, by the spring of 2006, more than 13,000 families had already celebrated housewarming in ready-made apartments and villas, and 7,000 housing units are planned to be commissioned in 2006. Even more investors are still waiting for the completion of the construction of their property.
The logic of buyers who believed in the seriousness of the ruler of Dubai's intentions is based on the fact that it makes no sense for the government of the emirate to kill a chicken laying golden eggs. Indeed, the construction boom attracted billions of dollars of capital to the country, contributed to the development of new business areas, and helped the city cross the threshold of one million residents.
The long-awaited law of the Emirate "On Registration of Ownership rights to immovable Property", authorizing the decree of 2002, was published on March 13, 2006. It should be noted that his appearance was most welcome. After 4 years, the boom began to fade, because the golden rain cannot last forever. The days have already passed when developers sold off projects that had not yet been built within a few hours after the announcement of the start of sales. In short, the Dubai real estate market has begun to acquire more realistic features.
With the help of a new legal document, the legislative bodies of Dubai have spurred the market situation. Firstly, the innovation did not allow the current housing prices in the primary market to fall. The stagnation that began was a thing of the past - developers immediately noted an increase in demand, and prices for many projects went up again. Secondly, the new law opened the way to the Dubai market for skeptical investors who did not believe in the possibility of introducing freehold four years ago.
Registration fee
Under the terms of the new law, you now have to pay for the registration of property. The registration fee is 1.5% of the value of the property specified in the contract. At the same time, the seller (he is also a developer, since even when buying real estate from intermediaries, the contract is drawn up directly between the developer and the new owner) also pays 0.5% to the treasury. However, since general developers are state-owned companies, for them the process can be described as the flow of money from one pocket to another.
At the moment, it is quite difficult to describe exactly how property registration takes place. There was information in the press that about 300 people have applied to the Land Department so far – no one is in a hurry to pay money. In addition, it is difficult to imagine that a developer who has sold tens of thousands of housing units will come to the municipality with each buyer individually. Local market experts believe that the following registration scheme will most likely be developed: developers will "wholesale" pay the municipality the amount for all housing units they own and provide contracts for them. And end users, in turn, will come and make a collection when it is convenient for them.
What is the law?
The document consists of 11 chapters, including 29 articles. An important concept for understanding the provisions of the law is the "housing unit". Multi-storey buildings are accepted as a housing unit, each of which must be registered in the singular. The apartments located in the building will be added to the register additionally, indicating the name of the owner.
The main provisions of the document are the following: citizens of the UAE and the Persian Gulf countries have the right to purchase property in full ownership (freehold), as well as leasing for 99 years (leasehold) anywhere in the Emirate of Dubai; persons who are not citizens of the UAE or the Persian Gulf countries have the right to purchase land and property on the basis of freehold and leasehold in specially designated territories. Purchase and sale contracts will continue to be concluded between the developer and the buyer, who will not formally be the owner of the property until the completion of construction.
Rights and obligations of a foreign owner
Freehold is the most attractive form of private property ownership. Ideally, a person who owns real estate on such rights is the absolute and timeless owner of the land and all buildings located on this land plot. He can sell, donate, or inherit the property on the same terms.
According to the law, local authorities exercise control over privately owned real estate. Their competence includes the use of land, the construction of new buildings on the site, the redevelopment of existing buildings – all this requires special permits. The owner should also be aware that neighbors, various authorities and utilities have the right to invade his territory to carry out work on it, for example, laying cables or repairing sewer pipes, which are necessary for the operation and development of infrastructure.
The duties of the rightful owner include maintaining the site and buildings on its territory in good condition, as well as paying utility bills that go to cleaning and maintenance of public areas. It is worth noting that in Dubai, the responsibilities of the owner and restrictions may vary depending on the building company and the specific project.
All this fully applies to those who purchase a house with a plot. And what should an apartment owner who does not have land do? How does the law apply to him? As for apartments, the closest analogy to the term freehold is the concept of commonhold, according to which the rights of the owner remain the same, but the proper maintenance of the building and the use of real estate is monitored by the association of tenants.
The right of inheritance
Article 11 of the new law reads as follows: "Any application for inheritance of real estate rights must be registered in the Register of the Land Department." Formally, if the owner wishes to declare the heir to his Dubai property, then he must register his will directly with the local municipality, and only with it. To enter into inheritance rights, you must apply to the Dubai court and confirm your identity. Next, you should contact the local Sharia court, where the data on the real estate itself will be established and confirmed. Only then will the heir be recognized as the new owner of the property.
The question arises - which state's laws will be applied to foreign heirs? Article 17 (5) of the UAE Federal Civil Code states that the laws of the UAE will apply to the execution of the will of the deceased regarding real estate. This point causes the greatest unrest among foreign investors, since the laws of the Emirates differ sharply from European ones and rather correspond to Islamic Sharia law. Nevertheless, the new federal law "On the management of personal Affairs", adopted in 2005, states that a foreigner can choose the laws of his own country to apply them to matters of inheritance of real estate. According to experts from Tamimi & Company, Dubai's largest law firm, the Land Department will adhere to the wording of the latest law. However, there is no official explanation of the issue at the moment.
Residence permit for the purchase of housing
After purchasing real estate in Dubai, the developer company can issue a residence permit to the client, as well as his family. Although it can be called so very conditionally – formally, a visa from a developer does not give the right to work in the UAE. The fact is that officially in the UAE there are several types of visas - tourist, guest (for 2 months) and resident (for three years), which is provided either by an employer, or by a husband or father. By issuing a visa to a client, the developer is legally made by your employer, which is why it is impossible to work for a "competitor". This does not mean at all that a resident of Dubai cannot get a job – companies often do not pay attention to such formalities and are happy to avoid their own costs for obtaining a visa for a new employee. So do women who receive a written work permit from their husband or father. Nevertheless, it is worth remembering that, despite the widespread use of this method, it is actually illegal and if you want to work or open your own business, you should take care of a "work" visa.
It should be noted that the so-called resident visa from the developer applies only to the ownerreal estate, a second spouse, sons who have not reached the age of majority, and unmarried daughters. Subsequently, the document is extended every three years on a general basis.
Having dealt with the basic legal subtleties of purchasing real estate in Dubai, we have to admit that in a country with young laws, not everything is clear and not everything is perfect, so when buying property, do not forget about the services of professional lawyers, albeit not very cheap, but able to save you from even more expenses.