Freehold vs. Leasehold Dubai [Complete Guide]- Compare4Benefit

If you are a foreign investor who wants to buy a property in Dubai, you’ve to understand the types of property ownership in this place first. As a prospective property owner, you must know the differences between leasehold and freehold ownership in Dubai.

This will help you make well-informed decisions while purchasing the property. Below is a compact yet precise informative guide on freehold vs. leasehold property in Dubai. Check it out.

Freehold Vs. Leasehold Property In Dubai: Key Differences 

Dubai allows expats and foreign investors to own property in specified zones or areas. The right to own a property on a leasehold basis was granted by the Dubai government in 2001. And in 2002, the government passed the order for purchasing property in Dubai on a freehold basis. 

Buyer’s rights are the primary difference between leasehold and freehold property in Dubai. Here’s a precise review of these two types of property ownership:

• Freehold ownership: If you buy a property in Dubai on a freehold basis, you’ll enjoy the complete property and land ownership. You can sell, occupy, or lease the property at your own will. 
• Leasehold ownership: Those who buy property on a leasehold basis enjoy their rights over the property for a fixed tenure, which can go for a maximum of 99 years. However, the land won’t come under ownership rights as the freeholder possesses the ultimate ownership. 

Freehold Property Ownership In Dubai

The freehold property ownership allows complete ownership of the property as well as the land it’s built on to the buyer.

The owner doesn’t have to undergo any time restrictions. As per the rules regulated under the property ownership law in Dubai, the name of the freehold buyer will get registered as the “landowner” in the registry by the Dubai Land Department, which then grants the property’s title deed to them. 

The contract for freehold ownership is applicable in eternity. If the owner dies, their heir will inherit the property in Dubai, and it stays within the family.

Apart from expatriates, every foreign investor living abroad can invest in ready or off-plan property in some designated zones of Dubai on a freehold basis. 

Buying Freehold Property In Dubai: Pros

• If you buy a property in Dubai which is freehold, you’ll get complete ownership and control over the land and unit. With freehold property, you can renovate or remodel the property structure while adhering to the guidelines set by the developers. 
• Your freehold property in Dubai will stay within the family. When you pass away, your legal heir will inherit the property. 
• You can sell, occupy, or lease the freehold property at your discretion in Dubai. 
• As a freehold property owner in Dubai, you’ll get eligible for renewable residency visas, provided you meet all the required criteria and conditions. Also, you can get eligible for a 5-10 years visa with the introduction of long-term residency visas in the UAE. 
• You’ll also enjoy the benefit of a wide range of properties available for purchase. The freehold areas or the designated zones in Dubai have great freehold property portfolios, which cater to different tastes, requirements, and budgets. 
• You can also benefit from the high ROI or return on investment. For instance, you can get average rental returns of 7% with your freehold property. 

Buying Freehold Property In Dubai: Cons

• Freehold property owners in Dubai have to adhere to the guidelines for the maintenance and upkeep of their property. For instance, if they lease out the property, they will be responsible for the maintenance or any major repairs, not the tenants. 

Leasehold Property Ownership In Dubai

If you buy a leasehold property in Dubai, you get the right to occupy it for a certain period. It’s a lease term, which typically lasts for 99 years but can be less depending on the circumstances.

The leasehold ownership only gives the right of ownership of the unit, but not the land it’s built on. When the lease period ends, the leasehold ownership reverts back to the freeholder. 

Related : Dubai Mortgage for Non Residents in UAE

Buying Leasehold Property In Dubai: Pros 

• As a leasehold property owner, you can renew the contract to continue living in the property when the lease term comes close to the end. 
• Buying leasehold property gives you the benefit of no maintenance and no repair cost liability. 
• Compared to freehold properties, the average sales price is much lower for leasehold properties. 

Buying Leasehold Property In Dubai: Cons 

• As a leasehold owner, you’ll have to get written approval from the freehold owner to make any alterations, remodeling, or renovation on the property. 
• Some other issues faced by leasehold owners are restrictions on owning pets or subleasing the property. 

Freehold Vs. Leasehold: Which Is The Ideal Choice? 

Before determining between leasehold and freehold properties, you must understand the legal responsibilities and rights of both of these ownership types.

However, the ideal choice between them depends on your budget and requirement for the degree of control.

Get in contact with a government-registered agent to know what’s right for you.