Basic rules:
Whereas the fundamental principles of buying a home are the same everywhere, property law, and its local interpretation, varies widely between different countries. If you have already explored the possibilities of buying in a foreign country, you will be very aware of how different the local laws can be, compared with your own country.
Dubai status :
Property law, like any law, is also a dynamic area; minor (and sometimes major) changes are constantly taking place, even in the most mature of property markets. In the case of Dubai and the UAE, property law is very young and still taking its long-term shape, although the key elements are straightforward to understand.
The commencement:
In early 2001, the Dubai Property Market changed. The Government of Dubai allowed foreign investors and buyers to take 99-year leases on apartments and villas in Dubai. When this decree was issued in 2001, the population of Dubai was close to a million.
In May 2002, the current Ruler of Dubai, His Highness Sheikh Mohammad bin Rashid Al Maktoum ruled that the emirate would permit foreign nationals to invest in Dubai properties on freehold ownership. The properties were initially grouped under 3 government-owned entities - ‘Emaar Properties PJSC', ‘Nakheel' and ‘Dubai Holding'.
The statement just jumpstarted the market and it has been thriving ever since. Drafted as Law No. 7 in 2006, the ‘Land Registration Law of the Emirate of Dubai' legalizes freehold ownership of land and property for the UAE and GCC citizens, while awarding the same rights to non-GCC expatriates in pre-designated areas that are approved by the Ruler of Dubai.
During last three years Dubai has be revealed as the extreme destination for international and local property investors. The boom was initiated when in 2003 ‘freehold property scheme’ as come into market, to allowing foreigners to own property for life, with the right to sell, lease or rent it at their own will.
Since the new laws were passed, capital growth in Dubai has been on the up and capital growth that exceeds 20% is expected as Dubai continues to nurture its attraction to be the NO1 tourist and leisure country. This coupled with achievable 8% rental income return; it is clear why Dubai is considered one of the top investment property hot spots in marketplace.
The Law:
On the 14th of March 2006, Dubai's government issued its long-awaited law legalising foreign ownership of properties in designated areas of Dubai, but doesn’t give property owners permanent residence visas or an automatic right to work in Dubai.
The Law No. 7 that legalizes freehold ownership of land and property for UAE and GCC citizens, while allowing the same rights to non-GCC expatriates to pre-designated areas that will be approved by the Ruler of Dubai.
Non-GCC expats living in the United Arab Emirates (UAE) were previously only permitted to rent property, or own property on the federal law approved 99-year leasehold basis. This all changed in 2002, when the Dubai government permitted the ownership of freehold property to expats, which has changed the real estate industry in the Middle East and Gulf regions.
Land Registration in the Emirate of Dubai
Dubai's Ruler His Highness Sheikh Mohammad Bin Rashid Al Maktoum having considered the Federal Law No: 5/1985 promulgating the civil transactions Law and its amendments; The Federal Law no: 11/1992 promulgating the civil procedure Law and its amendments; The Local Law No 7/1997 concerning Land Registrations Fees; and the Local Decree concerning the Formation of Land Affairs committee of the year 1960; do hereby promulgate the following Law.
Chapter One
Title and Definitions
Article (1)
This Law shall be cited as "The Land Registration Law of the Emirate of Dubai (No 7/2006)
Article (2)
In this Law, the following words and terms shall have the respective meanings assigned to each of them, unless the context requires otherwise.
The UAE: The United Arab Emirates. The Emirate: The Emirate of Dubai The Government: The Government of Dubai including any of its Departments, Authorities or public Corporations.
The Ruler: His Highness the Ruler of Dubai The Department: The Department of Lands and properties The Head: The head of Department The Director: The Director General of the Department Land: Anything permanently fixed nature which cannot be removed without damaging or altering its form 1.
Rights over the Land: Any principal or accessory rights over the land Land Register: A collection of records kept by the Department in written or electronic form in an electronic register, detailing the description of the registered Land, its ocation and the rights over it.
Land Unit: Any plot of Land and all that is located thereon such as buildings, plants or otherwise, situated in one land
Area: Without being separated from its other parts by any public or private property and without any part of it having a right or an encumbrance which its other parts do not have.
Land Area: A group of land units demarcated by principal roads or fixed and clear signs with an accredited name and distinctive number in accordance with the practice of the department
Synopsis :
The foreigners will have the privilege to lease or purchase the land, after getting endorsement from master-developers, (Emaar, Al Nakheel, and Dubai Properties).
A land will be registered in the name of a foreigner only after the developers submit a no-objection letter, stating that all the payments for the transaction have been made in full.
There are three kinds of ownership proposed in the legislation: freehold, usufruct, and common hold. The owner will have complete ownership rights over a free hold property and the building in this case will be in the owner's name.
The second category is usufruct or long-term lease. The law characterizes 'usufruct' as the right to use another's property short of destruction or waste of its substance. The right of usufruct, as per the law, should not be for less than five years. This will most probably be a long-term lease whose maximum validity period will range from anywhere between 50 to 99 years.
Common-hold allows leaseholders to dispense with their landlord and obtain a share of the freehold. Registration fee for the transaction will be two per cent of the total value of the property, of which 1.5 per cent has to be paid by the purchaser and the rest by the seller. After the payment of the whole amount, the owner is free to either bequeath the property or sell it.
The law also specifies the functions and responsibilities of the Department of Land and Property, which has so far been doing all the work by virtue of practice, sans legal clarity. As per the law, the department will determine the survey areas; approve the land map and the fees for the services provided by the department.
The confidence of the investors and buyers as the new Dubai property law ascertains on them the 100% foreign ownership for the expatriates. More banks will begin the facility of home finance as there is a guarantee in the ownership of the properties.
Dubai Property Law
Location - in United Arab Emirates
