Dubai’s real estate market has grown rapidly over the past few years and it has become a source of attraction for investors, homebuyers, and even business tycoons from all over the world. Dubai offers a variety of opportunities to investors and if you want to buy a luxurious home and enjoy the high standards of living then there are multiple options, various schemes, and offers introduced by the developers in Dubai to make your dream of owning a home in Dubai come true.
Many people not only from UAE but also international buyers or foreigners have a dream of owning a luxurious home in the skyline of Dubai, but heavy down payments are the hurdles in the path of purchasing a home. People can’t afford the heavy payments and manage their finances and they start to live on rent. At the same time renting a home seems to be a financial burden, they have to pay the rent monthly and they live in a house for years but they cannot own it.
Now, don’t worry, here is the solution to get rid of heavy down payments in the process of purchasing a home that is known as “rent-to-own”. A scheme introduced by the developers in Dubai’s real estate market, it has become popular rapidly and highly appreciated by investors and homebuyers.
If you want to know, what is “rent-to-own”, what are the requirements and essential details of this scheme, how it gives benefits to the homebuyer, and what are risks associated with this offer, then this blog is a guideline for you. Through this blog, you will be able to get a better understanding of this beneficial real estate scheme in Dubai.
Introduction To “Rent-To-Own” Properties In Dubai
“Rent-to-own” is a property scheme offered by property developers in Dubai. It is an agreement between buyers and developers, according to this agreement a buyer can gradually buy a property by paying a down payment to the developers in the form of rent or installments for a specific period, after that period, a buyer has a right to stay on the agreement and buy this property in predetermined price or he can walk away without purchasing.
5% or less is the upfront amount of the “Rent to own” scheme. The rental amount paid in this scheme is more than the market rental price, this is because of the convenience and confirmation of the property to purchase. In both cases whether you buy a property or not the rental amount is non-refundable.
Types Of Rent-To-Own Agreements
Two types of agreements are offered in rent to own property scheme
- Purchase agreement
- Option to purchase
Purchase Agreement
This type of agreement is a simple form of contract between buyers and sellers in which both parties decide all the allegations that are required for the agreement by keeping in mind the future price and trends of the market. No extra charges or fees are required for this agreement.
Option To Purchase
According to this agreement, the buyer has to pay the option fee after signing the contract. The amount of the fee varies as per the total amount of the property. Option to purchase is a contract that gives choice to the buyers to continue as a tenant or purchase the property. A buyer can change his mind according to his needs in the future. The option fee is non-refundable and the seller can legally keep this amount if the deal is not fulfilled.
Essential Details On Rent-To-Own
How To Apply For Rent-To-Own Scheme
As compared to other schemes like a home mortgage, the application process for rent-to-own is simple and easy for buyers. A buyer can apply for the deal by just following these steps:
- The first step to applying for the deal is to visit the Dubai Land Department website and log into the Oqood Portal.
- The second step is to click the service menu and select the option “rent-to-own property registration”.
- Add all the financial details and attach the required documents to the registration form.
- There are multiple payment options, select the payment mode that suits you.
- After completing all the required details and information, click the submit button.
- Once the submission is completed, for further processing, the applicant will be guided through an email. Receive the confirmation via email.
Required Documents For “Rent-To-Own” Registration
For Individual Applicant:
- Copy of sale and purchase agreement
- Copy of Emirates ID, if the applicant is a resident
- For foreigners or international applicants, a copy of the valid passport is required
For Sole Establishments:
- Copy of business’s licence
- If the license holder is a native then a copy of the Emirates ID is required and if he is a foreigner then a copy of his passport is required.
- Power of attorney is optional, but it is useful
For Limited Liability Companies:
- Copy of the company license.
- Emirates ID or passport for the license holder.
- A power of attorney is optional.
- A copy of the shareholder certificate.
- No objection certificate with one-year validity from free zones.
- Arabic translated company’s foundation documents attested by the Ministry of Foreign Affairs.
For International And GCC Based Firms
- Copy of firm’s license.
- Copy of Emirates ID or passport of the license holder.
- Power of attorney if available.
- Copy of the company’s Memorandum of Associations and appendices legally translated into Arabic and attested by the Ministry of Foreign Affairs.
- Copy of shareholder certificate.
- No objection certificate with one-year validity from free zones for foreign companies.
The Cost Required For The Scheme
Following is the list of different charges required for “Rent-to-own” registration
- 25% of the rent amount is transaction fees.
- 2% of the sale price, amount is payable to both buyer and seller.
- AED 10 is the knowledge fee.
- AED 10 is an innovation fee.
- AED 1000 for developers, for self-registration from the portal.
The Best Areas For This Scheme In Dubai
The demand for the “Rent-to-own” scheme is increasing in Dubai as per the report of ERE Homes Real Estate, and investors and homebuyers are appreciating this opportunity due to its many financial benefits. Some specific areas in Dubai are suggested as the best areas for “rent-to-own” properties in Dubai. Here is the list of these areas:
- Dubai South
- Jumeirah Golf Estate
- Al Furjan
- Business Bay
- Jumeirah Village Circle
- Dubailand
- Al Barsha
- International City
- Dubai Silicon Oasis
- Jumeirah Lake Tower