The new trend in Dubai’s property market is rent-to-own schemes. Developers in Dubai, with projects near completion are going all out to push these options to prospective buyers.
Anything that’s nearing completion between now and March next year is fair game for rent-to-own, The strategy is straight-forward – keep the monthly installment as low as possible and that’s the key.
But it’s not just that – for the project being offered at Dh2,500 a month, the offer is for a buyer to pay 15 per cent upfront and the rest over seven years.
Local developers were banking on a demand surge in the second-half of the year, timed to coincide with the original schedule of the Dubai Expo 2020,which will now be held next year. A lot of the upcoming completions were set with the mega-event opening this year. But the pandemic changed all that.
This is where rent-to-own can come in handy. The belief is that more residents would consider switching to property ownership if they feel paying landlords don’t make financial sense any longer. So, the best alternative would be to convince these potential buyers with rent-to-own.
They are becoming increasingly popular for residents wanting to convert their rent installments towards a purchase, this augments cashflows for developers as well as allows tenants to have greater flexibility without having the need to put in significant down payment.
There are now ready homes being advertised with 10 or 15 per cent down payment and with the rest of it to be paid off in eight or ten years.
Those wanting to go the rent-to-own way do have ample safeguards offered to them by the Dubai Land Department. These transactions have to be registered with the government agency. The Land Department maintains the registration system for such rent-to-own arrangements, and it requires fees to be paid by the seller and the purchaser before registration will be accepted.
For the buyer
On a rent-to-own deal, the buyer will need to pay:
* 2 per cent of the sale value and 0.25 per cent of the rental value;
* Dh250 title deed issuance fee;
* Dh100 fee for issuance of land map (Dh250 if it is a villa or apartment);
* Dh40 knowledge fee at the rate of Dh10 per fee;
* Dh40 innovation fee at the rate of Dh10 per fee.
For the seller
The seller in such transactions will have to shell out
* 2 per cent of the sale value;
* Dh10 knowledge fees; and
* Dh10 innovation fees.
Government fees
For the registration, these fees will need to be paid:
* If the sale value exceeds or is equal to Dh500,000, then Dh4,000 is payable; and
* If the sale value is less than Dh500,000, then Dh2,000 is payable.
Patrizia Marin
