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Last modified on 10th November 2022. Dubai Real Estate Blog
By Ward Mohammad
With Dubai's property industry seeing a continued flow of new supply, developers have made attractive payment plans to capture buyers' attention to purchase built-up stock. Rent-to-own properties in Dubai are earning popularity amongst buyers, helping them get into their first home quickly by removing the tension of a large down payment. This initiative provides developers access to a broader pool of buyers, who may not otherwise have the upfront capital to purchase otherwise – a mutually beneficial arrangement.
As the name itself suggests, you rent a property to own it at a later date. The translation is: you lease a home for a certain period with the motive of buying it at the end of your lease duration. That's how it starts! A part of your rent goes towards the eventual down payment of the house. Now, that portion of the rent is laying a solid foundation for your own home. And, you are not merely throwing away money but contributing to building house equity.
Each rent-to-own scheme is unique but, simply put, it's an agreement between a developer and buyer where the equivalent of rental payments are used toward a down payment. This arrangement allows a buyer to simultaneously pay rent and "save" for a down payment. Other schemes are on a more extended period, such as 20 years. The amount required up front is about 5% or less. Instead of obtaining a mortgage, monthly payments are made to the developer, and the property is paid off that way. Again, an upfront payment is required (though substantially lower than the 25% needed to secure a mortgage, plus additional upfront costs). Once the contracted timeframe has passed, the buyer can choose to purchase the property or exit the agreement. The rent is typically higher than the market's rate, considering the convenience factor for the buyer. Still, the premium could be justified if you otherwise could not save for a deposit.
Yes. The Dubai Land Department (DLD) launched the rent-to-own (Ijarah) service, a specific title deed register to provide a clear legal framework to facilitate such transactions.
A Rent-to-Own agreement could be a win-win situation for both parties. Let's dive into some of its benefits and disadvantages.
To sum up, not everyone has the luxury of buying a home. In addition, various financial and personal conditions could hit your investment decisions. Hence, rent-to-own can prove to be a smart move for many.
Suppose you want to know about specific rent-to-own apartments in Dubai or rent-to-own villas in Dubai. In that case, Driven Properties has all your questions answered.
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