January 13, 2023 | 5 min read
Do you want to own a home in Dubai by just paying your rent? Well, this article will help you. The diverse real estate market in this city has offered the residents multiple offers, schemes, and payment plans that have made the prospect of owning a home much more accessible. One such scheme that is quickly gaining traction with buyers and sellers in the emirate is ren-to-own properties in Dubai.
The rent-to-own schemes are made for buyers who want to purchase a property with a mortgage but are having trouble coming up with the initial down payment. In accordance with the standard UAE banking law, to qualify for a mortgage for a property, buyers must make an upfront down payment equal to 20% to 25% of the purchase price. Rent-to-own schemes provide an opportunity for those buyers who cannot afford to make the large down payment required by traditional banks.
For these buyers, rent to own Dubai programs are a great option. 20% to 30% of the purchase price is paid as rent over three to four years when buying a rent-to-own property, as agreed upon by the buyer and seller. This payment will be regarded as the initial down payment on the property at the conclusion of this contract, enabling the buyer to complete the sale through a mortgage or cash. Therefore, rent-to-own programs in Dubai are an effective way for buyers to purchase a property without having to make an upfront down payment equal to 20% to 25% of the purchase price.
In Dubai, rent-to-own homes do differ slightly from lease-to-own homes. Lease-to-own agreements cover the entire purchase price, while rent-to-own programs only cover the initial down payment. Because of this, lease-to-own agreements are typically longer, ranging from 7 to 10 years, during which the buyer makes equal monthly payments toward the purchase price.
The mortgage is yet another significant distinction between lease-to-own and rent-to-own programs. Dubai's rent-to-own programs are primarily intended for buyers who want to obtain a mortgage. On the other hand, an MOU that forbids the participation of outside parties like banks governs lease-to-own programs in Dubai. As a result, lease-to-own agreements require the buyer to come up with their own financing for the purchase, in comparison to rent-to-own programs.
The increased demand for rent-to-own homes in Dubai is now prompting many developers to respond to it. These choices are also provided by reputable real estate firms like Emaar, and there are more and more rent-to-own properties in Dubai South. Reputable neighborhoods like Jumeirah Golf Estates, Al Furjan, and Business Bay are now offering rent-to-own options, according to Yallah's portfolio of properties for sale.
You can look through our listings for rent-to-own homes in JVC, a suburban area that welcomes families. There are rent-to-own homes available in the Jebel Ali neighborhood of Al Furjan.
While Dubai and Abu Dhabi have dominated the rent-to-own real estate market, other emirates like Ras Al Khaimah are now providing these alluring options to buyers. Remember that rent-to-own homes and apartments in Dubai can cost 10%–15% more than a typical property for sale if you are considering doing so.
When it comes to Dubai's rent-to-own properties, sellers have a number of advantages. For starters, rent-to-own programs allow sellers to advertise higher sales prices in exchange for greater flexibility. Sellers in Dubai who provide rent-to-own programs can cater to a wider range of buyers, including those who might not be ready to buy just yet.
Overall, when it comes to rent-to-own homes in Dubai, sellers are in a win-win situation. The seller benefits from having earned a higher rental income even if the buyer decides not to purchase the property at the conclusion of the rental agreement. The buyer also wins in the rent-to-own situation, as they have the opportunity to test out the property before buying.
For the first three or four years of the initial contract, buyers will be treated as tenants. As is done for the majority of rental properties in the city, the majority of developers and sellers prefer to formalize the agreement through a tenancy contract and Ejari Dubai. The contract will also state that the initial down payment will be deducted from these rental payments. Following the rental period, the purchase will be made using a mortgage or cash, just like a regular sale.
However, buyers should be aware that it is not possible to sublease a property because the rent-to-own concept is designed for the buyer to be the end-user.
Furthermore, because the buyer is regarded as a tenant, the seller (or landlord) is in charge of carrying out major repairs to the property. Normal wear-and-tear issues are typically handled by the tenant in the interim. All fees will be paid by the new owner once the title deed is transferred at the conclusion of the rent-to-own contract period.
Additionally, landlords in Dubai can provide rent-to-own plans to their current tenants by establishing the purchase price at the beginning of the lease and specifying that the rent payments will be applied to the down payment.
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