Emerging Alternatives: Rent-to-own Schemes in Dubai


With transaction values down in the first half of the year, master developers are increasingly offering rent-to-own schemes to entice buyers who might not otherwise have the large down payment needed.

For developers, it makes sense to offer their available finished stock on rent-to-own schemes as it’s a win-win for both parties: developers get to sell their current stock and end-users can afford to buy where they couldn’t before due to lack of down payment funds.

There is a new option on the table for aspiring property owners: rent-to own.

Each rent-to-own scheme is unique, but in most traditional cases the rent is a little higher than the same property not on a rent-to-own scheme. However, the higher rent is justified, as this amount is put towards the down payment and purchase of the property.

An advantage of the scheme is that it offers the same protections to consumers set up by the Dubai Land Department for developers and developer sales, assurring property seekers of the legitimacy of their contract.

Rent-to-own gives the end user an option to buy when they don’t have the down payment needed to buy. Today, around 70% of expats rent, many due to lack of a down payment to purchase a property or uncertainty on how long they plan on staying in Dubai, says Lynnette Abad, Director of Data & Research at Propertyfinder Group.

The scheme works well in Dubai due to the high down payment needed to purchase a property and the amount of empty stock that is available in the market. Since 2016, Dubai had over 33,000 units delivered into the market with an additional 7,839 delivered in H1 this year, and another 8,000 expected to be delivered by end of year.

Large developers like Nakheel and smaller set-ups like 21st Century Property are using RTO schemes to address the hurdles of large down payments and huge fees that may have otherwise kept UAE residents away from making a property purchase, and there are such deals to be had in places like Jumeirah Village Circle, Palm Jumeirah, and Sports City.

“To purchase a mortgaged property that is less than five million UAE dirhams, one would need to have 25 percent of the property value plus approximately eight percent in fees,” Abad said in an interview with Thomson Reuters Projects.

While rent-to-own isn’t in the mainstream of Dubai real estate just yet, it’s proof that developers are willing to get creative to occupy their units — and it is in the interest of assisting more UAE residents to have a foot on the property ladder.

Fees to Register for a Rent to Own Contract*

1- Seller (typically a developer): 2% of the sale price

2- Buyer: 2% of the sale price, in addition to the following:

3- 250 Dirhams as Title Deed issuance fees

4- Map Issuance Fees (based on the type of real property)

5- 0.25% of the rent amount

6- Knowledge Dirham Fee of 10 Dirhams (added to each fee)

Registration Fees

• 4,000 Dirhams if the real estate property price equals or exceeds 500,000 Dirhams

• 2,000 Dirhams if the real property price is less than 500,000 Dirhams

*Source: Dubai Land Department


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