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Buying Property in Abu Dhabi Q&A

Buying Property in Abu Dhabi – Q&A 

Buying property in your own country and language can be confusing enough, so if you’re thinking of buying in Abu Dhabi you need to be clued up on local law

Step forward Ben Crompton, who knows the law inside out. Ben graduated with a law degree from Cambridge University in the UK and worked as a hedge fund and private equity lawyer in London before establishing a real estate firm in Abu Dhabi and Dubai. He is now a managing partner at Crompton Partners Estate Agents.

Which property laws do expats need to know about?

Abu Dhabi Law 2 of 2007 states that non-nationals may own the “surface property” in investment zones either by usufruct or musataha, which are legal terms for the right to enjoy the use of the property and facilities. This essentially means purchasing a 99-year lease over the land and ownership of the property above it. The person then has the right to deal with that property as the owner.

Buying Property in Abu Dhabi

Can you extend the 99-year lease after a certain period?

Currently there is no provision to extend this lease. A law is in the works, however. With over 90 years still left on all such leases, buyers don’t have to be too concerned at the moment.

What happens to your home after the 99-year lease is up?

In theory when your lease is up your right to use the property is removed. The developer owns the land at all times so they would then have all rights over the property.

What misconceptions do expats have when buying property in Abu Dhabi?

Common misconceptions are that the ownership is not protected by law, that the government can take the property away from you at any time, and that you cannot leave your property to your family in your will. All of these are untrue – buying property in Abu Dhabi is much the same as buying it in any other jurisdiction in the world.

How has UAE law, changed over the years for expats buying property?

The law has remained the same since 2007 but the process has been refined. Property developers are now more sophisticated when it comes to conducting the sales process and registering the sale.

In Abu Dhabi, a process has evolved which sees buyers make an offer by signing a Memorandum of Understanding (MoU) and handing over a
deposit to secure the unit, which is usually ten per cent of the property price.

This MoU is an obligation to complete the transfer of the property and is binding on both sides but it also regulates what happens to your deposit.

What practical tips to you have for expats wanting to buy a home in Abu Dhabi?

Buyers should check the MoU carefully, as they’re often drafted by brokers or estate agents who don’t have legal experience.

Make sure the MoU deals with what happens to the deposit if something goes wrong – like the bank undervaluing the property you’re buying and not lending you the funds to buy it.

In this instance, the deposit should be returned to the buyer. If you simply back out of the deal, you will forfeit your deposit to the seller.

What does the law say about buying a property with the intention of renting it out?

The law in Abu Dhabi has no specific provisions about buying property to rent it out. If you own a property then you are entitled to rent it as long as you adhere to Municipality guidelines on sharing.

Send us your Abu Dhabi Property Question to guides@cpestateagents.com 

Ben Crompton

Managing Partner

ben.crompton@cpestateagents.com

Call – +971 50 6145199

 

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