Are you dreaming of owning a home in Dubai but finding it challenging to save for the down payment? The rent-to-own schemes in Dubai offer a solution by allowing you to rent a property for a specific period with the option to buy it later. In this comprehensive guide updated as of Jan 2024, we’ll explore how rent-to-own works, its regulations, advantages, and the process of applying for such schemes.

1. How Rent-to-Own Works

Renting to own in Dubai involves leasing a property for a set duration, with the option to purchase it later. The rental payments made during this period act as the unit’s down payment, as agreed upon by the home buyer and the developer. The upfront payment is typically around 5% or less, making it more affordable than traditional mortgages.

2. Agreements in Rent-to-Own Schemes

There are two types of agreements:

Possibility to Purchase: Requires an ‘option fee,’ a percentage of the purchase price, providing the right to buy the property later.
Purchase Agreement: Involves mutually agreed terms, either a fixed purchase price or a price determined through future valuation at an agreed date.

3. Legality of Rent-to-Own Agreements

Rent-to-own agreements are legal, and the Dubai Land Department (DLD) has established a service through its portal to register specific title deeds, providing a clear legal framework for these transactions.

4. Differences from Home Mortgages

Compared to home mortgages, rent-to-own schemes offer more flexibility in down payment requirements, with no need for the buyer to pay at least 25% upfront. Eligibility conditions and processes also differ between the two.

5. Advantages of Rent-to-Own Schemes

Increases chances of homeownership with reasonable prices.
Rental payments serve as an installment for accumulating capital.
Allows trying the unit before committing to purchase.
Simplified criteria and procedures compared to traditional home loans.

6. Points to Consider Before Renting to Own

Before proceeding with a rent-to-own scheme, consider:

Understanding all agreement clauses, rules, and conditions.
Awareness of price fluctuations in the market.
Confirmation of deed ownership throughout the contract.
Evaluation of upfront payments compared to market rates.

7. Payment Plans for Rent-to-Own Schemes

Payment plans vary based on individual agreements between developers and buyers. The Dubai Land Department has issued guidelines, but each scheme is tailored to suit specific cases.

8. Inclusions in Rent-to-Own Contracts

A comprehensive rent-to-own contract should include:

Agreed property value.
Lease duration confirmation.
Deed ownership details.
Exit terms and penalty clauses.
Refund terms for down payments.
Clauses for unexpected events like job loss or mortgage rejection.

9. Required Documents for Application

Documentation varies for individuals and companies:

Individuals:

Buying contract copy.
Emirates ID copy.
Passport copy for non-residents.

Companies (Sole Establishment and Limited Liability Company):

Trade licence copy.
Owner’s Emirates ID and passport copy.
Power of attorney if available.
Memorandum of Association copy (legally translated).

Foreign/GCC Companies:

Additional documents such as a shareholder certificate and a No Objection certificate for foreign companies.

10. Process for Applying for Rent-to-Own Schemes

The application process involves:

Accessing the DLD website’s Contract service.
Choosing “register for rent-to-own.”
Entering financing details.
Providing necessary information.
Choosing payment methods.
Attaching required documents.
Submitting the application online.

11. Cost of Rent-to-Own Schemes

The cost involves:

0.25% of the rent amount.
2% of the sale price (paid by each seller and buyer).
Additional fees like knowledge fee, innovation fee, and self-registration fee for developers.

12. Rent-to-Own Properties in Dubai

Various properties in Dubai offer rent-to-own schemes, including:

Now, getting the home of your dreams is within reach with the rent-then-buy scheme in Dubai. Explore the available options in different communities across the city and make your dream home a reality.

For more information and personalised assistance, contact K Estates, your trusted partner in realising your homeownership dreams. Act now and turn your dream home into a reality with K Estates.

Disclaimer: The information provided in this guide is for general informational purposes only and does not constitute legal, financial, or professional advice. Readers are advised to consult with relevant experts and conduct their own research before making any decisions based on the information provided in this guide.

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