Property Ownership Terms: The Advantages of Leasehold vs. Freehold


November 6, 2018

The terms leasehold and freehold describe the type of ownership available to those wishing to purchase real estate. For expats interested in buying property in Dubai, they’re entitled to purchase property using either method. Dubai is home to foreign nationals from all corners of the globe. Expats in Dubai have the opportunity to supplement their income by investing in the local real estate. Dubai is a city that attracts many business professionals, people looking to relocate, freelancers, and other travelers. Expats and non-citizens want to experience first hand the advantages, opportunities, and the weather that Dubai has to offer.

When it comes to buying property in Dubai, there are some terms one must be aware of, including the differences between freehold and leasehold. We explain these two terms in detail within the article.

Meaning of the term ‘leasehold’

In 2001, the Dubai government granted foreigners the ability to buy leasehold property in Dubai. The agreed upon term was 99 years (or less). Purchasing a leasehold property as a foreigner means the physical property belongs to you, but you have no ownership rights over the land that it sits on. The land itself is owned by a freeholder/landlord, who’s the person leasing the property for an extended period of time. When the lease term expires, the unit reverts back to the freeholder/landlord.

Advantages of leasehold property ownership:

  • Expats can only fully and completely own property in designated neighborhoods in Dubai. But purchasing a Dubai leasehold property doesn’t put restrictions on the area you can buy in. That means there are more options for you to choose from with various price points.
  • The lease term can be renewed upon the lease expiration. You and your family members can continue living in the home if you so choose.
  • In the majority of cases, the landlord is responsible for making any necessary repairs in the home.
  • Limited liability in terms of repairs. Most of the time, it is the landlord’s responsibility to take care of repairs, especially if they impact the structure of the property.

Disadvantages of leasehold property ownership:

  • Renovation, remodeling, and any desired alteration must have written approval from the landlord.

freehold leasehold dubai villa palm tree detached house

Meaning of the term ‘freehold’

In 2002, Sheikh Maktoum, signed freehold property ownership into law. This means a non-GCC foreigner who purchases freehold property in Dubai, legally owns the unit and the land it sits on. The Dubai Land Department records the buyer’s name as ‘landowner’ and grants a title deed for the property. At this point, the freeholder has the right to sell, lease, or occupy the property. In the event of the freeholder’s death, their family members then inherit the property.

As a foreigner, you would be able to purchase a freehold property in these designated areas. In total, there are 23 neighborhoods in which a non-citizen can purchase a home. In order to purchase a freehold property, foreigners need to transact through a RERA-approved real estate agent.

Advantages of freehold property ownership:

  • When a foreigner purchases a Dubai freehold property, he or she, and their entire family may be eligible for UAE residence visas.
  • Owners can remodel and renovate the home to their liking. No approvals are required.
  • The property stays in the family upon the owner’s passing.
  • The home can be sold or leased anytime, at the sole discretion of the owner.
  • There is no requirement to be a resident of the UAE to purchase a freehold property.
  • Whether you are an Indian citizen or US passport holder, this option is open to all non-GCC foreigners

Disadvantages of freehold property ownership:

  • Maintenance is the responsibility of the property owner.
  • If you lease your home, you are directly responsible for making the repairs for your tenant.
  • You can only buy properties in these designated areas with full ownership rights

List of freehold areas and towers:

  • Burj Dubai
  • Dubai Marina, Palm Jumeirah, Marina Terrace, Marina Diamond
  • Golf Towers, Emirate Hills, Jumeirah Lake Towers, Saba Towers
  • Jumeirah Beach Residence (JBR)
  • Jumeirah Village Circle
  • Arabian Ranches
  • Palm Jebel Ali, The World
  • International City
  • Palm Deira, Saba
  • Dubailand
  • Business Bay

Deciding between the two ownership options

Understanding your legal rights as a non-citizen of Dubai is the first consideration to make before the purchasing process. Speak with a local realtor to educate yourself on the two ownership options. Since only designated neighborhoods contain freehold properties, by simply reviewing the areas, you may be able to already rule out freehold ownership. Before making a major purchase, performing due diligence is always a good idea. You can also do some research on the neighborhoods that have experienced increased property appreciation, or the areas charging the highest rents. The biggest and most significant difference between leasehold and freehold ownership is control. Freehold owners have more control over the property unit and land compared to leasehold owners. Other contributing factors to consider include your long-term needs, property use, budget and the home you are considering.

Other factors to consider and questions to ask:

  • How far into the future are you looking?
  • What is your primary intention for purchasing a property in Dubai?

If you said, far into the future, and the intention is to rent the home, then freehold ownership would be the best option.

If you decide to purchase freehold property in Dubai with the intention of leasing it, consider working with Blueground. We screen future tenants, handle all maintenance issues, collect rent on time, and offer short to longer-term contracts. Buying a property in a foreign country can make the rental process difficult to navigate. We have listed and managed several rental properties in Dubai. Over 1000 landlords worldwide have trusted their properties to Blueground and we can offer our experience to help you maximize your property’s annual yield.


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