The Rise of Lease-to-Own Properties in the UAE: A Game Changer for Expats

For years, expats in the UAE have faced property ownership challenges despite contributing to the country's economy and culture. Their housing choices had only been to rent forever or buy the property outright. They came with some drawbacks, e.g. renting meant long-term payments without any ownership benefits, while purchasing a property required a substantial upfront cost, often out of reach for many. But what if there was a middle ground, an option that combined the flexibility of renting with the eventual goal of ownership? That's where lease-to-own properties come in. So, what are lease–to–own properties, and how have they become game changers for expats? Let's explore.

What is Lease-to-ownership, and how does it work in the UAE?

Lease-to-own, popularly known as rent-to-own, is a housing scheme through which occupants rent out a property but have the option to purchase it after a specified time. Here's how it works in the UAE:

Initial Agreement: A lease-to-own contract has a rental agreement and a purchase clause. The tenant agrees to pay rent toward the eventual purchase price.

Option to Buy: By the end of the lease contract, which runs for 5 to 10 years, the tenant can pay for the house or simply leave with no liabilities. 

Flexibility in Payments: Unlike traditional home purchases that demand hefty down payments, lease-to-own properties allow tenants to save while they pay rent.

Lease-to-Own vs. Traditional Homeownership

Here's a detailed comparison between Lease-to-ownership and traditional home ownership, which illustrates why lease-to-ownership is Becoming a game changer for expats.

Benefits of Lease-to-Own Properties

There are undoubtedly many salient benefits to lease-to-own properties, such as:

• Lease-to-own allows expats to enter the property market without the burden of large upfront costs.
• Lease-to-own agreements are less risky as they allow tenants to walk away if circumstances change.
• In a market like the UAE, where property values in sought-after areas like Dubai and Abu Dhabi often rise, tenants may lock in today's price for a property that increases in value by the time they buy it.
• Lease-to-own agreements allow expats to experience living in a property and neighbourhood before fully committing to ownership.

Cost of Lease-to-Own Properties

The monthly rents for a lease-to-own property are a bit higher than those of a regular rental agreement. For instance, a regular rental property may cost AED 80,000 per year, while a lease-to-own option for the same property may cost AED 90,000. In this example, the extra AED 10,000 is used for the property's purchase price, which helps the tenants build equity over time. The lease-to-own options can lead to ownership in as little as 5 to 10 years. This makes the model more appealing for those who would otherwise spend a decade renting with no ownership to show for it.

Who Offers Lease-to-Own Properties in the UAE?

Some UAE developers and real estate companies have noticed the increased popularity of lease-to-own schemes. Amongst them are the following:

Emaar Properties: The UAE leader in real estate, Emaar has offered lease-to-own schemes for specific projects. It has leased out some exclusive residential communities for expats.

DAMAC Properties: Famous for its luxurious buildings, DAMAC offers lease-to-own plans for various types of homes at Dubai Marina, Business Bay, and more.

Azizi Developments: Focuses on the mid-income expat and is targeting lease-to-own schemes, especially for purchasing apartments in Al Furjan and Meydan.

The government has been building an inclusive property market in the UAE, creating opportunities such as longer visa periods, which are now linked to the property ownership status.

Frequently Asked Questions

Can I end a lease-to-own agreement early?

It depends on the terms of the contract. Some contracts have early termination options, while others charge penalties for that. Reading the fine print or seeking advice from a lawyer before signing is the way to go.

Do I need a visa for the UAE to enter a lease-to-own agreement?

Owning a piece of property can qualify one for a long-term visa in the UAE. Entry into a lease-to-own scheme does not automatically grant a visa, but it can be a first step toward property ownership, which may eventually help in applications for a visa.

Do lease-to-own properties require a deposit?

Some lease-to-own agreements require a deposit, which is less than the down payment for a traditional property purchase.

Can I apply for a mortgage to buy the property at the end of the lease?

Yes, many lease-to-own tenants secure mortgages to finalise the purchase.

Conclusion

The rise of lease-to-own properties represents the rising needs in the housing market of the United Arab Emirates. This model provides a much-needed middle ground for expats who have long felt on the sidelines of property ownership. By bridging the gap between renting and buying, lease-to-own properties offer expats a realistic path to stability, security, and long-term investment in a country they call home.

Ready to find your dream home or make a smart investment? Contact us today and let our expert real estate agents guide you through the best properties in the UAE.