Wednesday 22 January 2020

Dubai launches region's first rent-to-own title deed

DUBAI, January 30, 2019

Dubai Land Department has released a new title deed for rent-to-own properties under which for the first time in Dubai, the rent-to-own property is available to the buyers with a 20-year payment plan, according to Property Finder Group, a leading real estate portal in the Middle East region.

Like many of Dubai’s accomplishments, rent to own with a proper title deed is a first for the larger Middle East and North Africa (Mena) region and sets a trend for other markets to follow, it stated.

With current supply and demand, the Dubai property market was seeing the re-emergence of rent-to-own as it is an excellent way for both buyers to affordably become homeowners, and for developers to sell some of their available, ready stock.

As Lynnette Abad, the director of Research and Data for Property Finder Group, said: "2018 saw the completion of nearly 29,000 new residential units, and another 46,000 are slated for 2019 completion and currently have a completion status of 65 per cent or more."

With the latest trends which became popular in 2018, developers are offering payment plans of five or seven years whereby the buyer also owes a percentage upon booking and then various amounts due along completion stages of that property, she stated.

"However, many buyers experience difficulty with purchasing a property this way as they are already paying rent on the property they’re living in and are further extending themselves by owing instalments on a second property that is not yet ready," she pointed out.

"With rent-to-own, the property is already ready, and can be moved into and the repayment period is almost triple that of traditional developer post-handover payment plans," she added.

One local developer, Harbour Real Estate, has introduced a payment scheme where owners have 20 years to pay off a ready property. Options range from paying in 10, 15 or 20 years, which mirrors the time frames many banks offer on mortgages.

Properties that are available with this new rent-to-own payment plan are in desirable locations like Motor City and Dubai Land for both apartments as well as villas or townhouses, said the top real estate portal.

Mohanad Alwadiya, CEO of Harbor Real Estate, said this was an excellent opportunity both for buyers and investors, as buyers have a lengthier period to pay off their home and investors are able to collect rent immediately.

"The amount due with this scheme is less than most people’s average rental payment each month," he added.

According to him, the recent development from the Dubai Land Department had made rent-to-own even more attractive.

A title deed is immediately given from the DLD for that property through a rent-to-own scheme whereby buyers have up to 20 years to pay off the property while the title deed is in their name. This specific title deed reads that this is a title deed registered against a payment plan, he stated.

Property Finder research has looked at a number of post-handover payment plans offered in the market and found that the monthly payments range between Dh18,000 to 20,000 per month.

Abad pointed out that spreading the amount due over 10, 15 or 20 years, was much more affordable and attainable to the average consumer.  

"Participating in the rent-to-own scheme means that buyers can affordably purchase a property with no down payment, or just five per cent down, without the hassle of interest rates or hidden fees," remarked Alwadiya.

"The properties being offered are more or less the going market rate, additionally, the amount due can be settled early without any penalty. In the event a buyer paying off a property as a rent-to-own wants to sell that property, it can be offered for sale and the new buyer can continue the same payment plan. A local bank account with cheques is required," he added.-TradeArabia News Service


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