Freehold or Leasehold: What’s the Difference?

Dubai is the land of opportunity in the Middle East. The City of Gold offers opportunities to both local and international investors to flow investments into the emirate through various avenues, including real estate. However, investing in real estate requires an understanding of real estate law. If you want to buy property in Dubai, these are some of the legal considerations you must take into account before making an investment.

Differentiating a leasehold from a freehold

The city of Dubai is the first to offer expatriates and foreign nationals the opportunity to own property in the United Arab Emirates. In a bid to increase its inflow of investments and diversify its portfolio, the Dubai government officially allowed foreign ownership of Dubai real estate properties through a 99-year leasehold in 2001. Following this, the emirate’s Crown Prince Sheikh Mohammed bin Rashid Al Maktoum issued the freehold property decree in 2002, which allows foreign nationals hailing from non-GCC countries to have full ownership of real estate properties in specific areas within the city, regardless of whether they are residing in the country or not.

For investors, it is important to determine the difference between leasehold property ownership and freehold property ownership. Freehold property ownership entitles the investor to complete ownership of the property, including the plot of land in the specified area and any structures that stand on it. The status of freehold property owner entails having your name recorded in the land registry of the Dubai Land Department as ‘land owner’ of said property.

It is important to note that investors can only transact with government certified real estate agents and developers for the purchase of freehold properties. Once you are granted the title ‘land owner,’ you are given the freedom to make improvements on the property as you deem fit. Freehold ownership also gives you the right to sell or lease the property. It can also be passed on to an inheritor at the passing of the land owner.

On the other hand, a leasehold property owner is one who takes a lease from a freehold property owner on a property for a period of ranging from 50 to 99 years. A leasehold property transaction entitles the leasehold property owner to use of the property for the specified period in the contract.

If you are in need of legal advice from a Dubai real estate lawyer, contact Know your rights and fight for them.