The rent for properties on this scheme tends to be higher than if you were to lease other villas and apartments in Dubai on a normal tenancy contract. Those who struggle with the saving money for the downpayment or are finding it difficult to get mortgage and loan approvals will welcome this scheme. You would then need to complete the rest of the payments over the years and acquire the property, similar to how you would on a mortgage. Again, let's assume that the total price of the property is AED 1.2M. This amount or a portion of this amount (depending on what is stipulated in the contract) becomes your equity towards the total valuation of the property. Over the 3-year period, this amounts to AED 360k. For three years you are required to pay AED 120k as rent.
Say you are looking at a 2-bedroom property on a rent-to-own scheme. In many cases, this is 5% of the total property valuation. There is a small upfront payment in most cases of the lease to own schemes in Dubai, but this is significantly lower than the 25%, that is the norm for buying ready properties in Dubai. This is perfect for those looking to buy property in Dubai without paying the downpayment. Once the lock-in period is complete, you continue paying instalments, usually through a mortgage, until you acquire the property as a whole. As part of this scheme, the rents are structured as payments or instalments towards eventually acquiring the property. There is usually a lock-in period, at the end of which the payments made so far, can be converted into equity (similar to what you would have spent on downpayment) if you decide to purchase the unit. The rent paid by a tenant on any property in Dubai that is a part of the rent to own scheme (RTO) is converted into equity towards buying the home. How do rent to own schemes in Dubai work? But there is a large population that would still prefer to buy a ready property and this is where the rent to own schemes in Dubai and the rest of the UAE comes in handy.Īlthough not widely available across all property types, they are becoming popular and special regulations have been put into place by the government to ensure these are legally sound property investments in Dubai.
The alternative then is to obviously look at off-plan projects in the Dubai real estate market for investments. To save up 25% of the total cost of the property, along with all the other initial costs of buying property in Dubai, puts a significant strain on the pocket. One of the biggest things that stop potential investors in the Dubai property market is the amount of money that they need to save up for the initial downpayment.
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