Expats faced with shifting home buying rules in the UAE

by Ray Clancy on November 20, 2014

Expats buying a property in the United Arab Emirates are facing changes in terms of access to both available properties and finance.

Sharjah is opening its property market to foreign investment for the first time and HSBC has said that it is reviewing its Abu Dhabi mortgage lending strategy for expats.


Changing rules mean expats may now be able to purchase property in the UAE

Leases of up to 100 years are to be granted to expats in Sharjah under a new law allowing expats from any country with a UAE residency visa to buy, enabling expatriates from any country in the world to buy property in the emirate.

However, expat buyers will be restricted to new investment areas on the edge of the city centre with the first to offer the long leases including Tilal City, a 25 million square feet development on Emirates Road close to the Al Dhaid Interchange, which is being developed by Sharjah Asset Management and Eskan Real Estate Development.

Officials said the new rules would create new cluster cities outside central Sharjah which would reduce traffic and congestion in the main city centre. The move is expected to cut down the number of disputes caused by foreigners attempting to get around the previous rules, which prevented anyone other than GCC Arabs (and a few non-GCC Arabs and Asians with special permission) from owning real estate in the emirate.

‘There are over 220 nationalities here, but we think the biggest demand will come from Arab and Asian Muslims living here who want their families to live in a stable and safe environment,’ said Hamad Salem Al Mazrooa, director general of the Sharjah Real Estate Registration Department.

‘The only restriction is that they must have a residence visa at the time of purchase. If for some reason after the purchase their residence visa expires, they are free to hold the property, lease or sell it as they wish,’ he added.

Officials said that they were seeking to prevent developers selling hundreds of off-plan apartments to speculators who would then flip them on at a higher price by requiring developers to only sell a set number of off-plan apartments related to project completion.

‘We want to avoid off plan speculative flipping, as in the past in the UAE before the economic crisis where developers were marketing the project and didn’t finish building, took the money and left the country,’ Salem explained.

Meanwhile, HSBC has said that it is reviewing its Abu Dhabi mortgage lending strategy for expats, which includes offering mortgages on properties in selected zones in Abu Dhabi, though details of the criteria have not been released.

‘HSBC is currently reviewing its mortgage lending strategy in Abu Dhabi. During the review, we will continue honouring current approvals in principle and will consider select applications on a case-by-case basis. Following the redesign stage, we anticipate continuing to participate in the Abu Dhabi mortgage market for expats on a selective basis,’ the bank said in a statement.

Expats in Abu Dhabi can buy property in certain designated investment zones on a 99 year lease or apply to own properties without the right to ownership of the land.

The UAE’s Central Bank has introduced new mortgage caps and loan-to-value ratios aimed at curbing excess speculation in the country’s housing market. This means that expats buying a property for under Dh5 million must now produce a minimum deposit of 25%, rising to 35% for properties above Dh5 million. For second properties, the minimum deposit is 40%.

Rates are different for Emirati buyers, who need a 20% deposit for homes under Dh5 million, rising to 30% for homes over Dh5 million and 30% for any subsequent properties. Off-plan properties require a 50% deposit regardless of nationality.



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