- For the first time in Dubai, rent-to-own property is available with a 20 year payment plan
With current supply and demand, we are 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, Director of Research and Data for Property Finder Group notes, “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% or more”.
With the latest trends which became popular in 2018, developers are offering payment plans of 5 or 7 years whereby the buyer also owes a percentage upon booking and then various amounts due along completion stages of that property. 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 installments on a second property that is not yet ready. 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.
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.
Mohanad Alwadiya, CEO of Harbor Real Estate says “this is 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.”
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 18-20 thousands dirhams per month. As Lynnette Abad notes, “spreading the amount due over 10, 15 or 20 years, is 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 5% down, without the hassle of interest rates or hidden fees and as Alwadiya notes, “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.”
Recent development from the Dubai Land Department has made rent-to-own even more attractive. Under the supervision and with the guidance of the Dubai Land Department led by His Excellency Sultan Butti Bin Mejren, Alwadiya notes that “A title deed is immediately given from the Dubai Land Department 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.”
Like many of Dubai’s accomplishments, rent to own with a proper title deed is a first for the larger MENA region and sets a trend for other markets to follow.
-Ends-
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