Freehold VERSES Leasehold

Date 09th January, 2022

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When deciding between freehold vs leasehold properties, it is crucial to understand legal rights and responsibilities of each type of ownership.

The Difference

Freehold ownership: Those who buy property on a freehold basis enjoy absolute ownership of the property and the land it’s built on. The property can then be sold, leased or occupied at the owner’s will.

Leasehold ownership: If you buy a property on a leasehold basis, you will get property rights for a fixed term, which is a maximum of 99 years. However, you will not own the property’s land. The ultimate ownership of the property goes back to the freeholder on expiry of the ownership term outlined in the contract.

Pros and Cons

Freehold – Pros

Buying a freehold property in Dubai will give the owner complete control over the unit and the land. Those who own freehold property in Dubai can remodel or renovate the unit structure as they see fit, as long as it abides by the guidelines set by the developer.

The freehold property will stay in the family and is considered in inheritance laws.

The owner can sell, lease or occupy freehold property in Dubai at their discretion.

The owner of freehold property in Dubai and their family will also be eligible for renewable UAE residence visas, provided they meet certain conditions. With the introduction of long-term residency visas in the UAE, freehold property owners may also be eligible for 5 and 10-year visas.

Another advantage of freehold ownership is the wide choice of properties available to prospective buyers. The designated zones, commonly known as freehold areas in Dubai, have a massive portfolio of freehold properties catering to different budgets, tastes and requirements.

Freehold Cons

Freehold owners in Dubai will be responsible for the maintenance and upkeep of the property. For instance, if the owner has leased out the property to a tenant, the former will be responsible for any major repairs or maintenance.

Leasehold Pros

The average sales price for leasehold properties might be somewhat lower than freehold properties.

The leaseholder can renew the contract at the end of the term and continue to live in the property.

When owning a leasehold property in Dubai, the leaseholder will face limited liability in terms of repairs to property structure and common areas

Leasehold Cons

One of the key aspects of leasehold ownership in Dubai that buyers should bear in mind is that any improvements to the property such as remodelling, alterations or renovation require written approval from the freehold owner.

Leaseholders may also face other restrictions, such as when it comes to subleasing the property.

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