Dubai:It's becoming as easy to buy a home in Dubai as it is to rent.
For a token down payment or even zero upfront costs, a resident in Dubai can rent a home direct from a developer, keep paying rents over years, and if or she decides, end up buying it.
There is no need to negotiate with banks for mortgages, and the installments to the developer are quite manageable. Now, even the biggest developers are getting into the rent-to-own trend.
Dubai South has become the first master-development in Dubai to launch rent-to-own schemes, as the state of the Dubai property market has developers come up with reworked selling strategies.
The schemes have a 10-year payment plan. People who sign up are under no commitment to purchase. Those choosing to avail the offer will receive two months of free rent at the start of their contract.
In this particular offer, tenants/buyers can make quarterly payments and there is also no down payment.
“Given the current environment, we are highly conscious of the challenges faced by many and have created a scheme that gives tenants the assurance of owning their own property without any major up-front investments,” said Mohammed Al Awadhi at the company.
This means Dubai South will offer rent-to-own – where you pay a small down payment and then monthly instalments – across its vast residential clusters.
Rent-own-schemes are once again popular in Dubai after nearly 10 years, but so far, these offers have been limited to a building or set of buildings rather than across a massive destination.
The Abu Dhabi master-developer Aldar too has been offering rent-to-own schemes at its communities – and chances are this could be the next big trend in the UAE real estate market.
Why now?
Developers are going aggressively after genuine end-users for their ready – or soon-to-be-ready – homes. By tying the payment of the property to rentals, the buyer need not bother too much about paying a hefty down payment, or having to come up with sizeable installments tied to construction milestones.
And they don’t need to involve banks and be charged high mortgage rates. All of the dealing is direct with the developer.
“In many cases, the down payment is kept at 5 per cent or 10, and the instalments come to Dh2,500-Dh3,000 a month,” said a broker who is pushing the claims of projects by Deyaar.
And in Dubai South’s case, the developer is not even asking for a down payment.
Space and time
The timing could prove particularly beneficial for the developer.
The destination is likely to see more projects getting completed before the year is out. Plus, with the Expo 2020 now scheduled for next year, it gives the master developer – and other developers with projects there – to work on their plans. The likes of MAG and Emaar have ongoing projects there and which were well-received by buyers at the time of their launch.
It was also the location where developers experiments with offering townhouses under the Dh1 million range.
1. Make sure the agreement offers flexibility on exiting an agreement without the obligation of buying the property.
2. Since no banks are involved, it is the developer that is directly involved in the financing of the deal. And Developers need not always provide the flexibility banks can when it comes to defaults, etc.
