Dubai: Tenants in Dubai concerned about a sharp rise on their next rental renewals are seeking another way to offset it – ask their landlord whether they can do ‘rent to own’.
A significant number of tenants currently resident in Dubai’s freehold communities are asking that question to their landlords. In many instances, they are getting a favorable response.
“The end-user buying is returning to Dubai’s property market, and if they can reach win-win terms with their landlords, these buyers will be better off,” said Uzman Jameel of Azco Real Estate. “They don’t have to look at other rental options, they don’t have to pay a higher rent on their existing premises, and at the end of it all, they are getting a home of their own in Dubai.”
The first three months of 2024 have seen more leases turn into sale and purchase agreement possibilities. The trend has started to show up in upscale Dubai Hills, Downtown and Dubai Marina as well as in mid- to upper-mid communities JLT and JVC.
After the recent RERA Rental Index updating, end-user buyers are making a strong return to the market. And rent-to-own makes perfect sense to many of these buyers - they opt for a property that they are comfortable with and deal with a landlord who now wants to sell.
Most important, buying on rent to own terms cushions them from any future rental hikes.
Under rent to own, while ‘tenants’ will still see an increase in what they have to pay the landlord, that goes as down payment on the home they are residing in. Plus, there is no need to take on mortgages or other such obligations to pay up.
Typically, the buyer-tenant puts up six months or the full-year rental sum as down payment on the property.
If developers in Dubai have got unsold ready homes in their projects, there is a good chance they will initiate rent to own schemes of their own. But with so much happening in offplan sales, will developers have the time to look at ready options?
As for landlords, in a market heavily tilted towards offplan demand, finding buyers for their ready homes comes represents a win too. These sellers get to exit on their investments at a premium on what they had bought for. They don’t have to search or wait for a buyer. There is no need for agents to get involved and commissions to pay off. On top of all that, they are assured of regular payments from the buyer.
Rent to own schemes always turn popular each time the property market goes into overdrive on rental growths. Every indication points to another surge in Dubai rentals across its residential space.
“With rent to own, tenant-buyers will find they are flexible payment terms too direct from the seller,” said Jameel. “More so, because there are no banks involved. While this form of transaction has long been available, it’s only recently that it’s really gaining traction and opening up a whole new aspect to the Dubai property marketplace.”
