Abu Dhabi’s real estate market offers different types of property ownership and understanding each type is necessary for making an informed decision. Each type of ownership offers distinct advantages and considerations that can significantly impact the property buying process. The two most common types of property ownership offered in the capital city are leasehold and freehold. Buyers will get owner’s rights in both types but with different limitations.
For your convenience, we have elaborated on all the differences between freehold and leasehold properties in Abu Dhabi.
Understanding Freehold Property
Freehold property ownership provides buyers with complete rights to the property and the land. With full control, freehold properties can be renovated, remodelled and even inherited by the owner’s spouse.
Understanding Leasehold Property
Leasehold property ownership allows buyers to lease a property for a specific period. A maximum of a 99-year lease is offered to the buyers in Abu Dhabi. On leasehold properties, buyers do not have any right over the land, only on the structure.
Difference Between Buying Freehold and Leasehold in Abu Dhabi
Now that you have understood the basic definition, let’s move towards the key differences between freehold vs leasehold property in Abu Dhabi.
Affordability
The upfront cost of freehold properties for sale in Abu Dhabi is usually higher in comparison to leasehold properties. The core reason for the higher cost is complete ownership and full rights offered by the freehold properties.
In comparison, leasehold property owners only have limited rights leading to a lower upfront cost.
Ownership Rights
The freehold property owners have complete rights over their property. That said, owners are allowed to make any renovations to the project and even reconstruct it. Moreover, they can also sell or transfer the ownership rights.
Leasehold property owners have rights over the building only. They are required to seek permission from the lessor.
Maintenance and Renovation
The freehold owners are completely responsible for the maintenance and renovations of their properties. Though this provides them complete rights, it also comes with unexpected maintenance costs. However, the cost can be reduced by avoiding common home maintenance mistakes.
On the contrary, in leasehold property ownership, the lessee needs permission for maintenance from the lessor. Usually, the maintenance cost is borne by the lessor, but it can vary, depending upon the agreement between both parties.
Legal Issues
In freehold property, owners have to register their properties with the government authorities. Once the title deed is transferred, no other major contracts or legalities are required.
In comparison, leasehold property owners are required to renew the lease after its expiry. Apart from registrations, there are multiple other things to consider before lease renewal that add to the hassle of the lessee.
FAQs
What happens when a leasehold property expires in Abu Dhabi?
When the property lease expires, the lessee can negotiate and renew the lease or vacate the property.
What is the difference between freehold and leasehold in Abu Dhabi?
Freehold properties offer complete ownership including land and buildings. Whereas, in a leasehold, only the rights of the building structure are provided.
Can foreigners buy freehold property in Abu Dhabi?
Yes, foreigners can buy freehold properties in the designated freehold property areas of Abu Dhabi.
These were the core differences between freehold and leasehold property in Abu Dhabi. The different types of property ownership in Abu Dhabi are designed to cater for the varied requirements of the buyers. Aside from ownership, a number of other initiatives like digitalisation and transparency also aid in the convenience of owners. If you are interested in availing these benefits, browse through these properties for sale in Abu Dhabi and find an ideal unit.
If you are new to the market, here are the pros of buying property in Abu Dhabi as an expat that you must be aware of.
Stay tuned to dubizzle’s property blog for more information on property ownership.
