Dispelling Dubai property myths
Tim Searle answers some common questions for prospective Dubai
property buyers
Having just returned from a trip
to the UK where I attended property exhibitions concentrating
solely on Dubai property sales, I spent most of my time dispelling
real estate myths, and offering my modest insight into important
issues that buyers need to consider. Everyone agrees -The
Dubai property scene is hot. However, if before buying into
the emirate ’s freehold property dream all aspects have
not been analysed, then enthusiasm can lead to confusion and
pitfalls.
Here are the most frequently asked questions we encounter
at Globaleye.
“Which property agent should I use?” Since I do
not offer this advice, it pays to use a realtor who has time
to run through all the developments on their books, has an
overall understanding of the Dubai market, a local office,
knowledge of the legal framework, concise brochures, models
and §oor plans, details of the contract as well as schedule
of payment terms. It is beneficial to have a look at all the
developments in Dubai to determine which one fits your needs
from a perspective of timescale to completion, cost and purpose
(i. e. investment or residential, freehold/leasehold). If
you are not getting sufficient information from your realtor,
find one that is more experienced.
“Can I put the property in my Will?” Yes, but
if you are looking to ensure the property passes directly
to your spouse, be aware that Wills are not recognized under
local Sharia Law. It might be worth considering some form
of offshore structure to purchase the property so that it
passes within your estate unencumbered.
“When buying in Dubai, do I avoid paying Death Taxes
at home?” Most unlikely for most people, since at the
time of death you are assessed on your worldwide wealth and
certainly the UK Inland Revenue will want to charge you 40%
on all your assets over the £255,000 threshold. Since
the average price of a house in the UK is now £200,000,
nearly every UK domiciled person has an Inheritance Tax (IHT)
issue. Remember, if you were born in the UK you are UK domiciled
irrespective of how many years you have been away. Once again,
by careful use of offshore structures including Trusts, IHT
can be mitigated or eliminated in certain instances.
“Is there any Capital Gains Tax on the sale of property?”
Not yet.
“Can I buy using an offshore company?” This is
certainly possible, and using a Dubai offshore company can
also be explored.
“Can I get finance in the UAE?” Yes if you are
resident, but terms differ between the limited numbers of
local lenders. However, finance can be arranged through overseas
lenders if you have assets overseas too. Many property investors
with assets overseas (property, income, investments)have taken
advantage of favourable international interest rates. For
example, someone with property in the UK may be able to release
equity to a maximum of 80% of the value of their property
(less any outstanding mortgage), to finance all or part of
their property purchase in Dubai. Interest rates can be secured
as low as 3.5% in sterling terms as opposed to 6.5% in Dirhams
locally. Moreover international loan terms can be extended,
interest only options secured, achieve capital raising without
increasing monthly payments, obtain fixed interest rates and
numerous other options are available.
“Why don’t I use a mortgage broker in the UK to
help raise my finance?” Most UK based brokers merely
use a panel of limited lenders, whereas offshore brokers have
the full scope of onshore and offshore institutions. Also
consider this, do you want your UK broker to report your plans
to the tax authorities? Unfortunately they have to and most
will be unable to place your business if it is for property
purchase outside the UK. If you are buying offshore it makes
sense to seek bespoke offshore ser vices so you get the best
solutions available.
“Do I need insurance for my mortgage?” Most lenders
(banks and building societies)will require some form of protection
for the loan. This makes sense since you want your property
paid off in the event of your death or diagnosis of a serious/terminal
illness. Banks on the whole do not like repossessing property
and would prefer the loan to be repaid from an insurance policy
should a serious event occur. Similarly, if you fell ill and
had to sell the property to pay the loan in the absence of
a policy, the value of the property may have fallen to a level
below the outstanding loan amount. Seeking the right insurance
is important since it comes in many forms. Whole of Life,
Term, and Endowment policies are all widely available in the
UAE. Get advice on how to determine which one is right for
you. Similarly, it pays to use a broker since they can normally
secure terms well below that which is offered directly by
most Banks. Remember, the main hurdle to any property purchase
is ensuring you are comfortable from a financial perspective
before going ahead and securing that dream home.
Can you afford it? More importantly are you prepared for the
property to go down in value as well as up? Property is just
like any other investment and can §uctuate according to the
overall market. How long you are going to hold the property
will determine whether you can be sure it will make money
or not.
The author, Tim Searle, CEO of Globaleye, has been in Dubai
for ten years providing financial services to investors in
the Middle East. Globaleye boasts over 3500 clients and is
also part of Inter-Alliance WorldNet, a joint venture between
OFS WorldNet and Inter-Alliance International, part of Inter-Alliance
PLC. As the largest IFA in the UK, with over 1000 practitioners
and some 35 offices, Inter-Alliance PLC has won numerous awards
and accreditations.
For more information please contact 800 4558 (+9714 3979550)or
tsearle@globaleyegroup.
com
Or visit: www.
globaleyegroup. com
www.
inter-alliance. com
www.
iaworldnet. com
BACK - NEXT
|
