Initial usufruct right in Dubai

What is the Usufruct Right in Dubai?

In order to provide a smooth real estate ownership system with encouraging trading mechanisms, some real estate laws in Dubai have established clear foundations for selling real estate rights and purchasing their benefits between sellers and buyers. The usufruct or musataha right is one of these types.

This service is represented in one of two ways:

• Sale of Usufruct: The Dubai Land Department allows the registration of usufruct sale contracts, through which the sale of the usufruct right of a property is registered. This entitles the beneficiary (the usufruct buyer) to use the property they have leased for this purpose and benefit from it. In reality, the contract is a long-term lease, not exceeding 99 years.
• Sale of Musataha: This refers to the contract by which the beneficiary (the right buyer - musataha holder) is entitled to build on the land and benefit from the building for a period not exceeding 50 years, renewable.

Many people find in the real estate usufruct right unique and important investment opportunities for individuals and companies wishing to obtain land suitable for construction and development and to establish fruitful projects on it, given the flexibility this contract provides for using such land, building on it, establishing various projects, leasing, and making a profit from it.

How to Register the Usufruct Right in Dubai

The usufruct right is registered in Dubai at the real estate registration trustee offices, where the steps can be carried out and the contracts finalized between both parties after submitting the required documents and verifications. This procedure can usually be completed in less than half an hour.

Procedures

The detailed procedures for registering a usufruct contract are as follows:

• First: Both parties to the contract must go to one of the real estate service centers in Dubai, also known as the "Real Estate Registration Trustee Office".
• Second: Submit the required documents to the responsible officer to ensure there are no missing papers. All required documents are uploaded via the digital vault.
• Third: The officer enters the transaction data into the system and reviews it.
• Fourth: The applicant pays the specified fees and receives a payment receipt.
• Fifth: The transaction outputs are sent to the client via the selected email, including: the ownership certificate, map, and fee balance (all outputs are electronic).

Read also: How Are Real Estate Disputes Resolved in Dubai?

Required Documents and Papers

The documents vary slightly depending on the parties to the contract. If the usufruct or musataha contract is between individuals, the following are required:

• Electronic no-objection certificate from the real estate developer in freehold areas, if the usufruct buyer is not Emirati or a GCC national (obtained through the Dubai REST app).
• Emirati ID of the seller (for identification) or a valid passport copy for non-resident foreigners in the UAE.
• Legal power of attorney if there is a representative for the contracting parties.
• In addition, a copy of the usufruct or musataha contract.

As for companies:

The company must first be registered and have a valid commercial license.

If the company is a limited liability company, a copy of the Emirati ID or valid passport of the license owner must be provided, along with a copy of the company's articles of incorporation, stating the names of the shareholders.

Conditions for Registering the Usufruct Right

The most important conditions that must be met in the property to register the usufruct right are:

• The property must be in areas permitted for freehold ownership if the usufruct buyer is not from the GCC countries.
• The start and end date of the usufruct right must be specified in the contract.
• The end date of the usufruct right for the sold unit must match the end date of the usufruct right on the land.
• For contracts between companies, if the company is not previously registered, the entity must be registered by submitting a company registration application to obtain a commercial license.

You may also be interested in: Real Estate Valuation through the Land Department.

Fees

The fees to be paid are as follows:

• In cases of long-term lease (usufruct right):
• 2% of the rental value paid by the property owner.
• In addition to 2% of the rental value paid by the tenant.
• In case of musataha:
• To register musataha: 1% of the total value of the musataha contract.

For resale of musataha on vacant land: 1%, and for built-up land: 4% (of the building value) + 1% (of the musataha value).

• 250 AED: Ownership issuance fee.
• 100 AED: Land map for lands not under Dubai Municipality authority.
• 225 AED: Land map unified map fee with Dubai Municipality.
• 250 AED for villa and apartment.
• 10 AED knowledge fee per fee.
• 10 AED innovation fee per fee.

In addition, service partner fees:

If the sale value is 500,000 AED or more, the fee is 4,000 AED plus VAT on service partner fees.

If the sale value is less than 500,000 AED, the fee is 2,000 AED plus VAT on service partner fees.

Various payment methods are available for the fees, whether through smart payment (e-pay), Dubai SADAD platform, Noqodi, or by check to the Land Department.

For All Real Estate Matters in Dubai, Consult Imtilak Global

Through the services of Imtilak Global in Dubai, we open wide horizons for freehold ownership and real estate investment in the UAE, through our free consultancy services, extensive real estate tours, and exceptional freehold opportunities.

We answer your real estate questions and welcome anyone interested in knowledge and investment in the real estate sector, through our professional and knowledgeable team, well-versed in regulations and laws, with extensive expertise in everything you need to know about the real estate market and freehold ownership or investment in the most beautiful Gulf city.

Edited by: Imtilak Global©