How to own your property – A structure that’s right for you

Once you’ve chosen your property, whether it’s for your own use or to rent out as an investment, you should think about how to structure that ownership. There are various options, and here we will look at owning in your individual name, in joint names, or in the name of an offshore company.

Individual Name

If you are buying a property as an unmarried individual, you may well choose to have the property registered in your individual name. In this case the process is relatively easy, as you only have to produce evidence of your identity (usually by way of your original passport) at the transfer office. It is also a useful option where you are taking advantage of mortgage finance, as most locally-based banks will only lend to individual buyers, and not to offshore companies.

Joint Names

Married couples will often opt to buy a property in their joint names, but coownership is available to any joint buyers. They will both be listed as owners on the title deed, holding equal shares (unless otherwise specified on transfer). This requires both parties to be present at the purchase and any subsequent sale (themselves or through their duly appointed representatives). Note that a husband cannot sign for his wife, or vice versa, without express authority. As with individual owners, there are advantages of simplicity and therefore speed and cost in the conveyancing process.

Mortgage finance is also readily available to joint owners as it is to individual owners. Once again we would recommend that joint owners file Wills with the DIFC WPR (‘mirror’ Wills) to ensure that the property passes in accordance with their wishes on death. Note that where one of two joint owners dies, the deceased’s share does not pass automatically to the surviving owner, but rather to the rightful heirs of the deceased (which may or may not include the joint owner). It is important therefore that a Will is made to evidence the wishes of the parties in the event of the death of either of them.

Previously, some individuals were reluctant to buy property in their individual names, as they were worried about the inheritance implications at a time when it was not clear how the local courts would treat Dubai property succession issues for foreign, non-Muslim owners. They looked to offshore company ownership to circumvent the application of UAE inheritance laws and regulations. But the establishment of the DIFC Wills & Probate Registry (DIFC WPR) has provided individuals with a solution which gives comfort in that it is designed to ensure that your property passes in accordance with the wishes stated in your DIFC WPR registered Will.

Offshore Company

In the early days of Dubai’s real estate history, when foreign ownership of property in designated areas was first introduced, there were few restrictions on the types corporate entities that could hold freehold title. Many properties were therefore bought directly in the names of companies from the traditional offshore centres like the BVI, the Cayman Islands, Jersey, Guernsey, etc. More recently, the Dubai Land Department has adopted a policy under which the only offshore entities that can be registered as owners of Dubai real estate are Jebel Ali Free Zone (JAFZ) offshore companies.

However, it is permissible for these JAFZ offshore companies to be owned by a ‘traditional’ offshore company, which can in turn be owned by the individual investor. These structures were more popular in years gone by, as the ultimate ownership was removed from the local jurisdiction and hence removed from the vagaries of the local inheritance position at the time. Since the introduction of the DIFC WPR however, many investors have felt comfortable to eschew such structures for simpler direct ownership models. Other drawbacks include costs – it can be expensive to establish and maintain an offshore structure, and the legalisation and translation of the paperwork required to buy and sell the underlying asset can be expensive. They do however still provide a solution that addresses succession concerns, and they can be used to integrate local property acquisitions into existing portfolio structures.

So even before you have identified your ideal property, whether it’s intended as a home or as an investment, think about how you want to structure the acquisition. Identify and consider your concerns, be they succession issues, costs, tax implications or anonymity requirements. Then take advice and make sure you create a structure that’s right for you.