Better late than never—Rent-to-own picking up in the UAE
With a second property developer offering Rent-to-Own schemes, Kipp is wondering if the trend is finally catching on in the UAE?
September 6, 2011 1:56 by shafeer
And then there were two.
Shortly after Surouh’s Rent-to-Own scheme that was announced two months ago, Abu Dhabi’s Aldar, this week, has introduced a similar scheme on unsold units in Al Zeina and Al Bandar project.
Those opting for the Rent-to-Own scheme will be allowed to rent a unit for up to two years, after which the tenant will be allowed the opportunity to either purchase the apartment or walk away from the agreement penalty free. If indeed the tenant decides to buy the property, after two years 100 percent of the first year’s rent and 90 percent of the second year’s rent would be converted to equity towards a purchase at a predetermined price.
What makes Aldar’s scheme different from Surouh’s is that Aldar allows participants to transfer their equity to a new tenant if they choose to leave. Now, what with the extremely uncertain nature of expat’s stint in the UAE, the option of being able to sell your equity to another tenant is undoubtedly an appealing one.
Now, Rent-to-Own Schemes aren’t new to the UAE; as far back as 2004 Tamweel was offering a variety of home financing products along these lines, including the ‘Flexi Rent to Own’ and ‘Fixed Lease to Own’ option. Of course, with the property sector taking a real beating upon the onset of the recession the popularity of such schemes has dwindled. But now, with two developers in the capital offering Rent-to-Own schemes and the recent change to the investment visa terms, could we be seeing the beginnings of a much more hopeful and optimistic property sector?