The property market seems a lot less appealing to those looking to retire in the UAE, as a new visa law leaves many wondering what their legal rights are.
We want only to stay
There was a time when securing a visa wasn't a priority for the majority of foreigners who owned property in the UAE. Back in the boom era, most buyers were in the market for the short term, and vague assurances from sales agents that developers would eventually provide a renewable three-year residency visa with the property were taken lightly. Beyond the speculators seeking a quick buck, however, was a significant pocket of buyers who did depend on the sponsorship of a developer to allow them to live in the country: those who want to retire here.
A new law requiring non-working foreign property holders to renew their visas every six months is designed to clarify what developers can promise and minimise fraud. The new law, which was first announced in February of this year, will apply to all of the emirates. But for potential retirees, whom property agents and developers see as a significant yet underserved segment of the market, the planned federal law that entitles foreign owners of property to a half-year multiple-entry visa may not work well.
The visa would be available to owners of property worth at least Dh1 million and who earn at least Dh10,000 a month, or its equivalent in a foreign currency. The visa will cost Dh2,000 to renew every six months, and applicants will have to leave the country to do so. Applicants also must also be covered by health insurance in the UAE. Existing holders of property-linked residency visas will need to adhere to the new rules or risk being considered violators.
And the new visas are not meant for those looking to settle permanently in the UAE, which has generated confusion for those making retirement plans. And it's not only buyers who are puzzled. Eric Joshua, a property consultant with Abu Dhabi-based Hayatt Real Estate, said the new law could certainly use some clarification. "In Dubai, there's been a freeze on investor-based visas, so developers can no longer provide visas. You'll not receive a visa from developers in Abu Dhabi, either," he said. "In Abu Dhabi they're still a step behind ... an expat can't own the land, so they buy property with a 99-year lease. And there has been no news about the new visa rule as it pertains to Abu Dhabi."
Another property agent, who asked not to be named, described the case of an elderly couple who live in Brunei but are about to make the final payment on a property in Dubai. Like many others, they were told they would get a renewable three-year visa sponsored by the property's developer. Under the old system, developers were allowed to provide visas. But although some developers fulfilled this, there was no guarantee or requirement that they do so.
The visas allowed holders to live in the emirate but not work, and were generally granted after the owner took possession of the property. But in a seller's market, many buyers interested in obtaining a visa were misled or misinformed. "Buyers thought that developers were processing visas," said the agent. "For example, the elderly couple bought in good faith and wanted to retire to Dubai. They want to make their last payment, but their main concern is that under the new law they will only get a six-month visa. So they've been debating whether to forfeit what they've paid so far and go and retire somewhere else. There are a lot of people who want to retire here and they can't under the six-month visit visa."
The law was supposed to go into effect on June 1 of this year, but so far it is unclear whether any new visas have been issued since the rules were announced by the Interior Ministry in April. "I know there's still a lack of clarity in terms of the restrictions," said Lisa Dale, the head of the property department at the Dubai-based law firm Al Tamimi. "And I'm not sure whether they've started issuing [the visas]."
According to Duane Keighran, managing associate of Simmons & Simmons, a law firm in Dubai, there has not been an update since the new visa proposals were announced. Nobody at the Interior Ministry was available for comment. Meanwhile, the Dubai Naturalisation and Residency Department (DNRD) is preparing to implement the new policy and has begun discussions with property companies about issuing visas.
Brig Obaid bin Surur, the deputy director of the department, said in a statement to the state news agency, WAM, at the beginning of August that the department was fielding inquiries from developers "around the clock". He said that the DNRD and the Dubai Land Department would jointly assess the value of properties to ensure they met the value requirements. At the moment, most homebuyers depend on their employers to sponsor their residency. But for those who wish to retire, that isn't an option - and the requirement to leave the country every six months and pay Dh2,000 is a big deterrent.
Aarti Chana, for example, lives and works in Dubai. She has bought a villa, which is still unbuilt, at Nakheel's Palm Jebel Ali two years ago. "I like the lifestyle Dubai has to offer, so I would think of staying in the long term, but if I have a six-month visa only I wouldn't be able to do that," she said. "If they instead offered a three-year visa, as was promised before, then that would be a better option. I don't think it's going to be of any benefit to have to change our visas every six months; it doesn't make sense."
Iqbal Saqib, who owns properties in Dubai, said: "I don't think it's helpful at all. Investment in property is for the long term and [the visa] should at least be for five years." Manju Bhatia, a senior property consultant at Dubai-based property broker Prime Location, said the ruling needs more clarity. "My parents, for example, own property here and are earning," she said. "But when they retire in a couple of years, they won't have a monthly income of Dh10,000. So will they be able to still hold the property in their name? That rule is not very clear."
Some expatriates say the six-month visa would be ideal. David Baker, who has lived in the Gulf for 27 years, said such an arrangement would work well for him when he enters retirement. Mr Baker, who is from the UK, owns a villa in Arabian Ranches in Dubai but has no plans to retire in the emirate, although he would like to keep hold of the property. "The visa is not a pressing issue for me at the moment," he said. "But keeping a residency here would give me a tax advantage if I went back to Europe."
Meanwhile, Ronald Hinchey, a resident partner at Cluttons, a property consultant based in Dubai, says a permanent residency arrangement would boost the slowing market. "A lot of retired people would come from the likes of Europe, for example, to make their affairs tax-efficient," he said. But it depends how serious the Government wants to take this ... I know there are political reasons why they're reluctant to give people permanent residency."
At the very least, the new six-month visa could bring a degree of clarity to foreign buyers at the federal level, and it is expected to keep developers from misleading buyers. According to Jimmy Haoula, a managing partner at Bin Shabib & Associates, a law firm based in Dubai, any provision in a contract that says the developer will grant a visa against the property is now null and void. He said the new regulations are a "law in transition", with many of the practicalities still needing to be ironed out.
"I think there are lot of people who would like to retire here but who can't do it on that particular visa." Mohammad Sultan Thani, the assistant director-general for excellence and organisational governance at the Dubai Land Department, said that the law is a "good idea" but that the department has yet to receive any clear guidelines on what it will entail. "It's at federal level ... when we receive the regulations, we will see how they can be applied," he said.