Should I Be Worried About 99 Year Leases in Abu Dhabi?

A 99 year lease when you buy property in Abu Dhabi is neither unusual nor something to be concerned about.

In Abu Dhabi expatriates (non GCC) acquire 99 year leases when they buy property and this is a concern for some people who only want freehold. It will not be an issue with people from the Common Law legal jurisdictions (like the UK) as these almost always only grant leasehold ownership rights to apartment owners. The freehold is owned by a trust and the apartment owners are members of that trust. The owners only have a lease over their apartment (under common law you can’t own the freehold in the piece of sky your apartment occupies). The UK has mechanisms whereby lease holders are granted longer leases as theirs comes to an end. The grand exception is Australia which uses the strata method, now adopted by Dubai (and to a certain extent Abu Dhabi).

So 99 year leases are common and Abu Dhabi has decided to deal with the issue of them “running out” through the owners associations (OAs). Under the new 2015 law all towers and developments will have OAs who will own the freehold of the land the tower/compound is on (just like UK trusts). The OAs will be the freehold owner of the land the tower/compound sits on and the OA shall be managed by the owners of the units in that development. Once the 99 year lease runs out the property will revert to the OA as the freeholder who will then grant a further 99 year lease back to the owner who is a member of that OA.

Crompton Partners is the largest Property Agency in Abu Dhabi and we would be happy to talk to you about anything regarding sales or leasing in the Nation’s Great Capital. Please feel free to call me on 050 6145199 or email at ben.crompton@cpestateagents.com

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