TOP 5 Dubai Laws for Real Estate Investors: Do Not Forget

12:57 pm  |  17.04.2024

You may have already heard that you don’t have to pay income tax when you resell real estate. The yield on local real estate can reach 10% per year, while in London and New York, it does not exceed 4–5%.

There are also many rules in Dubai that you will not encounter in other countries. And if you know them, you can protect your rights and save money.

Today we will look at 5 important laws of the United Arab Emirates that novice real estate investors should study. This will help you confidently enter the field and not make mistakes.

A Little History

Before 2001, you would not have been able to own property in Dubai: this was prohibited by law for foreigners.

But then major changes occurred in the local market. At first, the government allowed citizens of other countries to rent housing in Dubai for up to 99 years.

In May 2002, the ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum, allowed them to own real estate in Dubai on full ownership.

Currently, investments in real estate in the emirate account for about 15% of the city’s GDP, and this area is regulated at the state level.

Law No. (7) 2013. Dubai Land Department

The Department of Lands (DLD) came into existence in Dubai in May 1960.

Its goals:

  • supervision of the real estate sector;
  • registration of transactions;
  • promoting the real estate sector in Dubai locally and internationally.

And in 2013, the government decided to make Dubai the best investment destination in the world. So the department had new tasks.

Under Law No. 7, DLD became responsible for investments in real estate in the emirate. The main focus is on innovation, trust, and investor satisfaction.

READ: Labor Rights of Workers in the UAE: Detailed Analysis

Decree No. 3 of 2006

We mentioned above that foreigners are allowed to own property in Dubai, but there is one detail. They can buy a villa, apartment, or land only in areas called freehold zones.

You will not feel any loss as Dubai has 47 areas available for home purchase. Many of them are known not only within the emirate but throughout the world.

You may have heard about Dubai Marina, Downtown Dubai, Business Bay, and Palm Jumeirah. The main attractions of the city are concentrated here: the world’s largest shopping center, the tallest tower, singing fountains, and artificial islands.

Every year more and more tourists fly to Dubai to see these wonders with their own eyes.

Law No. 85 of 2006

The Dubai real estate market is actively developing, and along with it, the likelihood of meeting an unscrupulous expert is growing. Be careful when agreeing to work with a freelance broker.

Law No. 85 ensures that fraudsters do not deceive gullible investors. It states that all real estate agents are required to register with the DLD Broker Register. To save your capital to the last dirham, ask your agent to show his real estate license in the UAE. You will see an individual number on it, which can be checked on the website of the Dubai Land Department or in the Dubai Brokers application.

Law No. 8 of 2007 

Investors who make money on the resale of real estate buy real estate off-plan – at the construction stage.

After the owner contributes 40% of the cost of the object, he receives the right to look for another owner, even if the object is not ready yet. Thanks to this, you can earn more than 10% of your investment.

Purpose of Law No. 8: Investor Protection

All money that buyers pay for an unfinished property goes to a special escrow account. The construction company will receive them only after the completion of the residential complex. If the developer does not complete the construction, he is obliged to return the buyers’ money.

READ: The Rules for Apartment Redevelopment Are Not So Simple: Information for Dubai Studio Owners 

Law No. 14 of 2008

The main advantage of a mortgage is the long term. It can be repaid over 25 years, while installments must be repaid in 2–3 years.

Typically, a mortgage loan is taken out to pay for finished housing. And few people know that Law No. 14 of 2008 allows it even when purchasing off-plan real estate. To do this, the investor must deposit 50% of the cost of the apartment or villa.

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Dubai authorities are interested in ensuring that the local real estate market is safe and stable. Therefore, the legal system is regularly improved. Here are a few laws you learned about today:

  • All real estate transactions in Dubai are registered with the Department of Lands (DLD).
  • Foreign investors can purchase real estate only in special freehold zones.
  • Each broker is required to register with the Dubai Land Department and obtain a license.
  • Buying off-plan real estate in Dubai is safe because if construction stops, you will get all your money back.
  • You can get a mortgage for housing under construction if you contribute 50% of the cost of the property.

Don’t forget that you won’t have to study the laws yourself if you delegate the purchase of real estate to a competent broker.

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