A Guide for Indian NRIs in the UAE | Part 1

The United Arab Emirates (UAE) has emerged as one of the most popular jurisdictions worldwide for residency as there are no income taxes, property taxes, capital gains taxes on individuals and there is a relatively stable political system.

This blog is dedicated to NRIs who are currently in the UAE. We will cover the following aspects.

1. 1. 1. Permanent Residency for NRIs in the UAE
      2. Buying a property in the UAE
      3. Home Loans in the UAE
      4. Personal Loans in the UAE

First, let us try to understand how foreigners/expatriates become residents in the UAE.

Who Can Live or Reside in the UAE?

Foreigners can live as residents in the UAE through:

1. 1. 1. Employment: If employed by a Company /Government sector in the UAE – the Company/the Government will apply and sponsor a residence visa.
      2. Investing in Business: The investor will process and apply for his own visa under the sponsorship of his company’s registered name.
      3. Buying a Property: In this case, the property owner’s residence visa will be sponsored under the property he owns. The property must be worth at least AED 1,000,000. The visa is normally issued for 2 years.
      4. Sponsorship: Dependents can be sponsored by:

• • • • Someone who is employed in the UAE
      • An investor/business owner in the UAE
      • A property owner in the UAE

Dependents include children, parents, maids and close relatives.

A residence visa is needed to open a bank account, get a driving license, register a car, and access government health services and health insurance, in UAE.

UAE Golden Visa

The Golden Visa essentially offers long-term residency (5 and 10 years) to investors, entrepreneurs, individuals with outstanding talents like researchers, medical professionals, etc.

Eligibility for a 10 year Visa

• • • Investors in public investments of at least AED 10 million.
      • A deposit of at least AED 10 million in an investment fund inside the country
      • Establishing a company in the UAE with a capital of at least AED 10 million
      • Partnering in an existing or a new company with a share value of not less than AED 10 million
    • Persons with specialised talents.

Eligibility for a 5 year Visa

• • • Investors in a property in the UAE – Gross value of not less than AED 5 million.
    • Entrepreneurs – having an existing project with a minimum capital of AED 500,000.

 

Expatriates buying a property in the UAE

After becoming a resident, one might want to buy a property in the UAE. There are different regulations in Abu Dhabi, Dubai, and Sharjah.

Abu Dhabi

Real Estate Regulations in Abu Dhabi allows expatriates to own properties in the form of floors and apartments and not lands, through four main systems:

Ownership	Expatriates are granted ownership deeds of residential units for 99 years, which allow them to fully dispose of the apartments and villas they buy.
Musataha	Expatriates can own residential units for 50 years, renewable by the agreement.
Usufruct	Expatriates can own residential units for 99 years. The usufruct contract entitles the owner to enjoy the use of the property and its facilities without being able to change it.
Long-term lease	A long-term lease is given for an initial period, not less than 25 years.

 

There are nine select areas in Abu Dhabi, where foreigners are allowed to own real estate properties. They are: Yas Island, Saadiyat, Reem, Mariya, Lulu, Al Raha Beach, Sayh Al Sedairah, Al Reef and Masdar City.

Dubai

In Dubai, foreign ownership is permitted in areas designated as freehold. Foreigners (who do not live in the UAE), and expatriate residents may acquire freehold ownership rights over property without restriction, usufruct rights, or leasehold rights for up to 99 years.

Sharjah

According to Sharjah regulations, foreign nationals and companies owned by foreign nationals in the UAE do not have the right to own, but they have the right of usufruct for 100 years maximum after registering such usufruct right with the Sharjah Real Estate Registration Department.

Home Loan – Prerequisites

Banks must follow a certain set of criteria to offer home loans in Dubai. Usually, banks in Dubai have four main criteria for home loan eligibility:

• • • One must have lived in the UAE for at least six months to a year.
    • One must have been employed for a minimum period of six months in the UAE. The length of employment in the UAE is a major factor in deciding home loan application.
    • One must have done business for at least 2 – 3 years in the UAE.
    • Credit history – A credit score is the most important number when it comes to availing a loan.

The Al Etihad Credit Bureau (AECB) puts together a credit report of financially active residents in the UAE by compiling data from loan, mortgage, credit card transactions.

When it comes to securing a home loan,

• • • First, find out how much to pay upfront*.
    • Second, one should understand the duration of the mortgage.
    • Third, is to evaluate the interest rates – fixed vs floating rates of interest.

*Upfront cost includes:

• • • Down payment – (20 – 25% of the purchase price)
    • Transfer fee
    • Mortgage registration fee
    • Valuation fee
    • Real estate commission

Personal Loans in UAE

There is comparatively easier access to loans in the UAE, and the interest rates in the UAE are lower than those offered by banks in India. Indian expatriates in the UAE want to understand how beneficial it is for them to opt for a loan in the UAE instead of taking a loan in India.

As per the UAE Central Bank regulations,

• • • Banks cannot offer a personal loan more than 20 times an individual’s monthly salary. So, if you earn AED 20,000 a month, the maximum personal loan you would qualify for is AED 400,000.
    • The repayment period for personal loans must not exceed 48 months, against a monthly deduction of no more than half the borrower’s salary.
    • The UAE Central Bank has mandated that a UAE resident cannot have a Debt Burden Ratio of more than 50 %.
    • The combined monthly instalments on your existing loans should not exceed 50 per cent of your monthly income. So, if you earn an income of AED 20,000 a month, you must not be repaying more than AED 10,000 towards monthly debt instalments.

In our next blog, we will discuss Health Insurance policies, Pension Schemes offered to Expatriates, the “Retire in Dubai” Scheme, and Investment Options for NRIs in the UAE. Stay tuned!!