Gifting property in Dubai is governed by “Law No. (14) of 2017 Regulating Endowments and Gifts in the Emirate of Dubai”. The law defines gifting as an act of giving without expecting anything in return. “Hiba” as mostly known in Arabic, is when a donor voluntarily decides to grant the done a property-free of encumbrances- as a gift without consideration.

This type of action is frequently present in estate planning as an attempt to transfer assets during one’s lifetime rather than relying on inheritance. It is often chosen by both nationals and expats over sale transactions for its financial privileges and succession planning virtues.

Who Can Gift Property in Dubai?

Under Dubai’s property laws, anyone who owns a clear title deed of a freehold property can perform property gifting in Dubai.

While nationals have no restrictions and enjoy a lack of limitations regarding property ownership and transactions; Expats are granted rights to own properties but in designated freehold zones only, and for specific time periods, and then perform acts of transactions.

It has been specified by law that first-degree family members are the only members eligible to receive “Hiba” from each other, such as parents, spouses, and children, exclusively listed and restrictively applied. Even if siblings and nieces and nephews are also family members, once the transaction exceeds the scope of first-degree relatives, it is then treated as a sale agreement, incurring extra expenses.

Planning to gift property to a family member? Explore our comprehensive Family Property Gifting in Dubai guide for clear procedures and documentation.

Freehold vs Leasehold

Properties are gifted among first-degree family members with ease, yet the question is, which type of properties?

Freehold owned properties indicate that both the land and the building which resides it are both owned by the individual in question.

However, leasehold properties only grant rights on the building and not the land itself, meaning that the property ownership is not entitled to the owner of a leasehold property and thus he is incapable of gifting such property. Only leasehold rights can be gifted in such case.

Nationals enjoy a range of limitless possibilities for their property ownership and acts to be performed. Expats on the other hand are only allowed to gift freehold properties in Dubai’s certain designated freehold zones.

What Does it Cost to Gift a Property in Dubai?

Despite being characterized by being voluntary and without consideration, fees are still applicable in the case of property gifting.

The DLD allocates less expenses for gifting a property in comparison with processing a sale transaction; given that the sale agreement requires a 4% rate of the whole property’s value to be paid to DLD upon registration, whereas in the case of property gifting, a drastically lower rate of 0.125% of the property’s value is to be paid upon the transfer of ownership.

Additional charges also apply when processing a property gifting application, such as valuation fees, which are formally required by DLD, for the approval issuance, in addition to trustee office fees, both grouped together could reach AED 6,000 to 8,000.

Appointing legal services personnel, translating certain required documents, the need for a mortgage clearance certificate in case of a mortgaged property, and the property’s type, can all contribute to adding supplementary legal fees.

What is the Legal Procedure for Property Gifting?

Prior to initiating the gifting process, it is initially essential to ensure that the property is eligible for gifting,as:

• It should be in freehold designated areas
• And have a clear title deed, free of encumbrance

In case the property is an off-plan property, or is mortgaged, an NOC from the developer or the bank is required. Documents required are:

• Clear title deed
• A valuation certificate
• Proof of relationship among the gifting family members
• Identification documents
• And a valid POA in case the parties are incapable of attending the gifting transaction

After preparing the required documents, a valuation request is then issued to the DLD trustee or service center, then the payment of various fees takes place. Finally, after all necessary steps have been taken, the title is transferred within the presence of all parties or with a legal POA in case of inability to attend.

After finalizing the requirements, the DLD then issues a new title deed under the beneficiary’s name.

Special Situations in Property Gifting

Is it possible to gift a mortgaged property in Dubai?

Despite being a prolonged and complex process, it is possible under the provisions of the law. Banking and financial institutions’ restrictions often arise upon presenting an intention of gifting a mortgaged property, as they are the major role players and decision makers in this matter, the DLD requires an NOC issued from their side for the gifting to be approved and processed.

In most cases, banks prefer that the mortgage is cleared and settled before the gifting takes place, or in some cases, the mortgage is transferred to the new owner, as it is called a mortgage transfer agreement.

However, one must note that this path is risky, since settling a mortgage prior to its designated date implements penalties, financial penalties differ from bank to another, but they shouldn’t exceed one percent of the loan amount, and they can be chosen before the process continues.

Attaining the bank’s written approval involves lots of steps and often takes longer than anticipated, especially when compared to normal property gifting.

Gifting Property to a Legal Entity

One of the strategic plans of estate structuring, legacy planning, and enjoying low expenditure privileges, is gifting a property to a legal entity. Company gifting is regulated by law under specific provisions and regulations.

One of the main conditions for gifting a legal entity is that the company should be fully or substantially owned by the donor, other factors include the type of the company and the jurisdiction, as not all of them are allowed to hold properties.

Property gifting conditions of lands apply in all cases, as it should have a clear title deed, be free of encumbrances, or be accompanied by an NOC from the bank in case of an off-plan property or if it’s mortgaged.

Compliance with the regulations set by the DLD is also mandatory, a proper company structure, adequate documentation, and usually the free zone’s consent. Documents such as the company’s license, MOA, certificate of registration, current share certificate or extract to prove the ownership and a valid POA in case someone is representing the owner. The POA has to be issued specifically for the purpose of representation in property gifting.

Property Gifting to a Minor in Dubai

According to the UAE Civil Law No.5 of 1985, a minor is any person below the age of majority, or someone who is an adult but lacks mental capacity. Thus, minors are incompetent individuals when it comes to property management.

Nevertheless, the law allows minors to have properties registered under their names but restricts their powers of performing transactions on these properties. For this reason, the court appoints a guardian or custodian to take care of properties owned by minors.

Families often prefer property gifting in Dubaiearly on as part of a hassle-free succession planning process, and the law ensures that the child’s best interest is always protected and taken care of, thus guardians are always required to ask for the court’s approval before taking any action related to the minor’s property.

Minors are prohibited from performing any transaction activities on the property until they reach the age of majority, after that they are treated as adults and have the privilege of managing the property as they wish.

How Long does the Property Gifting take?

The process of property gifting usually takes two to four weeks to be finalized. In regular cases, where the transaction is taking place between first-degree family members, the documentation preparation stage shouldn’t be a problem; and then the process of valuation followed by the payment of fees and registration procedures follow, until finally having a new title deed issued in the name of the recipient.

Nonetheless, if the gifting process is taking place towards a minor, a legal entity, or a mortgaged property, then complications may occur, leading to the requirement of extra documentations, eventually causing a delay in the timeline.

Final Thoughts: Is Property Gifting for you?

In conclusion, property gifting is considered a powerful tool for wealth transfer, family security, and succession planning, but it’s not one solution that fits all cases. There are multiple key factors that set the long-term benefit and need for such option.

To ensure peace of mind, consulting a legal expert is advised for the intentions to be properly documented and for decisions to be beneficial without unintended consequences.

If you wish to skip the inheritance trouble and want to be able to transfer ownership of your property with less expenses, all within a secured process and a succession plan. Reach out to us to guide you through every step of your Dubai property gifting process.

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