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A rent-to-own scheme is an agreement between a developer and buyer where rental payments contribute towards a future down payment. This allows the buyer to rent the property while also saving up for eventual ownership. Unlike a traditional mortgage, there's a lower upfront payment, typically around 5% or less. After a set period, the buyer can decide whether to buy the property or exit the agreement. While the rent may be higher than market rates, it offers convenience for those who struggle to save for a deposit.
 

• Option to purchase: Under this scheme, the buyer pays an ‘option fee’, a mutually agreed percentage of the purchase price, in exchange for the right to buy the property at a later date. Should you choose not to proceed with the purchase, you lose the option fee.
• Purchase agreement: All terms are mutually agreed upfront with the buyer and developer deciding on a fixed purchase price, or choosing to determine the price with a future valuation at an agreed date.

Yes. The Dubai Land Department (DLD) launched the rent-to-own (Ijarah) service, a specific title deed register to provide a clear legal framework to facilitate such transactions.

Buying a home via a bank mortgage is common practice, but the main hurdle faced by Dubai residents is the requirement for a minimum 25% down-payment, per UAE Central Bank regulations. In addition to this, there are further upfront transaction costs that must be accounted for.

For a detailed breakdown of upfront costs, read out article on ‘Factors to consider when buying a home in Dubai.’
The key difference between a rent-to-own scheme and a mortgage is the upfront payment required.
 

• 25% down-payment, from cash savings
• Approximately 7-8% of the property purchase price for DLD fees, real estate agent fees and bank fees, which can be financed through a personal loan.
   

• Approximately 5-8% of the property purchase price
   

• Buying your first home is more affordable and accessible as the pressure of a large down-payment is removed.
• Rent payments help you build equity as each installment accumulates toward the acquisition of an asset.
• With rent-to-own schemes you can try before you buy, living in the property before you agree to proceed with the purchase.
• The application process for a rent-to-own scheme is typically less complicated than applying for a traditional mortgage.
   

• You must clearly understand the terms and conditions of the agreement including market price fluctuations, title deed ownership throughout the contract, and the timeframe for payment and exit clauses, before signing the contract.
• You may end up paying a higher premium compared to the going rate for the same, or similar, properties that are not under a rent-to-own scheme.
• Should you proceed to buy the property, you should ensure you qualify for a mortgage to complete the purchase.
   

The payment plan under each rent-to-own scheme is unique as the terms are individually decided under a contract between the developer and the buyer.
Whilst the DLD has issued guidelines and associated fees regarding registration, financing, transfer and cancellation of rent-to-own contracts, the schemes created to date have been developed individually, on a case by case basis.
 

• Value of the property, agreed between developer and buyer
• Timeframe of the lease term, agreed between developer and buyer
• Title Deed ownership throughout contract duration
• Exit terms
• Penalty clause for defaulted repayments
• Percentage of down-payment, if any, to be refunded, should you decide to exit the contract 
• Clause related to sudden job loss, missed repayments or mortgage rejection at the time of purchase (once the lease term ends)
• Property maintenance terms, who is responsible for the upkeep of the property throughout the contract duration
   

As determined by the DLD, the following fees are applicable when entering a rent-to-own contract:
 

⦁    2% of the sale price
 

⦁    2% of the sale price and;
⦁    AED 250 Title Deed Issuance Fee
⦁    Map Issuance Fees (dependent on the type of property) 
⦁    0.25% of the rent amount
⦁    AED 4,000 Registration Fee for properties AED 500,000 or above;
AED 2,000 Registration Fee for properties less than AED 500,000
⦁    AED 10 Knowledge Fee (added to each fee)
 

Source : Propertyfinder (https://www.propertyfinder.ae/guides/what-are-rent-to-own-schemes-in-dubai/)