Guide To Gifting A Property In Dubai
What is a gift transfer and what should I know about it?
A gift transfer (also known as “a grant transfer”, or “a Hiba transfer”) is a voluntary transfer of a property, or part of a property, from an individual to another individual, from an individual to a company, or from a company to an individual. It is important to underline at this stage that an off-plan unit cannot be gifted. The individual, or the company, that grants/gifts the property is referred to as “a donor” while the individual, or the company, in receipt of the property is referred to as “a donee”. The main difference from a sale-and-purchase transaction is that there is no requirement of consideration (i.e. payment or compensation) for a property in a gift transfer, that is the property can be transferred from a donor to a donee on an absolutely gratuitous basis and that the Dubai Land Department (DLD) charges significantly less fees in case of a gift transfer.
However, the above arrangement does not mean that an owner of a Dubai property can gift it to any given individual. In fact, you can only gift your property, or share of it, to a “first degree relative”. Under the local legislation, the definition of “first degree relative” comprises relationships between parents and children, and between husband and wife. It is worth noting that relationships between siblings, and between stepchildren and stepparents, do not qualify as “first degree relatives” for the purposes of a gift transfer in Dubai. In other words, you would be able to gift your property only to your parents, spouse, or your children, while you would not be able to grant your property to your siblings, stepparents, stepchildren or any other relatives.
Up until recently, one way of circumventing the “first degree relative” rule and transferring a property from one sibling to another was to carry out a “double gift transfer” of the property. So, let’s assume that Adam owned a studio in Business Bay and wanted to gift it to his sister, Meghan. Obviously, as explained above, Adam and Meghan – even though a brother and a sister – would not be considered as “first degree relatives” within remits of the Dubai law. In order to overcome this hurdle, Adam could first transfer the studio to his mother, Susanna, who would then, in turn, pass it over to Meghan. However, the Dubai Land Department recently put a lid on such arrangements in order to prevent possible misuse. In accordance with a Directive introduced in November 2016, the Dubai Land Department are unlikely to authorize more than one gift transfer on any property in the Emirate. This means that if a property has been gifted once previously, it cannot be gifted again and the next change of ownership transaction on that property will likely be a sale-and-purchase transfer.
What documents will I need?
If you decided to gift your property to “a first degree relative”, below is the list of documents you will need to have in order to complete the transfer:
- Original Title Deed – to prove that the property in question does indeed belong to you. Bear in mind that an off-plan unit cannot be gifted.
- Affection Plan – this is similar to a site plan and should be obtained to prove the location and size of the property.
- Value Estimation Certificate – this can be obtained from the Dubai Land Department and determines the market value of the property. This figure will also serve as a basis to calculate the transfer fee owed to the Dubai Land Department at a later stage.
- No Objection Certificate* – this document is applicable to freehold property only and can be obtained from your developer. Essentially, it is a letter which states that the owner has no outstanding liabilities before the developer and that the developer has no objection that the property be transferred.
- Proof of Kinship – you will need to provide the Dubai Land Department with a proof of “first degree relationship” between the donor and the beneficiary of the property. In a child-parent relationship, this can be a birth certificate. In a husband-wife relationship, it is required to provide a marriage certificate as well as the letter from the Dubai Courts which confirms that the pair are still in spouse relationship. It is important to note that any birth certificate and/or marriage certificate issued outside of the UAE has to be duly legalized and translated.
- Declaration of Grant and Letter of Transfer* – if you are a UAE citizen, you are additionally mandated to supply these two documents. The Declaration of Grant is obtained from the Dubai Courts. You are also required to send a Letter of Transfer to the director-general of the Dubai Land Department, making clear your intentions of property transfer, and explaining reasons for the same.
- Identification Documents – Passport, Visa, and Emirates ID of both parties to the gift transaction.
How much will it cost?
The total price for the whole process will depend on the type and specific features of the property but outlined below are the key costs involved in any gift transfer. In addition to below expenses, you will also incur some other costs for obtaining the requirements as explained above. Please contact us to get the full list of costs for your property gifting.
- Transfer fee – one of the main distinctions from the sale-and-purchase transfer – and, thus, one of its major benefits – is that the gift transfer carries a far lesser transfer fee paid to the Dubai Land Department. Where as in the sale-and-purchase transfer it is required to pay to the Dubai Land Department 4% of the property sale price, whereas in the gift transfer you are only required to pay 0.125% of the value of the property, or its share, as determined by the Value Estimation Certificate (and no less than 2,000 AED), plus the maximum of 560 AED in admin fees.
- Registration fee – this amount will depend on the property value. Thus, if the property value is equal to, or above, 2,000,000 AED, you will have to pay 4,000 AED while for properties that are less than 2,000,000 AED, the registration fee is 2,000 AED.
- Title deed issuance fee – 250 AED.
- Map issuance fee – 250 AED, but this may vary depending on the type of property.
- Knowledge fee – 60 AED.
Will I need a Power of Attorney for a gift transfer?
Appointing a representative with a Power of Attorney is not one of the mandatory requirements. However, it is worth noting that although it may seem not a complicated transaction, the gift transfer can be rather lengthy and could take up to 6 weeks to complete it. So, in the event that the donor and/or the beneficiary are not able to attend the necessary formalities to complete the gift transfer, it is advisable to hire an expert in this filed who can offer professional gift transfer services to handle the whole process on your behalf.
You may also want to read our blog on ‘Why Do I Need a Power of Attorney for Property Gifting’ here.
Disclaimer: The content on this page is for general information purposes only and does not constitute as legal advice nor should it be used as a basis for any specific action or decision. Nothing on this page is to be considered as creating a lawyer-client relationship or as rendering of legal advice for any specific matter. Users of this website are advised to seek specific legal advice from their own legal counsel regarding any specific legal issues.