Call us today: +44 (0) 20 3551 6634
Expatriates in the United Arab Emirates (UAE) are being held back from buying property due to caps on the amount of money they are allowed to borrow.
The UAE central bank has taken the unexpected move of restricting lending to expats to 50 per cent of the value of any property they wish to purchase in the country, reports the Telegraph.
Previously there had been no limit, meaning that foreigners could obtain 100 per cent mortgages if they wanted to.
Since the UAE is a popular expat destination, foreigners make up the majority of the eight million-strong population.
If expats were to default on their home loans, banks could be left in a vulnerable situation having opened themselves up to high levels of risk.
In contrast, Emiratis are restricted to a 70 per cent loan-to-value ratio and have long been calling for expats to be curbed in the same way.
They also fear that such high levels of foreign investment in the property market could lead to the creation of another asset bubble.
Simon Conn, an overseas property specialist, said: "If they are only offering 70 per cent to residents then offering lower to non-residents makes sense, as there is more risk to the lender, especially if the non-resident defaults and the banks have to chase any outstanding debts."
Many of the large scale building projects that had been planned prior to the global economic crisis have been put on hold.
They are looking to be brought back to the fore and come to fruition, which some fear could lead to a property boom and then bust.
As a large number of foreigners that purchase property in the UAE are cash buyers with no need for mortgages it is unlikely that the new rules will prevent them from buying houses.
Mark Stott, chief executive officer at Select Property, said: "If these changes do happen, then we'd expect to see an increase in the rental market with more people choosing to rent a property rather than buy.
"With rental yields standing at between eight to ten per cent, this presents property investors with a sensible option."
Expatriate Healthcare specialise in providing international health insurance. Make sure you're protected. © Expatriate Healthcare
Expatriate Group.Delmon House,36-38 Church Road,Burgess Hill,West Sussex,RH15 9AE
Registered Address.35 Ballards Lane,London,N3 1XW
Tel: +44 (0)20 3551 6634Fax: +44 (0)870 428 5141Email: email@example.com
Short Term Healthcare Insurance
Travel Medical Insurance One Way Travel Insurance Single Trip Travel Insurance Annual Multi-Trip Travel Insurance Non UK Resident Travel Insurance Business Travel Insurance
About Us Useful Links Leave a Review Our Awards The Press Room Satisfaction Survey Downloads Legal Notice Underwriters Hospital List
Emergency Assistance information Short-Term Healthcare Working Abroad Insurance Thailand Health Insurance Family & Friend Benefits
Register as an Intermediary Opportunities for Brokers
Expatriate Group & Expatriate Healthcare are trading styles of Strategic Insurance Services Limited who is authorised and regulated by the Financial Conduct Authority (FCA). FCA Firm reference Number is 307133. Strategic Insurance Services Limited is authorised to carry on Regulated Activities in accordance with the permissions granted by the FCA under PART IV of the Financial Services and Markets ACT 2000.