HSBC reviews Abu Dhabi mortgage strategy for expat home buyers

The lender says it is to 'consider select applications on a case-by-case basis' while it reviews its strategy.
HSBC on Airport road in Abu Dhabi. The UAE’s Central Bank last year introduced new mortgage caps and loan to value ratios. Ravindranath K / The National
HSBC on Airport road in Abu Dhabi. The UAE’s Central Bank last year introduced new mortgage caps and loan to value ratios. Ravindranath K / The National

HSBC has said that it is reviewing its Abu Dhabi mortgage lending strategy for expatriate homebuyers.

Representatives from the bank’s home finance team said that HSBC was issuing mortgages on properties in selected zones in Abu Dhabi “on a selective basis”, giving no further details about what criteria it was using.

“HSBC is currently reviewing its mortgage lending strategy in Abu Dhabi,” the bank said in an emailed statement.

“During the review, we will continue honouring current approvals in principle and will consider select applications on a case-by-case basis. Following the redesign stage, we anticipate continuing to participate in the Abu Dhabi mortgage market for expats on a selective basis.”

Expatriates in Abu Dhabi are permitted to hold, in certain designated investment zones, a 99-year lease or to own properties without the right to ownership of the land, according to a research note from Afridi and Angell Legal Consultants.

“The interests of such foreign investors are limited to contractual rights under the sale and purchase agreement signed with the developer, or rights as a lessee under a 99-year lease,” according to a research note from Afridi and Angell Legal Consultants.

“Although Abu Dhabi has issued a resolution (Executive Council Resolution No 64 of 2010) to register ownership and issue title deeds to foreign investors in the emirate, these plans have yet to materialise.”

Banks are far more comfortable with mortgage lending in Dubai, with the emirate’s land department giving out title deeds for property purchases, according to Jean Luc Debois, the managing director of the mortgage consultancy Home Matters.

Abu Dhabi’s municipality does not give out title deeds outside designated investment zones, he noted.

The UAE’s Central Bank last year introduced new mortgage caps and loan to value ratios aimed at curbing excess speculation in the country’s housing market.

Expatriates buying a property for under Dh5 million must now produce a minimum deposit of 25 per cent, rising to 35 per cent for properties above Dh5m. For second properties, the minimum deposit is 40 per cent.

Emirati buyers require a 20 per cent deposit for homes under Dh5m, rising to 30 per cent for homes over Dh5m, and 30 per cent for any subsequent properties.

Off-plan properties require a 50 per cent deposit regardless of whether the buyer is an expat or an Emirati.

jeverington@thenational.ae

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Published: November 18, 2014 04:00 AM

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