# Use the housing allowance to buy instead of rent?



## amaslam (Sep 25, 2008)

Hi:

I did not find anything by a search for housing allowance. I'm not in Dubai but in my research phase at the moment.

As I've read over and over housing is the major expense in Dubai and rents increase annually by alot.

So if that's the case is it possible to use a housing allowance to buy instead of rent. 

Let's say a housing allowance is 200000/yr and you get a mortgage to buy a 1000000dhs property. Wouldn't the 200000/yr allowance essentially allow you to cover that mortgage quite easily and basically own the property in < 10 yrs?

Do people do this?
Is it allowed as a fair use of the housing allowance?
Are there laws against it?

***
If it's covered in another thread please let me know which one so I can read that.


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## flossie (Jun 9, 2008)

amaslam said:


> Hi:
> 
> I did not find anything by a search for housing allowance. I'm not in Dubai but in my research phase at the moment.
> 
> ...


A quick look on the property pages for Gulf News shows me that you would be able to afford a Studio for a million dirhams. With loans hard to come by, you would need a sizable deposit. (30%?).

So if you were happy living in a studio and had 300K dirhams lying around, maybe. Some companies won't give you a housing allowance if you want to buy, though.

I could also go on about whether it's value for money, right time to buy, etc , etc, but noone seems to agree with anybody else, so that's a personal decision.


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## Elphaba (Jan 24, 2008)

It depends on whether your employer permts this. Quite often they want to pay the landlord directly. In other cases the allowance is paid to you as part of your salary. In this situation it is deemed to be part if your income for calculating mortgage borrowing.

Note that lending is strict here and loan to values have just decreased. You will now generally require a deposit of at least 20%.

-


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## amaslam (Sep 25, 2008)

Thanks for the feedback. Looks like my planning and estimates should be for renting. If that's the case what are the annual rent increases looking like these days (10%? 20%?) and if this is the case is it typical to have some sort of annual adjustment in the salary package to cater for that? If not then I could see the rent essentially being the 'tax you would have paid' if you had stayed in a country that had income tax but more stable rental pricing.

Right now I'm using these numbers:
2 BR Apartment: 200000
3 BR Villa: 350000

I'm considering Abu Dhabi and Dubai and I think Abu Dhabi has the bigger supply issue at the moment. Please let me know if my working estimates are too low


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## greatexpectations (Aug 5, 2008)

amaslam said:


> Thanks for the feedback. Looks like my planning and estimates should be for renting. If that's the case what are the annual rent increases looking like these days (10%? 20%?) and if this is the case is it typical to have some sort of annual adjustment in the salary package to cater for that? If not then I could see the rent essentially being the 'tax you would have paid' if you had stayed in a country that had income tax but more stable rental pricing.
> 
> Right now I'm using these numbers:
> 2 BR Apartment: 200000
> ...


your estimates are fine, but don't expect to be overwhelmed by your options....

it's hard to visualise the traffic, dust and poor build quality (despite Elphaba and others repeated warnings!)....so we have struggled to find a beautiful ell maintained villa close to my workplace without a traffic problem...

that will be no news to those of you already in dubai....but i thought i would mention it again since you're not here yet.

note that i would still move here knowing what i know - but it is much harder work finding soemthing nice than I expected....and there is an unorderly queue of unscrupulous landlords waiting to take your money off you... 

good luck!


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