Guide to buying property in Dubai
Additional Fees
It is important to have an idea of all the fees associated with buying a property in Dubai beforehand. This is essential to set your budget appropriately. From a residential point of view, Dubai is known for having one of the most generous taxation laws in the world.
For full details of the additional costs, read the detailed article on this topic.
In brief, the fees that accompany the purchase of a property are as follows:
State fees:
- Government fee to Dubai Land Department (DLD) is 4% of the purchase price + administrative fee from 10 to 147€ depending on the property. (In case of greenfield purchase, only 4% is payable for the issuance of the Oqood certificate when the buyer has paid at least 25% of the developer's payment)
- Property registration fee- 508 € to 1017 € +5% VAT on the value of the property (in the case of a green purchase is waived).
- Mortgage registration fees at Dubai Land Department- 0.25% of the loan amount + 74€
Agency Fees:
Although engaging the services of an estate agent will increase your property purchase costs by 2% plus VAT (payable on completion of the transaction), having the right agent can make your transaction much more hassle-free. Working with a qualified agent ensures you get the best advice during your journey from the Dubai property market to the area you are buying in. The agent also helps with the entire buying process from end to end. He ensures you that all documentation, contracts and financial agreements related to the transaction are legally sound. Broker's fee 2% of the purchase price + 5% VAT. This commission is only applicable on a secondary sale. In the case of a purchase from an investor, the brokerage commission is borne by the seller.
Guarantee fee: Approximately 1525 € to 2542 €. The "Conveyancing" fee is a type of notary fee applicable to the buyer when using the services of a firm to ensure that all legal terms and contracts are accurately written according to UAE law, protecting the interests of all parties involved.
Mortgage fees:
- Bank mortgage settlement fee 1% of the loan amount + 5% VAT
- Property valuation fee between 635 € - 890 € + 5% VAT
Mortgage
If you are planning to take mortgage, it is important to determine the terms of mortgage loans available to foreigners or expatriates who are residents of Dubai. Foreigners or expatriates who want to invest in real estate that is valued at up to AED 5 million have the option of financing from banks for up to 75% of the total property value. For real estate that is valued at AED 5 million or more, the option is up to 65% of the total property value. Expats looking to invest or purchase a second property have the option to borrow close to 60% of the total property value.
If you are planning to purchase a greenfield property a deposit of 50% will be required.
Buyer's debt-to-income ratio should not be 50% or more.
The term of the mortgage must not exceed 25 years. This is because there is an age limit (usually in the range of 60 to 75 years).
Foreign nationals are able to apply for a specific loan amount, which must not exceed their annual income or earnings by more than seven times.
How to apply for a mortgage in the UAE
If expatriates or foreigners in the UAE want to apply for a home loan or residential mortgage, they have the option of contacting a financial institution directly or a credit counsellor. A financial advisor or mortgage broker may prove to be an advantage for expats or foreigners living in Dubai. Their advice can be very helpful in gaining insight into possible market fluctuations. It can also allow people to take advantage of the best possible options.
We work with qualified experts in the field. For more information we can provide their contacts.
See also the article on mortgages in Dubai.
Guidelines for achieving high return on investment (ROI) in the UAE
In Dubai, apartments generally tend to provide the highest rental incomes compared to villas and townhouses as demand is higher for apartments.
Reselling smaller apartments is usually a quick process. Additionally, it provides a value that is higher compared to other properties that may be larger in size. This is again due to the high demand.
The annual maintenance fees payable to DLD are based on the Dubai Real Estate Regulatory Agency's (RERA) Service Fees and Maintenance Index, which can have a significant impact on the overall return on investment. The index sets a specific fee per square foot and varies by neighborhood. Maintenance fees can be easily accessed through the DLD website. Potential investors can research the fees applicable to the selected neighborhood before making a potential investment.
Residence visa
The UAE's golden visa rules have been relaxed from 24. 01.24., as it is now more affordable. The modification includes a significant relaxation of the eligibility criteria- the minimum down payment requirement of AED 1 million ($272,000) for real estate investments has been removed. Investors can now qualify for the Golden 10 Year Residency Visa by owning a property worth AED2 million ($545,000) or more, regardless of the down payment amount and the status of the property (unfinished, completed, mortgaged or not mortgaged) .
When you purchase a property in the UAE worth at least AED 750,000, you can apply for a two-year residency visa.
Property owners also have the option to sponsor residency visas for their families.
Construction Investment Companies in Dubai
When buying an apartment or house in Dubai, it is essential to research the developer and make sure they have a trustworthy reputation before signing a specific contract. In addition, request comprehensive details in writing of all fees to be paid under your repayment plan, along with the potential due date.
It is important to ensure that the developer has successfully registered with the relevant regulatory organisation.
Check also the prices of other similar properties. This will help you make sure you pay the right amount.
Evaluate recent developments. This will allow you to see what other buyers have said about the personal residential property from the developer you are considering.
We hope we have been helpful with this article. If we have piqued your interest and you would like to learn more about the Dubai real estate market feel free to contact us for a free consultation.
Read also our FAQ article
