Costs to Consider When Buying Property in Dubai

Ultimate guide about the extra costs associated with buying a property in Dubai. The detailed information by real estate experts at Imtilak Golden.

Costs to Consider When Buying Property in Dubai
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2023-01-03 Last update 2023-01-03

Costs to Consider When Buying Property in Dubai

What's the Cost of Buying Property in Dubai?

One of the most strict restrictions protecting buyers and sellers is in place in the real estate industry in Dubai. Because of this, there are some up-front costs for buying houses in Dubai that the buyer must pay in addition to the price of the property.

These up-front costs for purchasing real estate in Dubai might vary based on the kind of property (ready or off-plan) and the vendor the buyer chooses (developer or seller).

If you intend to get a house loan to buy your property, you need also to take into account the minimum wage required for a mortgage in Dubai.

Property Transfer and Registration Fees

8 Steps to a Property Transfer in Dubai

  1. Sign the Documents

Both parties will sign a Unified Form F and an Agreement of Sale, which are legally binding agreements between the buyer and seller that outline the terms and contents of an understanding, including each party's needs and responsibilities, once the price has been agreed upon.

At this point, the buyer should ideally have a pre-approval in place. Before approving a transaction, sellers frequently make this a condition.

  1. Valuation of Real Estate

The buyer will be required to pay for the property to be valued by the bank granting their mortgage after the contracts are signed and the buyers' pre-approval is in place. The bank will give the valuation instructions after this fee has been paid.

Mortgage lenders conduct property valuations to make sure the property is appropriate collateral for a loan and that the market worth would be sufficient to pay off the mortgage in the event of a forced sale.

A valuation firm will be hired by the bank to do the valuation on their behalf. Access to the property will be necessary for the valuer. The vendor should make reasonable efforts to make such access available. The real estate agent will frequently attend the property valuation even if neither party is required to be there.

The property valuer will subsequently deliver a report to the bank that includes the property's valuation. The final mortgage offer will then move forward with the bank.

Valuation of Real Estate

  1. Final Approval of a Mortgage

After receiving permission from the mortgage lender, the buyer must submit the necessary paperwork to their bank to receive the mortgage's final approval.

Their money will be the focus of this procedure, and the bank could request credit card statements or other private financial records.

The bank may require up to 7 calendar days, depending on the situation, to release the mortgage final offer letter.

The buyer and seller will probably need to be informed of the current situation, the procedures, and the timeframe throughout this period if there isn't a sales progression officer in place.

  1. Letter of Liability

The seller can get a responsibility letter from their bank after receiving the letter of final mortgage approval. The precise amount of the outstanding mortgage owing to the Seller's bank will be stated in a responsibility letter.

The responsibility letter will be written to the buyer's bank and must include all property information, including the plot number.

Here, time is everything! A responsibility letter may not be issued for up to 14 calendar days and may only be valid for 7–15 days after that.

  1. Settlement of Liability

The buyer must take the responsibility letter to their bank as soon as it is available. To pay off the seller's mortgage, the bank will subsequently create a manager's check. Before the settlement takes place, it must be made clear if the seller will need to be present.

The purchaser must take copies of any checks used as evidence of liability settlement.

  1. Documents of Clearance

The clearance documentation will now be made available by the sellers' bank. Depending on the situation, this can take a week or more. The original title deed, a letter to the developer, a letter to the seller, and a letter to Dubai Land Department are among them.

The same information will be stated in every letter, namely that the property's mortgage has been freed and that it is now available for sale.

The buyer's bank is in charge of obtaining the paperwork from the seller's bank. Neither the buyer nor the seller can accomplish this.

  1. NOC

Make sure all of your paperwork is prepared and organized before asking the developer for a No Objection Certificate (NOC). The developer issues the NOC as proof that all debts have been paid and that they are content for the property to be sold.

Any servicing fees must be paid by the vendor at least a quarter in advance. The buyer will then pay back these fees when the property is transferred.

Each developer's procedure may differ somewhat, call for various papers, and even mandate that the buyer and seller be present at the NOC.

  1. Transfer

A copy of the NOC must be delivered to the buyer's bank so that they may reserve the date for the property transfer when it has been received.

To prevent any issues on the day of the transfer, it is a good idea for the buyer and seller to figure out how much money they will be sending out and receiving. Additionally, it is crucial to write out all checks prior to the transfer and to double-check the accuracy of all information on the checks.

transfer property

Property Transfer and Registration Fees for Ready Property

Purchasing a home from a developer in Dubai is typically the most affordable option. The required payments to the Dubai Land Department are listed below:

- 4% of the property's worth in Dubai Land Department fees.

- AED 520 for the Title Deed's issuance.

- AED 4,200 for DLD's administrative costs.

Mortgage Registration Fees, which are equal to 0.25% of the entire mortgage amount plus AED 290 in administrative costs, must be paid to DLD by those who finance their property with a mortgage or home loan.

Property Transfer and Registration Fees for Off-Plan Property

1. Agency Fees

While using a real estate agent may increase the cost of purchasing a house by 2% plus VAT (payable upon closing the purchase), choosing the appropriate agent can help the process go much more smoothly.

Working with a skilled agent guarantees that you get the greatest guidance along the way, from the Dubai real estate market to the neighbourhood you're purchasing in or the property's developer.

Additionally, an agent helps you through the full purchasing process from beginning to end, making sure you are properly educated and aware of all associated charges.

Insurance Fees

2. Insurance Fees

Home insurance is not compulsory in Dubai, however, it is recommended. Protection against probable loss or damage from theft, accidents, fires, and natural disasters is provided through home and contents insurance.

In the UAE, obtaining a mortgage requires life insurance. You should include life insurance premium payments in your budget as a recurring expense of mortgaged house ownership.

Most banks charge it monthly, independent of the loan. Banks typically charge 0.4% to 0.8% interest per year on declining mortgage debt, and some banks may demand that the policy be fully paid for the year.

3. Property Service Charge

Service fees are an additional cost to take into account once the deal has closed and property ownership has been changed. The Dubai Land Department will collect annual maintenance fees for a property based on the RERA Service Charge and Maintenance Index.

This index, which varies by community, establishes a precise fee per square foot. The DLD website is the best place to go for the most recent costs. This sum helps to maintain a building's or a community's common spaces, such as elevators, landscaping, security, swimming pools, etc.

4.Government Fees

In Dubai, all transactions must be registered with the DLD within 60 days of the transaction; otherwise, the purchase would be worthless. Although in principle the buyer and seller should split the 4% DLD fees equally, in reality the buyer is responsible for paying the whole 4%.

The Property Registration Fee is another expense borne by the buyer. The buyer must additionally pay an extra charge to the DLD to register the mortgage against the property when purchasing a home with a bank loan.

This cost equals 0.25 percent of the entire loan amount. This charge does not apply to a cash buyer.

Imtilak Golden Takes Care of All Your Legal and Financial Matters

Imtilak Golden, the leading real estate company in Dubai, offers full services to investors wishing to invest in the emirate's real estate market.

Imtilak Golden works to give the best real estate opportunities available in the real estate market in Dubai to its distinguished customers, and the company undertakes post-purchase services from the procedures for obtaining the title deed, residence and various other services.

Imtilak Golden is based on its extensive experience in the international and local real estate market, as it is a regional company that owns several offices in different countries working in many investment fields, the most important of which are real estate markets.

Edited by Imtilak Golden  ©

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