Finding the right Dubai property advisor. The Dubai property market is very different from other countries in the world; making sure you have a Dubai real estate agent you trust to guide you through the process is crucial
Understand the purchasing process
In Dubai, property can be purchased either ‘off-plan’ from a developer or ‘resale’ from a private seller. When purchasing off-plan, expats will need to submit their passport, along with a reservation form that outlines the terms and conditions of the deal. A reservation fee, of between 5 to 15% is then paid to draw up the Sales and Purchase Agreement (SPA), that commits both parties to the deal. For properties that are still under construction, ensure that the agreement includes a completion date and outlines any compensation to be paid if there is a delay in completion by the stipulated time period. When purchasing resale property from a private seller, a Memorandum of Understanding (MoU) outlines the terms and conditions of the deal, after which the buyer usually puts down a 10% deposit of the property price to confirm his purchase of the property, pending approved financing. Once financing is obtained, the transfer of deeds can take place.
If you are a foreigner, there are main types of property that you are allowed to buy. It is important you understand each one to consider your options. The types are:
Freehold properties are the most common type with foreign buyers who are looking for an investment opportunity. With freehold properties, you have the right to buy, sell, and pass the property down as an inheritance. Keep in mind that freehold properties need to be bought from a developer that has been approved by the United Arab Emirates Government.
Leasehold properties, as the name also suggests are the areas in Dubai where you cannot buy real estate but you can lease a piece of land/ property. By definition, any property which is given on lease for a period of more than 10 years up to 99 years is considered as a leasehold property.
Purpose of Buying Property in Dubai
Deciding on whether to purchase a property for investment purposes or to buy a property that you intend to occupy yourself can have a huge impact on the type of property purchased. If the primary purpose of purchasing property is for investment, most ex-pats will be likely to rent out such property. It is then important to look at the property market and study the types of properties that have the highest rental yield. Investing in a one or two-bedroom apartment would be a more sound investment decision than indulging in a villa purchase, as the former have better rental yields than the latter, even though the latter may seem more luxurious to own.
Hire a Qualified Real Estate Broker
When buying a property in Dubai (or any part of the world), having an experienced real estate agent who will navigate the entire process with you is essential. Having a knowledgeable agent who knows the ins and outs of Dubai’s real estate market will make the process a lot easier.
Fees and Charges
Below is a list of fees and charges that you will have to pay while buying a property in Dubai.
Agent’s Fee/ Commission, the standard practice in Dubai’s real estate market in terms of the agent’s commission is 2 percent of purchasing value. However, it mainly depends on the mutual understanding between you and your real estate consultant.
Dubai Land Department, title Deed Registration/ Transfer Fee,Prior to 2014, the transfer/ registration fee charged by the Dubai Land Department for issuing title deed was only 2 percent of the property value. However, according to new law issued in 2014, any person buying a property in Dubai has to pay 4 percent of the purchase value to the Dubai Land Department. This payment has to be made in the form of a Manager’s check.
Registration Trustee Fee, the transfer of property from one owner to another (you), takes place at the registration trustee office. There are 20 plus trustee offices in Dubai. If the purchase price is less than Dh 500,000 the trustee fee is Dh 2,000 however if the property value exceeds Dh 500,000 the trustee fee becomes Dh 4,000.