Generally speaking, depreciation is something that you use to write down the value of long-lasting assets that you acquire for business or investment purposes. For example, a business might depreciate its computers or its fleet of vehicles. Real estate investors depreciate buildings, whether they are large skyscrapers or single-family rental properties.
Old homes offer charm, new homes offer higher value…or at least that is what many buyers think. The truth is that value may be in the eye of the beholder.
Most people would consider a new home more valuable because there should be no major expenses in the first several years of ownership. Unfortunately, almost all the major components of a house have a life expectancy. So, a house that is 30 years old may be equally renovated and just as updated as a new home. The usual big-ticket expenses are windows, roof, siding, and HVAC. An older home may be just as valuable as a new home if these features are up to date and concern for maintenance costs is minimal.
A broker is an independent party, whose services are used extensively in some industries. A broker’s prime responsibility is to bring sellers and buyers together and thus a broker is a third-person facilitator between a buyer and a seller. An example would be a real estate or stockbroker who facilitates the sale of a property.
It usually takes around two weeks (around 10 working days) to obtain the final offer mortgage letter. This includes the time it takes to secure a pre-approval on the mortgage application.
Please note, the stated deposits apply on first time mortgages. If you already own a mortgaged property, the minimum down payment required goes up to 35% for UAE nationals and 40% for expats.
Fixed rental contract
A majority of properties in Dubai are rented out under fixed-term contracts. A fixed contract refers to a rental agreement where the landlord and the tenant mutually agree to a set of terms and conditions for a certain length of time. These contracts, once registered are regulated by the RERA rental property laws in Dubai.
A legally binding fixed tenancy contract in Dubai gives the tenant the right to live in the property, which should be in a good, inhabitable condition. The tenant also has the responsibility of paying rent in Dubai, to the landlord on the designated due date.
No rental contract
Short-term living arrangements in Dubai usually do not require a formal contract. Besides, fixed contracts require a valid residence visa to be formalized in Dubai. In most cases, it takes some time for new ex-pats to get their residence visa and other documents sorted. Short-term rentals in such cases are often more convenient. A short-term rental agreement also provides flexible plans for rent payment in Dubai, typically spread over daily, weekly and monthly variations.
Paying rent in a single cheque
Some landlords prefer an upfront payment of rent in Dubai with a single cheque. This means you have to pay the entire year’s rent in one go, with a cheque dated for the day the property keys are handed to you. While it is a way of securing the landlords, this method of paying rent in Dubai is not always feasible for the tenants.
Paying rent in multiple cheques
The other, more convenient option to pay rent in Dubai is through more than one cheque. Some landlords accept rent payment in two, four, and sometimes even six cheques over the course of the year. All these cheques are forward dated and given to the landlord or the property management company, on the day they handover the property to you.
If you are using the services of a real estate agent or broker in Dubai, you will be subject to agency fees for renting in Dubai. This is an additional cost of renting in Dubai, which typically ranges between 2% to 5% of your annual rent.
Another one of the additional expenses of renting in Dubai is the registration of Ejari. This is a government-run program that regulates all tenancy contracts in Dubai. Typically, the tenant pays for the cost of the registration, which amounts to AED 215 plus VAT.
One of the hidden costs of renting in Dubai that not many tenants are aware of is the Dubai Municipality housing fee. This amounts to 5% of your annual rent and is paid in monthly installments through the billing system of Dubai Electricity and Water Authority (DEWA).
In addition to your initial rental cheque, you will also have to make a one-time, refundable security deposit to the landlord. This is usually around 5% for unfurnished properties and 10% for furnished properties; alternatively, the security deposit could be an amount equivalent to a month’s rent.
Tenants should also keep additional costs of renting in Dubai in mind, such as the refundable deposit to set up the DEWA connection in your new home. This costs AED 2,000 for rental apartments in Dubai and AED 4,000 when renting a villa in Dubai.
Many apartment communities in Dubai use district cooling systems to reduce the amount of electricity consumed for air-conditioning. This is done through district cooling companies such as Empower or Emicool in Dubai.
Even though it’s not very common, you can find properties in Dubai available on monthly rent payments. Paying rent in Dubai on a monthly basis may bring you convenience, but at the same time they come at a premium – you end up paying higher in the long run than you would if you opted for a single cheque.
For paying rent in Dubai using a credit card, your landlord must be open to accepting credit card payments. However, as mentioned earlier, most landlords in Dubai are keen on receiving payments via cheque(s).