Understanding how to buy property in Dubai helps you make the best decisions for your future and help you achieve your realty goals. In this comprehensive book, we will focus on the most important steps in the Dubai Property Purchase Process to give valuable tips to potential buyers.
Dubai's bustling metropolis, with its towering high-rises and stunning beaches, is where many dream of becoming part owners of this vibrant city. Dubai's real estate is attractive, but there are many complexities to the purchasing process.
The process to buy property in Dubai varies depending on whether you are purchasing from the primary or second market. It is technically any purchase or sale directly from a developer that is referred to as primary. Secondary market also called ready property is a purchase from a private owner.
Here we will break down the whole process to buy property from both the primary and Secondary Markets in Dubai.
The process of purchasing a brand new house is very easy. It offers several financing methods: installments (payable in monthly payments), payment plans, mortgages and cash.
Moreover, everything including paperwork, Dubai Land Department registraion, identification documents and contracts are handled by the developer or real estate agent. This means that you don't need to be in Dubai physically unless it is your preference.
EOI submission involves submitting documents (passport copies) and a previously determined payment. The developer decides on the amount, which is fully refundable if you do not get a satisfactory unit.
To understand the exact reason why EOIs aka Expressions of interest are paid, read this article.
The unit that you selected after submitting EOI is now reserved for you with the funds for EOI.
You may not need to obtain an EOI in all cases. In these instances, you can make a booking. Booking is the term used to describe the first payment you make after finding a property you like. After paying the reservation amount, you will have the option to transfer the remaining balance.
The developer may accept any amount between 2% and 5%. Bookings will require you to sign the reservation form. The receipt for the first payment will be sent to you as soon the funds have been credited to the developer account.
If you choose to purchase a property off-plan that allows payment in installments, the deposit is typically 20%.
Next, pay 4% DLD.
Dubai Land Department Registration Fee (also known by the name Oqood or DLD), equals to 4%. The DLD is not the only fee. An Administration Fee is charged in addition to that 4% DLD. There are a range of administration fees ranging from AED 1,000/- to AED 5,000/, which can be applied for your SPA (Security Purchase Agreement), Title Deed or other paperwork.
The downpayment is always accompanied by 4% DLD, Admin fees and other charges. They are always paid through the developers corporate account because the developer has to send the funds to Dubai Land Department after submitting the application for title transfer.
After signing the SPA and completing these steps, you will have your SPA ready. This is the official contract for purchase that will be signed both by you and your developer and you will get your copy. During this time, you will continue making payments according to the plan.
One thing worth noting is that buying on the primary property market actually comes with a lower cost of transaction than the secondary.
Along with this, we charge no commissions or agent fees for primary property sales.
Please contact us if you want to make an investment that will be perfect or if you would like to purchase your dream property in Dubai.
You will receive notification when the developer has received the BCC. You can complete your handover deposit and set up an appointment for snagging.
Snagging means checking to make sure that your new apartment works as it should. If there is a problem with the apartment, for example, you find that a tile has cracked or if cabeled door is loose, then developer will rectify it free of charge. On taking over the apartment you have a law-mandated 10 year structural warranty and 1 year of full warranty.
Finances is where the process of purchasing property in Dubai second market begins. Determine your financing option, such as cash or mortgage. Also, set up a budget. If you want to get a mortgage and plan to buy, you need to fill out an application with your bank. Next, you'll need to locate a suitable investment or home and complete the transaction.
You can now move on to the next step.
The next step is to sign a sale agreement in Dubai. This document is also called a Memorandum of Understanding.
Your agent will prepare a Form F or a MOU.
When the contract is completed, both the buyer, and seller, must sign in front of an agent at the Registry Trustee office.
The buyer will also need to pay the standard 10% security bond on the property. This deposit is paid by the buyer to the Registration Trustee and will be returned upon the completion of the property transfer. It is not uncommon to request a deposit prior to signing the MOU in case of any delays. In this situation, checks are given to the agents' company with scanned receipts. When the cheques have been transferred, they are returned.
You, as the buyer and seller, together with your agent, will need to go to the developer's offices. You will have to go to the office of the developer to get a No Objection Certificate. The developer won't issue a NOC until there are no outstanding fees on the property. These charges must be settled upfront.
You still have to take the final step legally in order to purchase property in Dubai. The final step is to meet the seller, at the Dubai Land Department's office, for the transfer to take effect.
Documents Require
To transfer funds, you will need to bring the following documents:
A manager's cheque payable to a seller for the purchase price
Original identification documents of both buyer and vendor (Emirates ID or passport, visa).
The original NOC is issued by the developer
Signed Contract (MOU).
You will receive a Title Deed after all the formalities. Congratulations, you now own property in Dubai.
A lengthy process is involved in buying second-hand property. It can range from 2 weeks to 10 weeks.
Lengthier if property is mortgaged.
Also, when it comes to transaction costs on the secondary markets, they are higher than primary market purchases. The property price alone does not cover all the costs.
The administration cost of purchasing property is comprised of:
Dubai Land Department fees are 4% plus AED430 (for land) or 40 AED for off plan or 580 AED for apartments or offices.
Property Registration Fee
AED 2 000 + 5% tax on all properties under AED 500,000
Properties value above AED 500,000: AED 4,000 + 5% VAT
Title Deed fee - AED 2,500
Agents charge 2% of the value of your property as a fee
Banks will charge mortgage arrangement fees if the property is mortgaged. These fees are 1-2% of the total loan amount. Before lending, the bank will need a Property Valuer fee between AED 2,500 and 3,500+ 5% VAT.
Dubai Land Department imposes a 0.25% fee on the price of the sold property in order to register the mortgaged property.
Also check out our more blogs:
https://sites.google.com/view/factors-when-investing/home
https://petkovicproperties.com/investor-confidence-uae-2024/
https://petkovicproperties.com/expression-of-interest-eoi-in-dubai-real-estate-explained/