03 January 2022 – Market Screener – www.marketscreender.com
The modern gateway between the east and west of the world, Dubai is the reigning hub of global business and trade. The property market of this progressive metropolis has been attracting investors around the world for years. Considering the long term demand and profitability of the real estate industry, people in and outside Dubai are showing interest in buying a property in UAE. While property prices range from low to high depending on the size and type of structure, you need to understand the additional fees for buying property in Dubai.
All property buyers in Dubai need to consider the total acquisition cost (TCA) of the property. The TCA is one of the most important things to know before buying property in Dubai. Many buyers aren’t aware of these additional costs associated with the purchase over and above the total cost of buying a flat or any real estate.
If you are considering buying a property in Dubai, here is our detailed list of fees associated with a property purchase in the city.
Additional Fees for Buying Property in Dubai 1. Property Transfer and Registration Fees
The real estate market in Dubai has commissioned certain regulations to protect buyers and sellers. Hence, one needs to pay upfront fees which is different from the cost of the property itself. The upfront fees may depend on the type of property and therefore be different for different areas and property types.
Buying property in Dubai fees includes Dubai Land Department (DLD) fees. It can be considered as a one-time tax paid to the government. DLD fee is 4% of the total price of the property. DLD fees in Dubai is legally divided between the buyer and seller which is 50% each. However, in most cases it is entirely paid by the property buyer.
Along with the mandatory DLD fees, buyers are also required to pay the property registration fees, which depend on the value of the property. The buyers purchasing property with the help of bank loans also need to pay the mortgage registration fees with DLD.
Here is the division of transfer and registration fees:
- DLD Fees = 4% of the property price + Admin fees (AED 580 for apartments and offices, AED 430 for land, AED 40 for off-plan)
- Registration Fees for properties valued below AED 500,000 = AED 2000 + 5% VAT
- Registration Fees for properties valued above AED 500,000 = AED 4000 + 5% VAT
- Mortgage registration fees Dubai Land Department = Up to 0.25% of loan amount + AED 290
It is crucial to know that DLD fees need to be paid within 60 days otherwise the purchase stands cancelled. Also, people not opting for bank loans need do not pay any mortgage registration fees.
2. Agency Fees
If you are buying a property through a real estate agent, then you will be liable to pay their commission. An experienced agent may actually help the buyers make wise and informed decisions throughout their journey.
To ease the overall purchase, buyers also hire a conveyancer. They are the experts that ensure your documentation and contracts are up to date as per the UAE laws.
The expenses here can be split as:
- Agency fees = 2% of property price + 5% VAT
- Conveyance fees = AED 6000 to AED 10,000 (Approx.)
3. Security Deposit
In order to secure the purchase, the buyers have to pay a specific security deposit, till the property is completely transferred. The initial security deposit is as much as 10% of the property price or more, depending on the property. The amount is usually collected by a RERA registered broker.
4. Mortgage Fees
Buyers purchasing the property through loan are required to pay the mortgage fees in Dubai. The mortgage fee is further broken down as mortgage arrangement fees, processing fees and valuation fees.
In case you have the mortgage registered, then you need a NOC. The mortgage registration fees in Dubai ranges from AED 500- AED 5000.
The major split of Mortgage fees:
- Mortgage Arrangement Fees = 1% of Bank Loan Amount + 5% VAT
- Property Valuation Fees = AED 2500 to AED 3500 + 5% VAT
5. Insurance Fees
Dubai hasn’t enforced mandatory home insurance yet, however it is highly recommended for the new-age home buyers. It offers optimum protection from potential damages.
If the buyer is purchasing the property via home loan then they need to have life insurance is
Insurance fees for buying a house in Dubai is split as:
- Home Insurance = AED 1000 per year (Approx.)
- Life Insurance = 0.4% to 0.8% of decreasing loan per year (Approx.)
6. Property Service Charge
Once the property is transferred, the buyer technically owns the property. However, there are certain charges associated with it like annual maintenance expenses, also known as service charges. These charges are paid towards the maintenance of the property and amenities. These charges are paid to the Dubai Land Department. The maintenance charge is based on RERA service and maintenance index, as per the square foot.
7. Dubai Electricity and Water Authority Fees
Another key aspect around the fees for buying apartment in Dubai is the DEWA fees. The governing body that manages Dubai’s electricity and water connections for all households. The range of DEWA charges depends on several factors like the type of property and your area.
The cost for setting up DEWA ranges from AED 2,000 for a flat to AED 4,000 for a villa, depending on the number of meters.
These were some most observed additional costs in the property buying process. However, there may be several other additional fees for buying a house in Dubai, depending on the area, type and mode of purchase.
Benefits of Buying a House in Dubai?
Buying property in Dubai is now easier than ever. All you need to do is finalise your budget and do some research regarding areas, developer, amenities and of course, the fees for buying property in Dubai.
Dubai is known for its luxury and hospitality. It is a great place to buy exceptional properties at considerably lower rates compared to other popular cities around the world.
Affordability is one of the reasons why people consider buying property in Dubai. Apart from that, the city has a wide range of options like apartments, villas, townhouses and more.
Other major reasons to buy a property in Dubai are:
- Outstanding infrastructure
- Growing economy
- Rising opportunities across various sectors
- Variety of property options suitable to different budgets
- High rental yields
- No property tax
FAQs Is it worth buying a property in Dubai?
Dubai is one of the fastest-growing cities in the world. With rising housing demand in the city, the return on investment on properties is expected to increase with time. it is always a great idea to buy property in Dubai. Surrounded by classy water views, skyscrapers and other man-made wonders, Dubai offers a wide range of properties to suit every budget. The city is definitely raising a bar of luxury living with each passing day.
Should I consider solicitor costs as part of additional fees for buying an apartment in Dubai?
A solicitor or conveyancing lawyer will help smoothen the property buying process for you. They understand the market really well and advice with necessary documentation and procedures formalised by Dubai Government. Though not mandatory, it is advisable to hire a conveyancing lawyer to ensure the seamless purchase of your property in Dubai.
Can foreigners buy property in Dubai?
Yes, foreigners can buy property in Dubai in any of the freehold areas. Dubai has numerous freehold locations where foreigners are allowed to own property. Here is the list of freehold areas in Dubai
Is there any property tax and stamp duty in Dubai?
There is no property tax levied in Dubai, nor do you need to pay any inheritance or income tax. However, property buyers have to pay a stamp duty which ranges within 1% to 7% of the property purchase price in the UAE.