A step by step guide to buying property in the UAE

The UAE has become something of a safe haven during the pandemic, offering a welcome respite from the lockdowns that continue to emerge across the globe.

The real estate market is gaining momentum and projections for the second half of 2021 allude to a strong rebound brought by factors, such as stimulus packages, visa reforms and strong demand from end-users and investors.

Recording the highest number of total residential transactions since 2015, experts are citing the country’s management of the crisis, support measures to improve the ease of doing business, and long-term residency regulations as contributing factors to the recovery.

Buying a property is often one of the most important decisions any individual can make, requiring extensive planning and good consideration to ensure that all needs are met.

High-end real estate brokerage, Engel & Völkers, lays out what potential buyers need to know, from costs, processes to legalities, ahead of buying real estate in Dubai.

Do your research and define your criteria

Make sure to know what type of property you are looking for and the specific criteria. Whether it’s an apartment, townhouse or standalone villa, it is essential to have a clear idea of realistic property prices and the factors that contribute to these prices, such as location, view, amenities, and the type of community the property is in. 

Find the right agent

Working with the right agent is crucial when searching for a new property. You need someone who understands exactly what you want and who will be able to effectively guide you through the process. That person should be fully committed to assisting you in achieving your goals, and it goes without saying that they should be fully licensed and have a proven track record for success.

Leasehold vs freehold

The difference in rules for freehold and leasehold purchases are significant. Freehold is often the most appealing choice, given the absolute ownership it grants. To avoid complications and potential disappointment, ensure that you decide which option is best suited for your needs ahead of time, and ensure that your agent is aware of your preference.

In May this year, 62 percent of all property transactions in Dubai were for secondary/ready properties

Legal matters

You might be surprised to learn that being a UAE resident is not a pre-requisite for purchasing a property in a Dubai freehold area. As defined by the Government of Dubai, anyone, regardless of their nationality and location, can buy real estate in a freehold location.

Timeline and schedules

In Dubai, an average property transaction takes around 30 days to complete from the day the Agreement for Sale is signed. That said, different variables can affect these timelines, from the time of year to the type of buyer.

For example, a full cash-to-cash transaction will go through faster than a mortgage-buyer to mortgage-seller transaction. With that in mind, give yourself a schedule that affords a little wiggle room.

Protocol and procedures – a step-by-step guide

1. Once the buyer and seller agree on terms, they will need to sign an Agreement for Sale and/or Memorandum of Understanding (MOU). At this point a deposit, usually 10 percent, is also required as proof of commitment.
2. The seller must then settle any outstanding fees to the developer, such as service charges, and apply for a No Objection Certificate (NOC) from the developer, granting the right to sell the property against a one-time fee.
3. If the buyer is purchasing with a mortgage, then the lender bank will be involved in this process. If the seller has a mortgage on the property, the buyer is required to settle the seller’s mortgage in full prior to the NOC application.
4. Once the NOC has been issued, ownership can officially be transferred. This takes place at the Dubai Land Department (DLD) offices, with both parties in attendance. The purchase payment must be made with a manager’s cheque made payable to the seller on the transfer date. Following completion of these formalities, a new title deed will be issued in the name of the buyer.

The importance of doing a thorough document check

In order to stick to your timeline, make sure to have the right documents at hand. The following documents are essential for a smooth transaction:

1. Buyer and seller IDs
2. Property title deed
3. NOC from developer
4. Seller service charge clearance letter
5. Bank offer letter to buyer (in the case of a mortgage buyer)
6. Proof of mortgage settlement
7. Final bills: DEWA, A/C etc

The average commission charged by a Dubai-based real estate agent is 2 percent of the purchase price, plus VAT

Beware of all fees and costs

Make sure to include factoring fees and costs into your overall budget. Here are some important thingsto consider:

1. The fluctuations in cost for a NOC are significant and can vary from AED500 to AED5,000 (plus VAT). This is usually paid by the seller to the developer. It’s worth noting that certain developers will also ask for an additional refundable deposit, which is returned when the buyer presents the new title deeds at the developer’s office.
2. The average commission charged by a Dubai-based real estate agent is 2 percent of the purchase price, plus VAT.
3. Transfer fees are calculated at 4 percent of the purchase price, with an additional payment of AED580 required for administration fees.
4. Trustee fees come in at around AED 4,000 plus VAT for ready properties and AED5,000 plus VAT for off-plan properties. Payments should be settled at the Dubai Land Department Trustee Office.
5. If mortgage registration fees are required, these are calculated at 0.25 percent of the registered loan amount and need to be paid at the Dubai Land Department.
6. Developers will ask for service charges to be settled in advance, so payment of this pro-rata share needs to be taken into account by buyers.

Enjoy the success that comes with completion

Once all transactions have been completed, payments have been made, and all parties are in agreement, the next step is completion. After what is likely to have been a challenging time, completion day is the much anticipated milestone, when the property finally becomes yours.

It’s time to pick up the keys, or key cards, and enjoy this monumental occasion.