Dubai is the epitome of luxurious infrastructure and modern-day real estate. The residential properties and the commercial buildings provide world-class amenities and attract customers worldwide. It is a sweet spot for investors as well as those seeking luxurious lifestyles. Due to favorable business conditions, there is an ever-growing trend to buy properties in Dubai.
Is that enticing? If you plan to invest in the ever-growing Dubai real estate market, here is a detailed guide on how to buy property in Dubai. We will also discuss important things to consider when buying different types of real estate in Dubai.
Let’s start with the documents.
What Documents are Needed to Buy Property In Dubai?
The documents required for buying a property in Dubai vary from consumer to consumer. Also, the requirements of different companies differ too, which might result in the need for a few more documents, if not less.
So, here is a brief list, but before completing any transaction, it is advisable to check with the Dubai Land Department.
Below is the list of documents required for individual buyers
- Contact information
- Passport
- Legal ID
- Proof of address
Here is a list of documents required for the corporate buyers
- Original Memorandum and Article of Association
- Original certificate of incumbency (no more than three months old)
- Original Certificate of Incorporation or Trade License
- Legal translation of the memorandum and articles of association
- Original passport of attorney
- Original resolution approving the purchase
- Copy of shareholders’ passports
What Type Of Property Do You Intend To Buy?
The properties mostly acquired in Dubai are either off-plan or read-to-move-in. Both have their pros and cons, but the deciding factor is the nature of the investment the buyer is willing to make. The off-plan properties are cheaper because they are under construction. It can be a good investment for someone who can wait for the completion of the project. Once the construction of the property is completed, the prices rise exponentially.
However, it is not the case for the ready-to-move-in properties. They are expensive, but the waiting time is minimal. The only time that it would take is the processing time of the transaction.
Still, whichever plan suits you, the following is a detailed guide on the process of buying the off-plan as well as ready-to-move-in properties.
The Process Of Buying Off-Plan Properties In Dubai
A step-by-step process is explained below, which will guide you through the process of buying an off-plan property in Dubai.
- The first and foremost thing is to agree on the property price and the terms of sale.
- The buyer then signs the reservation agreement and pays the decided amount for the reservation.
- Sometimes, the first installment is also paid along with the reservation fee. However, it depends on the terms of the sale.
- Then, the Sale and Purchase Agreement (SPA) is signed. It includes complete details about the expected date of completion of the project.
- After SPA, the Oqood document is issued to the buyer. It is a temporary registration until the buyer is issued the title deed. The fee for an Oqood document is usually 4 % of the purchase price.
- If the buyer continues to pay the installments according to the payment plan, soon after the completion of the project, the Oqood document is changed to the title deed in the name of the buyer.
The Process Involved In Buying Ready-To-Move-In Properties In Dubai
If you are someone who intends to buy a ready-to-move-in property, here is a complete guide that will run you through the process.
- The foremost thing is that the buyers and the sellers agree on the price of the property. Once it is done, an agreement is signed on the terms of the sale.
- Then, a Memorandum of understanding is signed, which highlights all the conditions of the agreement. It is registered with the Dubai Land Department, and 10% of the total purchase price is paid at this point.
- The seller and the buyer then have to get a No Objection Certificate by paying a small amount as a fee.
- Now, the property has to be transferred. The transfer is registered with the Dubai Land Department. Here 4% of the total price is paid as a transfer fee.
- According to the Dubai Land Department regulations, the payment must be made in the name of the manager’s cheques, which are payable to the seller on the date of the property transfer. If one is paying by mortgage, then it is mandatory to involve a bank representative in the paperwork/transaction.
For instance, if the seller has an existing mortgage on the property to be sold, it is the responsibility of the buyer to settle the mortgage before getting the No Objection Certificate.
- After completing the above-mentioned process, a new title deed is issued in the new buyer’s name. The property is then officially transferred, and the buyer can move in whenever they want.
What If A Broker Is Involved In The Deal?
The overall process of the transaction would remain the same. In case the broker is involved, a Form A is signed between the seller and the broker, and another Form B is signed between the broker and the buyer. After it, a sale agreement is signed, and the rest of the process is the same.
Is Buying A Property A Time-Taking Process?
The average time taken after the agreement of sale is signed is about four weeks. However, it varies depending on multiple factors.
For example, the transactions carried on cash would take far less time as compared to the mortgage-based transaction.
Similarly, the time consumed for it also varies depending on the type of seller and the time of the year.
What Should You Know When Buying A Property In Installments?
The payment plan when buying a property in installments varies from developer to developer. However, generally, the payments for the off-plan properties run on a monthly basis and continue even till five years after the completion of the project.
The pre-completion plans are rigorous. Whereas the payment plans which extend even after the completion are easy for the buyers as the need to mortgage is eliminated.
A minimum of 20% to 25% of the total price is required in equity if the buyer wishes to mortgage. The number of installments and the duration of the mortgage depend on many factors, among which the property price is a significant one.
What Happens If The Buyer Fails To Pay Installments?
In such a case, the buyer must contact the seller and ask to reschedule the payment plan. Alternatively, the Sale and Purchase Agreement (SPA) may go through a revision mutually by both parties to avoid hefty penalties. If none of these options are possible, the seller will terminate the contract, and the buyer will be responsible for paying the cost of termination.
Understand The Finances Required For Buying A Property
To avoid issues such as that of failure to pay the installments, it is important to understand the DLD charges, taxes, and processing fees.
In addition to the cost of the property, there are a number of taxes and fees involved in the transaction.
- The cost of getting a NOC varies and stands around 1000 AED to 5000 AED.
- In addition to it, a 5% value-added tax (VAT) is to be paid.
- The commission of the real estate agents is around 2% of the purchase value.
The Dubai Land Department charges around 4% of the total purchase value of the property as a fee. The same is the case for off-plan properties; for Oqood, 4% is charged as a fee.
Remember, this fee is in addition to the standard charges, which are 430 AED for land and 40 AED for off-plan properties.
Apart from that, there is a trustee’s fee, which is different for off-plan and ready properties. It is 4,000 AED for ready properties and 5,000 AED for off-plan properties.
The property registration fee is also different. If the total value of the property is below 500,000 AED, the fee would be 2,000 AED.
For properties above 500,000 AED, the fee will be 4000 AED. Both of these fees are also added up with 5% VAT.
Should You Buy A Freehold Property Or A Leasehold Property?
If you are an ex-pat and intend to buy a property in Dubai, you need to know whether you should buy a freehold property or a leasehold property. Dubai has some limitations for ex-pats regarding buying properties on freehold agreements in non-designated areas. It is not a problem in the case of leasehold properties.
Similarly, buying a leasehold property is friendly on pocket as it requires lower upfront costs and fewer maintenance charges. Also, leasehold properties usually offer great deals since they are located at prime locations. However, the property rights are limited since it is bought for a predetermined period of time, up to 99 years.
Hence, if you desire to make changes to your property often, then you must go for a freehold property, as it offers complete ownership of the land as well as the unit.
Also, if you are a foreigner, buying freehold properties is preferable. That’s because owning a property valued at more than 1 million AED can get you and your family a renewable UAE residence visa.
What Should You Consider When You Have Purchased A Property?
After you have bought a property, it is essential that you know what are the potential post-purchase things to do.
- In case you want to rent out the property, the first thing is to register the unit, which is called Ejari. It is a certificate which is issued by the Real Estate Regulatory Agency (RERA). The purpose is to ensure transparency between the landlord and the tenant.
- The second thing is to manage the utilities. For that, register the property with Dubai Electricity and Water Authority. It is also covered under the registration with RERA.
- The last thing is to pay the service charges. No one is devoid of the service charges. The charges depend on the location, type of asset, and the facilities available. The range of service charges in prime areas of Dubai ranges from 15 AED to 50 AED per sq. ft.
What Is The Rule For Ex-pats To Buy Properties?
Till 2002, Dubai did not allow ex-pats to buy any properties. However, now the ex-pats constitute 70% of the total population of the country.
The government has issued provisions in which a minimum of 21 years old can buy, sell, lease, and rent the properties. For minors, they may be represented in the purchase transaction but cannot own properties in their name.
Also read: How to buy property in Dubai as expat?
What Are The Prime Locations To Buy Properties In Dubai?
The location is the most important factor to consider when buying a property. It is essential because if you are buying to rent it out, the first thing which tenants look at is the location.
Secondly, even if you are buying it for your own self, the facilities available play a huge role. If you are looking to purchase affordable properties, the areas to consider are Jumeirah Village Circle and Damac Lagoons. For high-end properties, Palm Jumeirah and Downtown Dubai offer great deals.
It is highly recommended to get help from industry experts when buying a property in Dubai. Hiring a certified real estate broker can help you navigate these challenges with ease.
Final Words
The process may seem complicated, but the end is undoubtedly rewarding. Once you have completed all the required documentation and paid all the fees and charges, you are good to enjoy the luxurious lifestyle or excellent rental yield, which Dubai is best at offering.