Additional costs when buying property in Dubai

Dubai is the main center of global business and trade in the Gulf region. The real estate market of a progressive metropolis has been attracting investors from all over the world for several years now. Given the long-term demand and profitability of the industry, the demand for local housing is not at all surprising. While property prices vary depending on the size and type of property, there are also hidden costs when buying property in Dubai. Many buyers are not even aware of the additional costs associated with buying a local home. In this article, UAE Assets explains the fees associated with buying real estate in the emirate.

What are the costs associated with buying property in Dubai

Against the backdrop of a booming real estate market and the simplification of rules for living in Dubai, many expats have decided to abandon the traditional rental model and move on to buying their own property. The real estate market is constantly moving forward, so it offers a large selection of housing for every taste and cost. In addition to the basic amount for buying a home, investors should be aware of the additional costs that every buyer of real estate in the UAE will have to face. We are talking about the necessary expenses when buying an apartment in Dubai. Below we will look at what hidden costs accompany the purchase of housing in the emirate.

DLD registration fee

The costs of buying a home include the Dubai Land Department (DLD) fee, which can be considered as a one-time tax paid to the government. By law, the fee is divided between the buyer and the seller - 50% each. However, in most cases, it is fully paid by the buyer of the property.

Along with mandatory DLD fees, the cost of buying a property in Dubai also includes property registration fees, the amount of which depends on the value of the property. If the property is purchased with a bank loan, you will have to pay mortgage registration fees.

• DLD fees equal to 4% of the property value + administration fees (580 AED for apartments and offices, 430 AED for plot, 40 AED for off-plan). For objects worth less than 500 thousand AED, the amount is 2 thousand AED and 5% VAT. For objects worth more than 500 thousand AED, the amount is 4 thousand AED and 5% VAT.
• Mortgage loan registration fees - up to 0.25% of the loan amount + 290 AED.

The fee must be paid to the Department within 60 days or the purchase will be cancelled.

Agency Fees

The costs of buying a property in Dubai include broker fees. A qualified agent can provide invaluable assistance in buying a home. To facilitate the process of acquiring real estate, many hire a lawyer who will ensure that documentation and contracts are up to date in accordance with UAE law. The costs can be divided as follows:

• Agency fees - 2% of the property value and 5% VAT
• Lawyer's expenses - from 6 to 10 thousand UAE dirhams (1.6-2.7 thousand US dollars)

The second paragraph is relevant only if the process uses the services of a lawyer.

Security deposit

For all real estate transactions, the buyer must pay an initial deposit amount as a guarantee that the transaction will take place. Usually the amount is 10% of the property value. You must pay a percentage of the agreed value of the transaction in the name of the seller. The amount is held by an authorized RERA broker until the transfer of ownership is completed.

Insurance premiums

Dubai has not yet introduced compulsory property insurance. But experts strongly advise using insurance, especially if housing will be bought with a mortgage. Banks issuing a mortgage loan may require property insurance as a guarantee of the safety of their funds.

Insurance premiums when buying a house in Dubai are distributed as follows:

• Home insurance - around AED 1,000 per year
• Life insurance - from 0.4% to 0.8% of the decreasing loan amount per year

Dubai home insurance provides protection against theft, damage, accidents and natural disasters. The cost of insurance may vary depending on the chosen service. Life insurance is mandatory when applying for a mortgage. In most cases, the amount is charged monthly, but there are also annual payment options. Banks usually have their own insurance policies for the borrower.

The above items are expenses in the process of buying property in the UAE. If you plan to buy local housing, you must carefully read all the requirements. You can also take the help of UAE Assets Certified Brokers to learn more about taxes and costs when buying property in Dubai. Thanks to working with the UAE housing market, we are well acquainted with the legislation and the country's requirements for investors. Our company employs experienced professionals who will provide you with the necessary support and help you complete the transaction for housing. To contact our office, use the contact phone or fill out an application on the website. We will call you back as soon as possible and consult on your questions.