9 key steps to buy a property in Dubai
February 14, 2022
Dubai is one of the safest cities in the world and among the world’s trendiest destinations to buy a property. If you are a first-time home buyer, this guide will help ensure smooth entry into the Dubai property market.
The most important factor in the buying decision to consider is that buying a property in Dubai comes with area limitations: Expats and other non-UAE nationals (such as tourists or non-resident investors) are allowed to buy property in Dubai in specially designated Investment Areas. Investment areas in Dubai include Dubai Marina, Dubai Downtown, Dubai Hills, City Walk, JBR, and additional areas as detailed by the Dubai Land Department.
Buying a property in Dubai can seem like a daunting task, however the steps involved are relatively straightforward. They include:
1. Identifying the type of property you are looking for:
This is an obvious step but also the most crucial, and there are a few questions you should answer:
- Are you looking for a flat or a villa?
- Are you looking for a ready property or an off-plan property?
- Are you looking for a tenanted or non-tenanted property?
If it is to live in, it is also important to also consider the size of the property based on existing but most of all future needs (e.g. getting married, having a larger family)
[If you want to better understand the pros and cons of buying a ready property or an off-plan, do read our focused article on our blog.]
2. Identifying
your research area:
If it is to invest, try finding a location or development that offers the most
compelling opportunity in terms of high rental value, low vacancy risk, and low
expected maintenance costs and service charges. Typical investment areas would
include Dubai Marina, JBR, Dubai Downtown or Dubai City Walk.
If the property is for you to live in, you should consider first proximity to
retail areas, workplace and schools, how connected the
area is in terms of transportation and other other
amenities the development or the area has to offer. Most family chosen areas in
Dubai would include for instance Dubai Hills, Damac
Hills, District One in Sheikh Mohamed Bin Rashid City (MBR), Meadows
and Arabian Ranches.
3. Hiring a Real Estate agent and finding your property:
An
experienced Real Estate Agent can dramatically reduce the legwork involved with
arranging viewings across compare multiple units, setting up transfer
appointments, preparing contracts, maintenance and
inspection reports and during the handover.
When purchasing an off-plan property, a developer’s
reputation, past projects, and timely delivery of the units is of
paramount importance and a knowledgeable broker should be able to identify any
warning signs or share recommendations. The ideal broker will talk you through
the entire Dubai property buying process, be fully versed with the
paperwork involved, and be able to identify any warning signs in a property or
share recommendations.
On the
other hand, properties aggregators can include Bayut and Property Finder.
4. Signing the MoU:
Once you have selected a property in Dubai to buy from a private seller and have negotiated an offer, a Memorandum of Understanding (MoU) will need to be prepared. This document outlines the terms and conditions of the deal, is usually developed by the Real Estate Agent, and the buyer is usually required to put down a 10% cheque deposit to confirm that they will purchase the property.
5. Getting a mortgage:
As a rule, the UAE Central Bank stipulates that for UAE
Residents, the owner is usually required to put up a down payment of at
least 20% of the purchase price. Hence, buying a property will require you
to get a mortgage and to find the best rates for your home finance. In this
case, Lenddoo can help you simulate your mortgage, find the best
rates in the market and help you finance your property
transaction costs.
Before the terms of the mortgage are agreed, the corresponding bank will value
the property. Usually, Banks may take anywhere between 20 to 30 days to advance
the financed amount. Alternatively, some mortgage brokers
like Lenddoo offer ‘pre-approved financing’, which allows buyers to have
a loan approved prior to choosing a property.
6. Getting the no objection certificate (NOC) from the developer:
If buying property in Dubai from a developer, the NOC will simply state that they do not object the property being handed over to the buyer. Properties bought from a third party require an NOC from the developer of the property stating that the seller has paid all their dues and that they have no objection to the property being handed over to the buyer. Such developers can be Emaar, Damac, or Meraas for instance in Dubai.
7. Signing the Sales and Purchase Agreement:
Once the NOC has been received, all parties are ready to sign the sales and purchase agreement (SPA). In agreements involving bank financing, the seller will receive a Guarantee Letter (also known as a Comfort Letter) stating that the bank will transfer them the funds once the seller signs the SPA.
8. Paying the property transaction fees:
Buying a property in Dubai can incur a number of fees totaling approximately 7 per cent of the purchase price. These fees would include:
- Dubai Land Department (DLD) fee (4% of property purchase price + AED 580),
- Mortgage registration fees (0.25% of loan amount + AED 290),
- Real Estate agent commission (usually 2% of property value)
- Property registration fee (AED 2,000 for properties worth less than AED 500,000; AED 4,000 for properties worth more than AED 500,000)
- Bank processing fee (0 to 1% of loan amount – Lenddoo can help you waive this fee!)
- Property valuation fees (up to AED 3,500 - Lenddoo can help you waive this fee!)
- Mortgage broker fees (around AED 3150 - Lenddoo can help you waive this fee!)
9. Receiving your title deed:
Once the transfer is complete the sale is registered with the DLD and you will receive your new Title Deed and all keys/access cards to your property. For off-plan property bought directly from the developer, Oqood (same as the title deed) is issued at the developer’s office.