Friday, October 05, 2018
Buying a property in Dubai might be even more costly than you think. Of course, the cost of living in Dubai depends on the type of property you are buying, the area that you are considering and many other factors.
There are many buyers fail to allow for all the extra costs, fees and charges involved in purchasing real estate in the emirate. They need to know that the total cost might add another 10 percent to the price.
At the time of selling a property as well, your costs at that end of the transaction might exceed more than AED 10,000. This pretty much adds to the expense.
There are many different fees to watch out for from different bodies and commercial organizations at the time of buying property. These fees include government bodies such as the Dubai Land Department, your developer, lender, estate agent, and conveyancing lawyer.
As per the decision by the Dubai Land Department to double its transfer fee, certain costs have risen lately in Dubai. These have risen from two to four percent of the property value. In the emirate, the transfer fee ranges from one to two percent. The mortgage fees might depend on whether you take out a standard loan or Islamic finance. The Islamic finance can be a bit more expensive.
In case you’re planning to buy, you might need to work out the total cost in advance. This is important if you want to calculate how much you can afford to spend on the property itself.
You need to keep in mind that there are certain ongoing fees. These include your developer’s annual service fee and maintenance charges for the upkeep of your apartment or villa. The water fees can really add up in a villa.
You might need ready cash upfront, to put down at least 25 percent initial deposit to secure your chosen property.
When you use a mortgage to fund the rest of your purchase, you need to understand the total cost of compound interest over the term of the loan. This is important when you are looking at buying property.
When you remember the cost of rent in the Emirates, it’s worth calculating the costs. Foreign nationals are currently allowed to purchase freehold properties in designated areas in Dubai. Gulf Cooperation Council (GCC) nationals are allowed freehold ownership in general.
There are some developments that are pretty much available for foreign freehold ownership. These are The Palm, Jumeirah, Emaar Towers, The Greens, International City, and others. In case of certain projects, land can be leased up to 99 years.
In general, residence visas are issued to property owners. These extend to their immediate families. These visas are renewable every three years at the time of ownership.
Properties in the designated developments are bought off-plan, or before completion, in usual. Buyers might choose what to buy. Accordingly, they pay an initial deposit of around 10%-15% of the original price. A holding deposit might also be asked by the developer, taking the property off the market. This gives the buyer time to finalize his finances, documents etc. This secures the property for up to one month. The holding deposit is non-refundable in the event. The buyer usually decides not to continue this with the purchase.
Most of the developers offer different payment plans. The buyer might provide staggered payments to the developer prior to completion. When the development is completed and units can be handed over to the buyers, full payment of the purchase price needs to be made.
Foreigners can be granted Land Certificates by the Dubai Lands Department. The sale agreement and other required documents are usually lodged at the Department for registration. There are no taxes related to property in the UAE. However, Dubai might have its own stamp duty of around 2%-8%.
The round trip transaction costs usually include all costs of buying and then re-selling a property. These include lawyers' fees, notaries' fees, registration fees, taxes, agents' fees, etc.
As far as the currency is concerned, the United Arab Emirates uses the UAE Dirham (AED). The title deed costs AED250 (US$71). It is issued by the Land Department. As far as the Registration Fees is concerned, the buyer and the seller each pay the registration fee at 2% of the property value. Registration fee is paid to the Land Department, in general. The broker's fee usually ranges from 1% to 5% of purchase price. It mainly depends on the type of property and the overall purchase price.
Usually, the buyer needs to submit an application form to the developer. When the application has been approved, the buyer is required to go to the developer’s sales center on a pre-scheduled day to select the unit and pay the initial deposit.
Based on the level of completion, the buyer needs to wait for 2-3 years prior to receiving the property. The completion date is provided by the developer.
The truth is that this is a quicker way to buy a property in Dubai. But, it is a slightly more complicated process that involves more financial expenses. When an investor wishes to buy a property and the seller has a mortgage, the seller needs to be in a position to discharge the seller’s mortgage prior to collecting their title deed from the land department.
It is required for the buyer to use a RERA-registered broker. At the time of viewing the property, the buyer presents an offer to the seller. When the buyer’s offer has been accepted, the seller’s agent will produce the memorandum of understanding. This states all the costs and responsibilities of both parties. It is then that the buyer then pays a 10 percent deposit in the name of the seller to secure the property.
Based on whether the buyer is paying cash or via a mortgage, the buyer’s bank needs to carry out a valuation procedure to inspect the property. It is to ensure that it is secure enough.