The Middle East property market is booming, and many expatriates choose to buy a home when moving to Dubai. There are many sought-after exclusive developments under construction, giving expatriates the opportunity to purchase the very latest properties in a desirable area.
Buying a property in Dubai is a little different to some other countries, so it is worth engaging the services of a professional to help streamline the process. There are many well-known estate agents operating in the area – for example, Knight Frank – who are familiar with the sales procedure and can help to navigate the paperwork involved. One advantage is that there are no limitations on who can buy a property in Dubai – there is no need to have legal residency or a permit.
There are various fees and taxes payable during the buying process, which you will need to take into account when setting a budget, as these are not usually shown in the listing price. There are two ways to buy a property in Dubai. Most commonly, expatriates buy ‘off-plan’ directly from a developer, where homes are still under construction. It is also possible to buy a ‘resale’ from an individual seller.
Most properties are freehold – though there are some leasehold apartments – so it is necessary to check the terms of the lease or freehold to see if you will need to pay any service charges. Developers usually expect you to pay the full annual service charge in advance, which you should bear in mind when considering the cost of living in Dubai as an expatriate.
If you engage the services of an estate agent, then they will charge a commission. This is usually around 2% of the final purchase price. This is the best way to find good resale properties and to be informed of the latest developments.
There are fees and taxes payable throughout the sales procedure. Once you have found a property that you want to purchase, both buyer and seller have to agree on the terms of the sale. For a resale, a Memorandum of Understanding (MOU) is drawn up and signed by both parties. At this point a deposit is due, usually around 10% of the purchase price.
For buying from a developer, it’s a little different. A reservation agreement is drawn up and a deposit paid – anything up to 25%. Once terms are agreed and the deposit received, a sales and purchase agreement can be written, which is a formal commitment to the purchase. There are usually stipulations regarding the completion date and any compensation due if the project overruns.
The official transfer of ownership is done by visiting the Dubai Land Department. The full purchase amount will need to be paid at this point to either the developer or the seller. There is a one-off land registry tax, which is 4% of the purchase price, plus an admin fee. The admin fee goes to the Dubai Land Department and the new title deed is then provided.
If you are taking out a mortgage on part or all of the purchase price, then there are additional fees. Mortgage registration fees are also applied, which are 0.25% of the loan amount, again paid to the Dubai Land Department.
All of these fees and taxes can add a significant amount to the total purchase price, and therefore need to be taken into consideration when looking for the right property in Dubai.
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