Thanks to altered policies in Dubai in 2002 the last decade has seen many overseas property investors buying property in Dubai.
Despite the recent downturn in property prices, the predictions are in favour of Dubai, as the popularity continues to increase, and a steady stream of Asian expats travel there to extract benefits from the well-rounded destination.
So what do you need to know when buying property in Dubai?
Dubai Land Department or DLD charges 4 per cent of the whole property amount in which 2 per cent goes to the seller, and 2 per cent goes to the property agent. In case you are buying a property listed in bayut, even then you are required to consult the agent for cross-checking the availability, legal disputes, and ground price of the property.
Please note that there are plenty of potential real estate scams active in the streets of Dubai, so it is suggested to conduct a full online as well as offline investigation of property and agent profile.
Overseas property investors buying in Dubai are required to pay 25 per cent of the whole amount as a down payment protocol. The UAE nationals pay 20 per cent of the amount in cash to the seller.
Banks in Dubai offer expat loans so potential investors can have nearly 70 per cent of the real-estate amount financed by Bank.
It is suggested to analyse, verify, and compare the property interest rates offered by all Dubai banks. Depending upon the bank, interest rates range from 2.99 per cent to 5 per cent.
Before granting the loan, property valuation consultants evaluate the ground status of the property and charge around Dh2,500 up to Dh3,000, which is exclusive of the loan amount. In addition to this, the bank mortgage establishment fee could extend to 1 per cent of the whole loan amount.
It is advised to conduct full end-to-end fee and property price analysis before committing to any mortgage amount since there can be huge fluctuations in pricing, depending upon the property location in Dubai.
Associated Life Insurance
It is a mandatory practice when buying property in Dubai, to have additional life insurance when your bank loan amount is granted. Majority of Banks in Dubai will charge you an additional amount for life insurance. The life insurance policy is the only way a loan amount is sanctioned as it is perceived as a guarantee from the buyer.
The loan insurance amount varies from an individual’s health conditions to his/her age. However, it is not important to have life insurance from the Bank that provides you with a loan; external life insurance resources can be explored and adopted as well.
Developer’s Property Service Charges
After the finalisation and fulfilment of all the necessary fees, documentation and approvals, the last step resolves to the buyer paying an extra service charge to the developer of the property. This service charge is calculated on a pro-rata basis and paid according to the agreement decided in between the buyer and the developer.
Usually, the service charge is paid annually, and in response to the payment, the property developers are required to maintain landscaping, cleaners, security, communal electricity, building insurance, and pest control.
The service charge is calculated based on per square feet (sq. ft.), for example, there is a minimal charge of Dh15 per square feet followed in Dubai, and this will also depend upon the property location and type.
Once all of that is out the way, it’s time to crack open the bubbly and enjoy the lavish luxury of the desert paradise you are buying property in.