Buying a house in the UAE

Expatriates can buy homes in any of the specified freehold areas in the UAE. The inventory includes villas, townhouses or apartments.
You could own a home in the UAE for as less as Dh500,000 going up to millions.
The sale price advertised on mass media platforms, however, doesn’t include bank fees, commission or other governmental fees that add on to the price of the unit.

 How to buy a home
Buying process in Abu Dhabi

 Buying a house in Abu Dhabi at first would entitle you as a buyer on signing a Memorandum of Understanding (MoU) with the seller, where you would pay 2 per cent of the property value for your real estate agency (as a fee for their service), and another 2 per cent towards Abu Dhabi Municipality (for transferring the property to you).

 After this you will get an ownership certificate from the developer of the property. Another Dh5,000 is to be paid directly to the developer as an administrative fee. The process is much simpler in Abu Dhabi given that the regulations involve the municipality and the developer only.

 Dubai

 On the other hand in Dubai the process is a different as it all falls under Dubai Land Department (DLD). You will still have to pay your real estate agency 2 per cent of the property value as fees for their services. DLD charges transfer fees at 4 per cent, in which 2 per cent is to be paid by the buyer and 2 per cent is paid by the seller. Remember this when many developers and real-estate agents say the whole 4 per cent is to be paid by buyers and then, sometimes offer to pay the 2 per cent as a promotion offer - they were supposed to pay 2 per cent any way.

 Another Dh250 is to be paid on the day of the transfer as title deed issuance fees.

 To complete the registration of the property with the DLD, you need to pay a registration fee of Dh4,000 if the real estate property price equals or exceeds Dh500,000, or pay Dh2,000 if the property price is less than Dh500,000. This is done after all the money is transferred to the seller.

 In case you have a mortgage on the property, you also have to pay a fee for mortgage registration to the DLD, calculated at a rate of 0.25 per cent of the registered loan amount.

 Bank fees
For mortgaged buyers of completed properties in Dubai, a down payment of 25 per cent for expats and 20 per cent for UAE nationals is requested to be paid in cash to the seller. The rest of the amount can be financed by the bank. The 25 per cent down payment is the minimum requirement for expat buyers, so you will have to save or raise this amount before starting the process.

 Interest or profit rates range from 2.99 per cent to 5 per cent in UAE depending on the bank. However, before you are granted the housing loan the bank would send a property valuation consultant to value the property and they could charge the buyer from Dh2,500 up to Dh3,000 as valuation fees, This is in addition to bank mortgage establishment fee which could be upto to 1 per cent of the loan amount.

 Life Insurance
Life insurance is compulsory when you take a mortgage in the UAE. The bank will charge you separately from the loan for a life insurance. This insurance is the only way for the bank to guarantee the loan is paid in full in case of death. The amount of insurance varies depending on the age and health condition of the person, and also depends on whether you choose to take the life insurance from the bank, or from an external life insurance provider.

 Service Charge for developer
Once your mortgage is approved, and the property is transferred under your name, you will still have one more thing to pay to the developer – the service charge on the property on a pro rata basis.

 The service charge is an amount owners pay yearly to developers to maintain and manage the common areas in the property that includes landscaping, security, cleaners, communal electricity, pest control and building insurance.

 The charges are calculated per squae feet (sq. ft.); so for every sq. ft. you own on your title deed, you will be charged an amount, for example Dh15 per sq. ft. The amount payable annually is calculated in the month of purchase and you pay the money directly to the developer.
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