Hidden Costs: When Buying and Owning a Property in Dubai

Welcome to our blog on the hidden expenses of purchasing and owning real estate in Dubai!

Dubai, one of the most popular real estate investment locations, has a lot to offer in terms of beautiful houses and excellent rental returns. However, it’s critical to understand the considerable expenses and fees connected with buying and keeping a home in this city.

Various hidden charges can greatly affect your budget, ranging from stamp duty and agency fees to upkeep and utilities.

In this article, we’ll look at these expenditures in further detail. So please sit back, relax, and look at the hidden costs of purchasing and owning a home in Dubai.

Hidden Charges: When buying property in Dubai

The hidden expenses of purchasing and owning property in Dubai should also be considered, as more individuals and corporations want to acquire real estate in the city. To assist you in better planning your budget, let’s look through the additional costs associated with purchasing and owning real estate in Dubai.

Agency Fees:

The hidden expenses of purchasing and owning property in Dubai can include agency fees. Agency services can ease the process whether you’re seeking to buy or rent an apartment in Dubai. Hiring a real estate agent has several benefits, but the services are not free.

The typical fee for a real estate agent is 2% of the purchase price. However, this might change based on the region and kind of property. A carriage cost that ranges from AED 6,000 to AED 10,000 is further charged. Only if conveyancer services are engaged throughout the procedure is the charge relevant.

Mortgage Fees:

The additional expense of buying a home with a mortgage should also be considered. There are different types of mortgages in Dubai that come with some additional costs.

Banks usually charge 1% of the loan amount and 5% VAT as a mortgage arrangement fee. Additionally, there is the property valuation fee which ranges from AED 2500 to AED 3500, along with 5% VAT.

Furthermore, the buyer would need to pay off the current mortgage for a property where the current owner has a mortgage registered. The buyer gets the Non-Objection Certificate (NOC) once the existing mortgage is paid. The NOC is compulsory in this case to record the property with the DLD.

Initial Deposit:

In Dubai, it is typical for the buyer to pay a deposit to secure the acquisition of the property in both main and secondary real estate market transactions. The first deposit is normally 10% of the purchase price and is paid by check to the seller when buying a ready home on the secondary market.

An authorized agent who is a broker registered with the Real Estate Regulatory Agency (RERA) will collect and hold this deposit until the successful transfer of the property. To receive a No Objection Certificate (NOC) and the Title Deed for the property, the buyer must first pay off any outstanding mortgages recorded against the property. It is significant to remember that these procedures and demands could change based on the particulars of the transaction.

Services Fee:

As a potential property owner in Dubai, it’s important to factor in annual service charges when budgeting for your purchase. Based on the RERA maintenance index and service charge, these charges go towards maintaining and improving the community through security, elevators, and landscaping. You can find the most current demands on the RERA official website.

While it’s important to be aware of these hidden costs, owning a property in Dubai can still be a highly profitable venture. The dynamic real estate market in the city offers the potential for significant returns whether you sell your property or put it up for rent.

Don’t let the potential for additional expenses discourage you from considering a property purchase in Dubai – with careful planning and budgeting; you can make your dream of owning a property in this vibrant city a reality.

Government Fees:

These fees may add considerable expenditures when purchasing and owning a home in Dubai. Dubai Land Department (DLD) regulates real estate transactions. The DLD collects fees from Dubai homebuyers. These fees are usually a percentage of the property’s purchase price and vary by type. The DLD charges 4% of the purchase price plus AED 580 for flats and offices, AED 430 for land, and AED 40 for off-plan projects.

When purchasing a home in Dubai, you must additionally pay a property registration fee. This cost depends on the property’s valuation, with a lesser price for homes under AED 500,000 and a greater fee exceeding AED 500,000. The pricing includes 5% VAT. If you get a mortgage to buy a home in Dubai, you must additionally pay DLD mortgage registration costs. These costs are a proportion of the loan amount, usually 0.25 percent plus AED 290.

These government fees may add considerable expenditures when purchasing and owning property in Dubai. Budget for these expenses in advance and engage with a professional real estate agent or lawyer to buy and own property in Dubai.

Insurance Fee:

In Dubai, house insurance is not needed by law, but it is highly recommended to safeguard against theft, accidents, fires, or natural disasters.

On the other hand, life insurance is required in the United Arab Emirates when taking out a mortgage (UAE). Budgeting should consider life insurance payments as an ongoing expense of mortgage property ownership. Most banks charge 0.4% to 0.8% annually on declining mortgages, and some may demand full insurance payments for the year.

Major multinational insurance firms underwrite the bulk of banks’ in-house life insurance plans, which are offered to the public. However, if you are young and healthy, it is often feasible to discover more reasonable solutions by choosing an outside life insurance policy. You must speak with the bank or mortgage provider to fully grasp your alternatives and determine the best course of action for your particular situation.

Dubai Electricity and Water Authority(DEWA) Fees:

When buying a home in Dubai, it’s important to factor in all related expenses, including DEWA fees. DEWA, or the Dubai Electricity and Water Authority, oversees power and water connections for all Dubai residences. Property owners must pay DEWA for using these utilities as part of their services. Depending on the kind of property being bought and where it is located in the city, these costs may change. For instance, depending on the meters placed, DEWA rates for an apartment may be about AED 2,300, while fees for a villa could be over AED 4,000. When estimating the price of a home in Dubai, it’s crucial to consider these costs.

FAQs

What are some additional Dubai property expenses?

• Insurance
• Transfer fees
• Furnishing costs
• Maintenance fees

Is a real estate agent required in Dubai when purchasing a property?

Although it is unnecessary, many buyers of real estate in Dubai choose to work with a real estate agent. A real estate agent may guide you through the process and help with the negotiations, but bear in mind that they will be paid a commission.

What should I consider when choosing a property in Dubai?

Location: Consider the property’s location for employment, schools, and other amenities.

Size and layout: Size and design should fit your demands and lifestyle.

Quality: To reduce the need for future expensive repairs, choose a well-built house in excellent shape.

Future potential: Think about how the property’s worth may rise over time.