With the incomparable lifestyle Dubai has to offer, the city’s real estate market continues to attract individuals who wish to own a home in Dubai. Before deciding to invest in a property, expatriates must take into consideration the following key information.
1. You can purchase freehold property only in designated areas
If before 2002 expatriates were only allowed to have a 99-year lease of properties in Dubai, the Ruler of Dubai has since allowed expatriates to buy property on freehold ownership. Freehold property is opened to all nationalities. However, properties located only in specific areas of Dubai can be purchased by expatriates. These freehold areas include Dubai Marina, Emirates Hills and Al Barsha, The World Islands, among others. Recently, the Ruler of Dubai has issued Resolution No (8) of 2016, adding new land plots to the freehold area in Dubai World Central in order to attract further investments in the city. Expatriates cannot own property in non-designated areas.
2. You should check accreditation of the broker, the agent or the developer
Before dealing with any broker, agent or developer, it is fundamental to verify that the said broker, agent or developer is accredited and licensed with the Real Estate Regulatory Agency (RERA), which is the regulatory arm of Dubai Land Department (DLD). DLD is the sole governmental entity in charge of registration, organization and promotion of real-estate investment in Dubai.
3. You should be aware of the Central Bank’s regulations on property loans
Expatriates will often take a loan in order to buy the property of their dreams. However, the mortgage regulations of the Central Bank have to be taken into account:
- If the property’s value does not exceed AED 5 million, first time expatriate buyers must fund at least 25% of the property value. In other words, banks can only lend the remaining 75% of the value of the property. If the property value exceeds AED 5 million, then the expatriate must fund at least 35% of the property value. Therefore, banks can only lend the remaining 65% of the property value.
- As regards to second and subsequent properties, expatriates must fund at least 40% of the total value and can therefore only obtain 60% funding from the bank, irrespective of the value of the property.
4. You should have knowledge of the list of documents required
Once they have agreed to acquire a property, buyers will have to sign an agreement outlining the description of the property, the purchase price, the payment schedule and the obligations of each party. This agreement is often given the name of “Memorandum of Understanding” (MoU). Templates for agreements between the seller and the buyer, or the seller and the broker, or the buyer and the broker can be found on DLD’s online portal called Dubai Real Estate Mark (e-Mart). In order to execute the transfer of property, the seller and the buyer will have to register the property transfer before a registration trustee. The trustee will require to view the original title deed, the original non-objection certificate from the developer, the original manager’s cheque specifying the exact amount mentioned in the MoU, the original passports of the seller and the buyer and their residence visas (or entry stamps). A registration fee to DLD will have to be paid, equivalent to 4% of the purchase price. According to the real estate law, 2% have to be paid by the seller and 2% by the buyer, unless agreed otherwise. Minor additional charges might also be required by DLD. A trustee fee will also have to be paid and the amount varies with each registration office.
Buying a property can sometimes be quite stressful. Therefore, having knowledge of the above basic information is important to ensure a smooth process. Non-UAE residents wishing to buy a property in Dubai, but which are unable to travel to the UAE or wish to make the whole experience less stressful, have also the option to grant a power of attorney to a lawyer (or any appointed third party) in order to conduct the transfer of property on their behalf.
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