If you’re living in Dubai and looking for a home, returning to put down roots, or are looking to invest in buy to let, there’s plenty to think about when purchasing a property in Dubai.
Doing your research is essential to understand how buying a property in Dubai works.
Dubai is an incredible place to live and is increasingly lucrative for expats seeking a profitable investment. As an added benefit, expats don’t have to worry about any changes to their residency status when the Brexit transition period ends on December 31, 2020 – making it even more appealing and secure for long-term property investment.
Here are the most important things to consider when buying a property in Dubai as an expat.
Understand Why You Want to Buy
It might sound obvious but take a minute to think. Buying an investment property is a different proposition from buying a home and setting out your expectations will go a long way to help with the big decisions.
Are you:
- Buying to have somewhere of your own to live?
- Expecting to keep the property long-term or resell?
- Will you be living in the property full-time?
- Do you plan to rent the home to tenants?
- Is the property an investment?
The Dubai property market tends to fluctuate from time to time. By and large, it is a stable sector with reliable rental and resale values. However, with growing numbers of new developments, there is a lot of choice.
If you already live in Dubai, you probably have a fairly good idea about what sort of property you’d like to buy.
If not, then it’s worth thinking about what factors are essential, what amenities you need to be near, and how many people will live with you so your search starts on the right foot.
Dubai Property Expats Can Buy
You’ll find three types of property purchase in Dubai:
- Freehold
- Usufruct
- Commonhold
Buying freehold is the same as buying the UK. You buy a property, it belongs to you, and you can do with it as you wish. Most freehold properties are houses, although you can also buy some apartments and other homes freehold.
Dubai has a list of approved developers, who you should buy through if you would like a freehold property.
Usufruct is like leasehold, where you purchase ownership of a property for a specific number of years, often up to 100. During usufruct ownership, you can do as you like with the property, just as if it were a freehold.
When the lease ends, the property reverts to the ownership of the original seller. You can’t pass on this type of property as an inheritance, nor do you have the right to demolish the building.
Commonhold often applies to apartments and means that you purchase the residence but must pay maintenance costs to the owner – usually a developer. The developer owns the building and any common areas, but you own the residence.
You are free to sell, rent out or pass on ownership of the property just like a freehold, provided you keep up with the maintenance costs.
Few Restrictions On Expats Buying Property
Before 2002, expats could not invest in the Dubai property market, but this has changed, so buyers don’t have any specific rules to comply with.
There are some areas – like Jumeirah – that are closed to expats owning property because they are not freehold. Check with a local agent before setting your heart on a neighbourhood to make sure it isn’t one of the small number of places where you can’t buy.
For expats, the great news is that buying a property in Dubai is relatively relaxed:
- You do not need a specific type of residency to invest
- There are no foreign buyer permits or any other regulations to consider
This makes the process straightforward, without extra hoops to jump through. Many Dubai properties are sold as freehold, but leasehold properties usually have a lease period anywhere from 30 years to 99 years.
How To Choose The Right Dubai Property
As a buyer, you can choose from a vast array of homes, locations, and new developments.
Start browsing the market to help short list some properties you’d like by
- Looking through online property listings
- Contacting a local estate agent or a developer
- Visiting properties for sale to get a feel for the area and the layout
- Testing the neighbourhood at different times of day to check out traffic levels and noise
- Checking how long your commute is likely to take
- Making sure your short-listed properties have enough parking.
Some of these factors might not be as important to you as others, but given that traffic in Dubai can be heavy and some areas have less developed roads, it’s always worth having a test run of your regular journeys.
Find out the best places to live in Dubai for expats.
In Dubai, estate agents can assist as in any other country and will help to find properties in your preferred areas that match your budget and preferences.
However, it is also common to purchase directly from a developer, as most of the developments in the country are sold directly.
Working With Dubai Developers
If you decide to buy from a developer, verify their reputation before parting with any money or signing a contract. Different developers have their own fee structures, so it is wise to make sure you know what the likely costs are before you sign any paperwork.
This is the safest way to make sure you’re making a sound investment, and there are several things you can do to background check your property seller:
- Ask for written confirmation of all fees payable and due dates.
- Make sure the developer is registered with the appropriate regulatory body and then verify that registration for your peace of mind.
- Check the prices on similar properties to confirm you are paying a fair price.
- Look at previous developments to see what buyers say about their homes
- Appoint a local solicitor or a solicitor with international real estate experience. It is essential that you can communicate clearly and ask any questions, so choosing a solicitor experienced in dealing with expat investments is ideal.
As well as checking the background on your developer, most of these measures apply to estate agents. Take a little time to make sure they are appropriately licensed and reviewing the experiences of their previous clients before investing your hard-earned cash.
Sealing The Deal
By and large, Dubai homeownership works the same as anywhere else, so once you have found a property and agreed to a price, you can expect to have the contracts drawn up, so there is no room for confusion.
The transaction itself takes only a short time to complete, with the typical sale taking only 30-days from the date of the agreement to buy until completion of the sale.
You will need to sign a memorandum of understanding and provide a deposit. The amount varies depending on the value of the property but expect to pay a deposit of at least 10% of the property value.
To go ahead with your property purchase you will need:
- A valid passport
- Proof of residency status to demonstrate you can live in Dubai.
- Proof of your existing home address.
- Payslips or salary certificates to prove that you have a stable income.
- Bank statements to support that you can afford the investment.
Property Taxes In Dubai
Dubai is well known for having some of the most generous tax laws in the world, and property is no exception to the low-tax environment.
A lot depends on whether you’re buying a property from a developer, and whether you need mortgage financing, but the below table shows some of the typical costs you can expect to pay, although not every charge relates to all property sales.
| Fee or Tax | Rate in AED (Arabic Emirates Dirham) | Approximate GBP Value |
|---|---|---|
| Land Registry Tax | 4% of property value plus AED 540 | 4% of property value plus £115 |
| Registration Charges for properties up to AED 500,000 in value | 2,000 | £420 |
| Registration Charges for properties above AED 500,000 in value | 4,000 | £840 |
| Estate agent fees | Around 2% of property value | N/A |
| Valuation fees | 2,500-3,500 | £530-£740 |
| Oqood Contract Fee (if purchasing through a developer) | 4% of property value | N/A |
| Conveyancing Fees | 6,000-10,000 | £1,250-£2,100 |
You’ll also need to consider factors such as a deposit, mortgage fees, and processing charges if you are taking out a mortgage to finance your property investment.
Typically, these charges include:
| Fee or Tax | Rate in AED (Arabic Emirates Dirham) | Approximate GBP Value |
|---|---|---|
| Mortgage Registration Charge | 0.25% of mortgage + AED 10 | 0.25% + £2 |
| Mortgage Processing Fees | Up to around 1% of the mortgage value | |
| Deposit payment | 10-25% of property value |
Buying a Property in Dubai FAQ
Buying a dream home in Dubai is straightforward for expats wanting a new life in this busy desert city.
If you follow some simple rules, you can buy a home in as little as 30 days.
Although doing a deal is like buying a home in the UK, there are still some common questions asked by expats:
A few – if you’re entitled to reside in Dubai under any form of visa or permit, you are welcome to purchase a property. There are some areas where the old non-freehold rule still applies, but most are now accessible on the open market.
The sector is regulated by the Real Estate Regulatory Agency (RERA), so if you experience any issues, you can talk to them. It is also advisable to use a reputable solicitor who understands local property laws to ensure you have an expert on your side throughout the process.
No. You need an independent lawyer with loyalty to you, not someone else trying to do a deal. This may be a little more expensive but gives you peace of mind and security that the sale is handled by someone on your side.
Applying for a Dubai mortgage is like in the UK; the amount of lending you can secure, and the rates you will pay, all depend on:
The value of the property you wish to buy.
How much deposit you have.
Your income, security of employment, and current financial position.
The bigger UAE banks will offer mortgages to foreign investors. If you don’t already have a domestic bank account, it’s worth opening one to make the application process more manageable and for paying bills once you own the property
Yes, and unlike the UK there are no additional taxes to pay if you buy a second home. Land Registry Tax is charged at the flat rate of 4% with no other property taxes to pay whether you decide to live in the property or rent it out as a landlord.
It isn’t so much that there isn’t any parking; but that the Dubai air temperature gets extremely hot in the summer, and it is quite easy to forget you live in a desert.
Cars without covered parking are likely to overheat quickly, which can cause mechanical failure and makes them impossible to drive until the temperature drops.
If you decide to rent out your property, you’ll need to register the tenancy agreement through Ejari, as all contracts must be registered. This is then kept on file as a point of reference if any disagreement crops up between you and the tenant.
Related Information
Below is a list of related articles you may find of interest.
Hi,
I have purchased the property I live in now from the owner who is based in the UK.
It is difficult for him to come to the UAE just for the transfer.
Can we do the transfer without them being here ?
We have already agreed price and payment, it is just the legal transfer
Hi, can my husband and I buy a property together? If it’s in joint names, what kind of financial information will the lender need from me to secure the mortgage?
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