A Guide to Buying an Apartment in Dubai

Looking to buy apartment in Dubai? Purchasing property is usually a great way of getting more for your buck – but it can be a minefield for the inexperienced.

Here are top things to remember before signing on the dotted line.

1. How much can you afford? Never buy anything that you ultimately cannot afford.

2. Why are you buying? Buying an off-plan property to move into yourself is a very different scenario to buying it as an investment for resale or to let. The reason behind your purchase will determine the type and the location of the property you should buy.

3. Know the developer and evaluate the project. Do your due diligence on the developer behind the project. What have they built to date? Is the developer licensed by RERA? Were there any issues with previous projects? What’s their reputation like? Will they hand over the completed property in time? How does the project compare with similar projects in the same community?

4. Is any bank willing to back the off-plan project? Understand the financing options offered by their preferred banks. Irrespective of whether the purchaser is a UAE national or non UAE national, UAE Central Bank allows banks to only provide 50 percent of financing for all off-plan properties. This is regardless of how many other properties buyers own and whether or not they intend to occupy the off-plan apartment.

5. Know your rights: Ask for the land title deed, escrow account number, DLD approvals and agreement with the contractor. There’s strong investor protection in place now, with RERA snuffing out risky speculation by introducing measures such as the developer having to pay 100 percent for the land and make a down payment of 20 percent as bank guarantee, deposit 20 percent in escrow account or complete 20 percent construction before selling off-plan.

6. Reselling an off-plan property is harder now than it was before 2008: Most developers will permit resale only once the original buyer has paid off at least 40 percent of the property’s price. Emaar, for instance, restrict the resale of their off-plan units until handover. There are others that do not operate under such constraints, so depending on whether you’re looking to sell before completion or not, you should choose your developer accordingly.

Moreover, purchasing an apartment in Dubai isn’t cheap. However, do you know the real cost? When you factor in the added costs, you may end up spending 10 percent more than the agreed purchase price. If you’re selling a property, you’re likely to be hit with extra costs too.

The extra costs

So where do the extra fees come from? These include a registration fee of AED 2,000 on properties below AED 500,000 and AED 4,000 on properties over AED 500,000.

Furthermore, the agency fee is 2 percent of the property price; conveyancing fees cost up to AED 10,000 and valuation fees up to AED 3,500. There are also lenders’ fees to consider and a developer’s fee which may amount to 5 percent or more of the property price.

Mortgage fees vary depending on whether you decide to take out a regular loan or Islamic finance. You may need to pay legal fees too, that’s if you decide to consult a lawyer regarding the transaction. However, this is a personal preference and not a requirement.

In October 2014, the Dubai Land Department increased its transfer fee to 4 per cent whereas it’s between 1 to 2 per cent in Abu Dhabi. What about fees after purchase? Well, you’ll need to pay AED 11 per square foot every year if you’re residing in an apartment for the developer’s annual service fee as well as maintenance charges.

The Down Payment

You’ll need to make a deposit of approximately 25 percent on your purchase price and if you take out a mortgage, you’ll need to consider interest fees.

Service	Cost (AED)
Dubai Land Department transfer fee	4% plus AED 540 administrative fee
Abu Dhabi transfer fee	1% to 2%
Registration fees	AED 2,000 for property below AED 500,000
	AED 4,000 for property above AED 500,000
Mortgage registration fee	0.25% of loan + AED 10 fee
Mortgage processing fee	Up to 1% of loan amount
Estate agency fee	2% of purchase fee

Service	Cost (AED)
Conveyancing fees	AED 6,000 to AED 10,000
Valuation fee	AED 2,500 to AED 3,500
Oqood fee, for off-plan properties	4% of purchase price
Down payment	25% of property cost *

All said and done, purchasing a Better Homes apartment couldn’t be easier. Visit bhomes.com for the latest and finest range of properties In Dubai
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