Top best Hidden Cost of Buying a Property in Dubai

It’s well knowledge that Dubai provides investors with favorable terms for buying real estate. There are long-term visas for real estate investors as well as other long-term visas available in Dubai.

When it comes to purchasing luxury houses Dubai is also highly advantageous for homebuyers. When compared to the cost of luxury real estate in other well-known locations throughout the world, Dubai’s luxury property sales prices are actually rather reasonable.

In addition to cost being one of the main draws for purchasing luxury houses in Dubai a large number of people choose this city for their real estate needs due to the variety of properties available. The Dubai real estate market offers everything from luxury flats and penthouses in the city to coastal villas and townhouses.

When buying real estate in Dubai, purchasers must account for costs that are not included in the net selling price. To purchase real estate in Dubai, there are a number of fees that must be paid to the Dubai Land Department (DLD). Government expenses for purchasing a property are listed.

The knowledge cost charged by the Dubai Land Department is AED 430 for a plot, AED 40 for off-the-plan property AED 580 for apartments and offices. Transfer fees are calculated at 4% of the sales price.

A mortgage registration fee of 0.25% of the loan amount, including AED 290, is required by the DLD. Trustee for Registration The appointment fee, which must be paid in cash, is AED 4,000 for title deeds and AED 5,000 for off-plan purchases.

No Objection Certificate fees are charged by real estate developers in Dubai (NOC). The NOC price varies based on the property developer from AED 500 to 5000. A property may be delivered by a developer that is 5% less than the quoted size. When delivered, a property that is listed as 1,000 square feet will actually be 950 square feet. Developers of real estate demand a cash guarantee deposit equal to 10% of the sale price.

When examining the cost of home ownership in Dubai, prospective homeowners frequently neglect DEWA fees.

The market is now favorable for purchasers, making this the ideal moment to invest in Dubai. There are additional expenses outside the purchase price that can push up the cost by 10% to 15%.

Here is a breakdown of all the prices involved in purchasing a home in Dubai, including upfront fees and any hidden expenditures.

  1. Transfer and registration fee
  2. Real estate Agency Fees
  3. Mortgage Fees
  4. Insurance Fees
  5. Security Deposits
  6. Maintenance and service charges

Transfer and registration fee

A one-time tax known as Dubai Land Department fees is due to the government when you buy real estate in Dubai. 4% of the total cost of the property is the DLD charge. Although technically the buyer and seller split the DLD charge equally, in reality the buyer is responsible for paying the entire amount. DLD fees must be paid within 60 days to avoid having the purchase revoked.

Purchasers were required to pay registration fees in addition to DLD fees. A buyer must also pay Dubai Land Department mortgage registration costs if they purchased a home using a bank loan.

Department of Land charges 4% of the final sales amount

Fees for registering properties

For properties valued at less 50,000 AED, fees equal 2,000 AED plus 5% VAT.

Fees are equal to AED 4,000 plus 5% VAT for properties worth more than AED 50,000.

Mortgage registration costs in Dubai are 0.25% of the total loan amount.

Real estate Agency Fees

The cost of purchasing a home will go up if you choose to work with a real estate agent. According to the market rate of commission in that specific area and the agent’s experience, each agent has their own commission rate. Real estate commissions are typically calculated as 2% of the selling price.

Buyers must also employ a conveyancer in order to make the purchasing process easier. All of your contracts and documents will be available in accordance with UAE legislation, thanks to the licenced conveyancer.

The cost of conveyancing might range from 6,000 to 10,000 AED.

2% of the selling price in real estate commissions

AED 6,000 to AED 10,000 for conveyance.

Mortgage Fees

Mortgage fees are also necessary if you plan to buy a house with a bank loan. Few banks include the cost of buying a house in their monthly mortgage payments to lessen the strain.

Mortgage arrangement, processing valuation fees are all included in mortgage costs. The cost with a mortgage can increase by up to 5-7% of the properties selling price.

The aforementioned costs must be paid to the bank in the case of buyers who finance their purchase. In order to lessen the strain of the first financial outlay several banks permit buyers to include these upfront costs in their mortgage.

The buyer must first pay off the seller’s mortgage before receiving a No Objection Certificate (NOC), which is required to complete the property transfer with the DLD when buying a home where the seller has a mortgage recorded. The seller has paid all service fees and other expenses according to the NOC which is a legal certificate the developer has no objections to the transaction.

Additionally, keep in mind that if the seller has a mortgage that is registered, the buyer will need a certificate of no objection (NOC).

The NOC charge may range from 500 to 5000 AED.

Fees for arranging bank loans

5% in CAT Valuation Fees plus 1% of the Loan Amount

2,500–3,500 AED plus 5% VAT.

Insurance Fees

Dubai does not require homeowners insurance, but it is advised. Protection against probable loss or damage from theft, accidents and fires natural disasters is provided through home and contents insurance.

In the UAE, obtaining a mortgage requires life insurance. You should include life insurance premium payments in your budget as a recurring expense of mortgaged house ownership. Most banks charge it on a monthly basis, independent of the loan. Banks typically charge 0.4% to 0.8% interest per year on the declining mortgage debt some banks may demand that the policy be fully paid for the year.

Insurance is always advised, even though it is not required. The home will be shielded from harm from accidents, fires, theft, etc. by the insurance. Life insurance is required if you decide to finance your property purchase with a mortgage.

According to the table, the approximate annual insurance costs are as follows:

Property Insurance

Around AED 1,000 per year

Life assurance

0.4–0.8% of the loan’s declining balance.

In the United Arab Emirates life insurance is required when taking out a mortgage. The cost of a life insurance policy ranges from 0.4% to 0.8% of the declining loan balance annually. Some banks will charge the life insurance premium on a monthly basis, while others will demand full payment once a year.

The buyer must put down a deposit to secure the deal in both primary and secondary market transactions. The initial deposit is typically 10% of the purchase price, payable by check to the seller, for the acquisition of ready real estate on the secondary market. The authorized agent (a broker who has registered with RERA) is in charge of collecting this sum and keeping it secure until the property is successfully transferred. Once more, if there is an active mortgage registered against the property, the buyer must pay it off before applying for a No Objection Certificate (NOC) and obtaining the Title Deed.

Security Deposits

A security deposit must be paid by the buyer to hold the purchase agreement in place until the property is transferred. 10% of the total selling price is the initial security deposit. A broker who has registered with RERA collects the money. When estimating the cost of home ownership in Dubai, property owners should also take service fees into account. The homeowners are responsible for paying these ongoing costs for the maintenance and upkeep of residential structures or communities.

In Dubai, the service costs for purchasing apartments or villas are calculated based on square footage. Therefore, purchasers who purchase a larger house may expect to pay more to own a home in Dubai. Here is a useful guide for service charges in Dubai so you can understand how these fees are broken down.

Maintenance and service charges

There are additional yearly maintenance costs known as service charges after the property is transferred. The fees are paid to maintain the building’s shared amenities, such as the elevator and swimming pool. The Dubai Land Department is charged with receiving these fees. The maintenance fee is calculated per square foot using the RERA service and maintenance index.

Along from the upfront fees, property owners should factor in service charges when calculating the cost of house ownership in Dubai. These are recurring fees which must be paid by the homeowners for the maintenance and upkeep of residential buildings or communities.

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