Frequently Asked Questions
FAQ
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a) Liberalisation of the real estate sector – expats can now own property
b) High tax-free yields on freehold property rental
c) Globalisation and its effects on property prices in metropolitan cities worldwide
d) Favourable interest rate environment
e) Mortgages & homeowner finance available
f) Granting of “permanent” residency upon purchase of freehold properties
g) Great Value – Real estate land & apartment valuations are cheap compared to international prices
h) Conducive lifestyle: safe, tax haven, secondary and tertiary home for international buyers
i) Dubai’s robust economic growth p.a.(GDP)
j) Dubai’s robust population growth p.a.
k) Large mid-income population bracket with high disposable income
l) Dubai is the regional entrepôt & tourism center
m) UAE is an open, welcoming & tolerant state with investor-friendly business policies
Freehold property is any estate which is “free from hold” of any entity besides the owner. Hence, the owner of such a property enjoys free ownership for perpetuity and can use the property for any purposes however in accordance with the local regulations.
The owner of a freehold title of real estate enjoys the most superior form of private property ownership. A freeholder is considered to be the absolute owner of the land and buildings comprised in his title; he has the right to occupy, use and enjoy his property forever (“in perpetuity”) or until he transfers the title to a new owner, and his heirs are entitled to inherit his title upon his death.
Real Estate Regulatory Agency (RERA) is the regulatory arm of DLD that regulates the real estate sector in Dubai. It handles the relationship between all contracting parties and organizes the properties’ exchange process.
Dubai Land Department – DLD is a government agency that provides necessary legislation, organisation, and services for any real estate transactions in Dubai.
Oqood, which loosely translates to ‘contracts’ in Arabic, is an online service provided to the developers by Emirates Real Estate Solutions (ERES), with an aim of easing the registration process for property buyers and developers.
Makani number a unique 10 digit number that enables to locate building or any other property. The number is given to each building and every location. It helps all residents and tourists to search, and locate places desired destinations by navigational devices.
There is also an application developed by the Dubai Municipality. Dubai is the first city in the world to use these unique numbers to exactly locate building’s entrance(s).
DEWA is short for Dubai Electricity and Water Authority that handles water and electricity supply in Dubai. It provides citizens and residents with a continuous and reliable electricity and water supply.
Freehold means outright ownership of the property. While leasehold, it means the holding of property by lease for a period of more than 10 years up to 99 years and can’t be purchased outright.
The UAE has scrapped the need to have UAE nationals as sponsors, thus allowing expatriate investors 100% ownership with effect from December 1, 2020. The move is in line with a federal law issued by President His Highness Sheikh Khalifa Bin Zayed Ali Nahyan and which amends Law No. 2 of 2015 on companies in the UAE.
Yes, any nationality can own freehold property in designated freehold areas in Dubai and an heir can inherit it.
Typically, the prospective Buyer and Seller enter into an MOU, wherein the buyer commits to purchase the property and the seller commits to sell the property. In a purchase transaction, the buyer pays an initial booking deposit (of not more than AED 10% for villas and apartments) to the seller.
If the buyer withdraws from the transaction, the buyer forfeits his booking deposit. If the seller withdraws from the transaction, the seller refunds the booking deposit amount. The buyer pays the balance considered to the seller upon transfer of the property to the buyer.
**a) Can a property purchaser sell his property? **
Most developers allow property owners to re-sell their property; however, some have restrictions on the amount the owner must have paid the developer before re-sale. Developers usually charge owners a transfer fee of 1% to 2% of the value of original list price of the property in order to allow the transfer to a new buyer.
**b) How is a transfer made? **
In order to allow the transfer to a new buyer, developers usually require a property owner to sign a transfer letter with the new buyer at the developer’s office. Developers then usually proceed to issue a new property contract with the new buyer.
** c) Does a property purchaser have to be in Dubai to get property transferred?**
No, a power of attorney can be appointed to someone in Dubai who may engage in the transfer formalities (the PoA must to be notarized and authenticated by the UAE Embassy in the property owner’s country of residence).
**d) Is a power of attorney sufficient for the all transactions to be made including transfer? **
Yes, to purchase a property, a notarized POA is sufficient. To sell a property, a notarized POA + authentication by the UAE Embassy is sufficient.
A transfer fee is payable if you transfer your property to someone else. It is an administrative charge levied by the land department and is set at 4% of the total value of the property.
If all the documents required for registration are available, it takes an average of 30 minutes to register a sale
Service charges, AC and sinking fund is charged per sq. ft. with rates starting from AED 2 per sq. ft. and could to AED 75 per sq. ft depending on the type and location of the property. As for parking, it is paid yearly per bay/slot and starts from around AED 1,000.
Most studios and one-bedroom units are the same size. Some units have balconies and some do not. Sometimes the ones located on the corners of the building are slightly bigger. Retail shops on the ground floor vary in size and are priced accordingly.
Studios – Size approximately 480 Sq. ft.
One Bedroom – Size approximately 716 Sq. ft.
Shops – Size varies, upwards and downwards of approximately 500 Sq. ft.
The top developers in Dubai are Emaar Properties, Aziz Developments, Damac Properties, Dubai properties, Nakeel Properties, MAG Property Development, Danube Properties, Wasl Asset Management, Sobha Group, and Aldar Properties.
a) If the seller wants to sell his property what are the charges normally charged by sales agents?
Between 1% to 2% of the property value.
b) What is the transfer fee if between family members?
Same amount as above.
c) Do the property purchaser and seller need to be in Dubai at the same time to transfer a property?
No, as long as the power of attorneys are properly notarized and appointed.
d) After a sale, how long is the residence visa is valid for?
Normally between 30 to a max of 45 days after the property is sold to the new property purchaser, after which it is cancelled.
Yes, the real estates can be sold or presented in the auction with the approval of the landlords or their legal proxies under a valid and duly certified power of attorney (its issuance date shall not exceed two years).
The court’s award is sufficient if the auction is in execution of a judgment issued in a lawsuit. In case of a minor, a NOC of the sale must be issued by the competent authority (Awqaf and Minors Affairs Foundation).
In case of selling a real estate off plan (on a map), the DLD must be provided with a NOC of the sale issued by the competent authority (the developer).
It can if it is registered within the specified areas for foreign ownership with obtaining license for Jafza, Jebel Ali Free Zone.
What are the required documents?
Original Title Deed
Evaluation certificate from Land Department
No objection certificate (NOC) from Developer
The owner has to attend in person or POA (Power of Attorney translated in Arabic and attested).
Passport copies (Visa page, Emirates ID).
Marriage certificate (for gifting to wife or husband) or Birth certificate (for gifting to children). All these documents should be translated in Arabic and attested from the Ministry of Foreign Affairs.
Land Department Fees:
0.125% from evaluation value (it should be not less than AED 2,000).
AED 560 (if apartment, villa) + AEd 410 (if land)
Registration Trustee Fees:
AED 4,000 + AED 200 (5% VAT) if the price of the property is equal to more than AED 2 million.
AED 2,000 + AED 100 (5% VAT) if the price of the property is less than AED 2 million.
Yes, any person who owns a property in his name can gift full ownership to his company as long he’s the owner of the company, by paying a very small fee of (0.125%). Example, if a property costs AED 10 million, then all is needed is AED 12,500 to be paid.
Depending on the type of the real estate required and the categories of applicants, applications are received as follows:
To apply for residential land (for UEA citizens only), the application is submitted to Mohammed Bin Rashid Housing Establishment.
To apply for investment land, the application is submitted at Dubai Real Estate Corporation (DREC).
There will be a fine if you’re unable to pay service charges, the developer will not allow you to use the amenities.
But now due to covid-19, RERA waived all service charges fines. Dubai offer homeowners relief by waiving off fines on non-payment of service charges for 2019-20.
The land ownership title in case of separation / the land ownership titles in case of attachment.
Maps of lands or the approved master plan with a letter issued by the planning authority.
In case the land is within freehold projects or long term rental, the developer should submit the application through the developer portal.
If the land is within the old areas of Dubai (non-freehold areas), the application must be submitted through the Real Estate Services Trustees or the customer happiness department.
All real estate legislations in the Emirate of Dubai stress the necessity of registering all real estate transactions including ownership, transfer or change with or without consideration in order to guarantee the rights of investors. All dispositions on real estates that are not registered in the registers of the DLD are invalid.
The DLD registers the real estate of foreigners and others through a letter approved by Dubai Courts, which determines the inheritance procedures according to the laws in force in the UAE.
Any power of attorney issued outside the UAE must be formally ratified to be accepted for completing the actions or transactions at the DLD, through ratifying the same by the notary public and the Ministry of Foreign Affairs in the country of origin, as well as the UAE Embassy in the country of origin, and finally the Ministry of Foreign Affairs of the UAE.
The legal proxy may, under a duly legalized and regulated power of attorney, dispose of the client’s real estates within the limits of the power of attorney granted to it as stated in the power of attorney. The validity of the power of attorney including the purposes of dispositions such as sale, mortgage and gift shall be for two years and in case of purchase, it shall be for five years from the date of notarization at the notary public.
The law does not require any age to own a real estate in the Emirate of Dubai. However, in case a person is desirous to sell, donate or mortgage a real estate owned by a minor, in a whole or in part, a judgment awarded by the competent judge approving the sale of the real estate / share of the minor issued from the Awqaf and Minors’ Affairs Foundation for the citizens holding a registration extract (Khulasat Qayed) from the Emirate of Dubai and from the competent court for the rest of the categories shall be submitted.
In case of purchase of a real estate for a minor (less than 21 years), the legal guardian will sign the contract on behalf of the minor.
Even though in the last few years, the government has allocated some projects within a few non-freehold areas as freeholds, these areas are, in general, considered as non-freehold.
- Abu Hail
- Al Awir
- Al Baraha
- Al Buteen
- Al Daghaya
- Al Ehibab
- Al Garhoud
- Al Mamzar
- Al Muhaisna – Fourth
- Al Muraqqabat
- Al Murar
- Al Muteena
- Al Nahdah
- Al Qusais
- Al Ras
- Al Rigga
- Al Sabkha
- Al Tawar
- Al Waheda
- Al Warga-BLD
- Ayal Nasir
- Hor Al Anz
- Hor Al Anz-East
- Mirdif
- Naif
- Port Saeed
- Rigga Al Buteen
- Mirdif (Shorooq Mirdif Project)
- Mirdif (Ghoroob Mirdif Project)
- AL Kheeran
- Mirdif (Up Town Mirdif Project)
- Ras Al Khor (Samari Project)
- Al Ghurair Centre
- Al Mamzar Centre
- Abu Hail
- Al Baraha
- Al Khawaneej
- Al Mamzar
- Al Mezhar
- Al Muhaisna
- Al Muteena
- Al Qusais
- Al Rashidya
- Al Tawar
- Al Waheda
- Al Warga
- Hor Al Anz
- Mirdif – Complexes
- Mirdif – Individual
- Nad Al Hamar
- Nad Shamma
- Warsan 2
- Mirdif (Shorooq Mirdif Project)
- (Complexes) Al Garhoud
- (Individual) Al Garhoud
- Dubai Creek Club
- Oud Al Muteena
- Al Badaa
- Al Barsha
- Al Hamriya
- Al Hudaiba
- Al Jaddaf
- Al Jafeliah
- Al Karama
- Al Mankhool
- Al Qouz
- Al Refaa
- Al Sofouh
- Al Souq Al Kabeer
- Al Wasl
- Jumeirah
- Madinat Dubai Al Melaheyah
- Oud Metha
- Satwa
- Trade Center 1
- Trade Center 2
- Umm Hurair
- Umm Suqeim
- Al Qouz (Alkhail Gate Project )
- Al Safa
- Dar Al Wasl
- Al Badaa
- Al Barsha – Individual
- Al Barsha – complexes
- Al Hudaiba
- Al Jafeliah
- Al Manara – Complexes
- Al Manara – Individual
- Al Mankhool
- Al Quoz Residential
- Al Safa – Complexes
- Al Safa – Individual
- Al Sofouh
- Al Wasl
- Jumeirah – Complexes
- Jumeirah – Individual
- Satwa
- Um Al Sheif
- Umm Suqeim – Complexes
- Umm Suqeim – Individual
- Emirates Golf Club
- Nad Al Shiba
- The Galleria
- Al Muntazah Complex – Jebel Ali
For Individual, tenant should have a valid passport and Residence Visa copy (Original copies of these documents should be shown by the tenant to the Property Broker).
For Corporate Tenant, a valid Trade License, General Manager’s Passport Copy(if he is signing the the Agreement) and valid passport of the Occupant.
a) After completion, what is the estimated average annual rental for units?
Studios: typically range from AED 28,000 to AED 35,000
One Bedrooms: typically range from AED 35,000 to AED 60,000
Shops: varies but typically range from AED 50,000 to AED 80,000
Property owners can expect rental yields of 6% to 10% p.a. on the value of their property. The rental agents’ charges to manage the property on behalf of the owner are approx. 10% to 12% of the annual rental amount.
The above mentioned are indications and may vary depending on the location and quality of the project.
b) What does the rental agent charge for property care, repair and maintenance?
The rental agent’s charges for care, repair and maintenance are usually actual costs + a 30% markup. The charges are borne by the property owner.
c) Is the rental market robust?
Yes it may be beneficial to read the Gulf News’ (leading UAE daily newspaper) articles on rentals and market trends.
The landlord can only raise your rent in accordance with the RERA calculation, and any increase must be communicated to you 90 days in advance. The RERA calculator determines a rental cap for each location. If your rent is less than this amount, your landlord is allowed to raise it to the RERA rate.
Tenants have the right to claim compensation from their landlord if they were evicted from the property because the landlord desires to sell the property or use it for personal purposes, including renting it to another tenant.
Any Tenant disputing the eviction order of a Landlord whether selling, personal use and in times where the Tenant discovers that the Landlord evicted them in order to rent the property to another Tenant gives tenants the ability to to claim for compensation and prove the damage caused to them. In the end the decision will be made by a judge who will decide on such cases and investigate the damage caused.
A break clause can be found in several contracts. You’re usually expected to give notice within a certain amount of time. You’ll also face a penalty of a number of months’ rent, which will be pre-agreed in your contract.
It is conditional on the cause. There will be a clause in your contract that says the landlord is responsible for maintenance exceeding AED 500 for general wear and tear. However, if there is any damage, you will be held liable.
If the tenant fails to pay the rent, or part thereof, within 30 days from the date of serving a written notice by the landlord to him to that effect; unless all concerned parties have agreed otherwise. If the tenant subleases the property without the landlord’s written approval. If the tenant uses, or allows others to utilize, the property for immoral or illegal activities. If the tenant causes or allows others to cause damage or changes to the property that endanger the safety of the property. If the tenant uses the property for purposes other than the ones for which it was leased. If the tenant fails to comply with any of the terms of the tenancy contract or the Law within 30 days from date of notice served by the landlord to him to abide by such obligations or conditions. If the property is in danger of collapse. If development requirements in the Emirate require demolition and reconstruction of the property, in accordance with government authorities’ instructions. For commercial properties, a landlord may demand eviction, if the tenant has closed business operations for 30 consecutive or 90 consecutive days without giving any valid reasons. In all of the above cases, the landlord has to notify the tenant through the Notary Public or by registered mail.
In the first case, you should speak with your Landlord. If they refuse to pay, you may be able to take legal action against them. To begin, dial 600 555 556 for the Dubai Rental Disputes Settlement Centre.
According to the Real Estate Regulatory Agency, a landlord must provide a 90-day notice in regards to any changes to the rent contract. Renters can legally refuse a rental increase if the landlord does not provide a notice of 90 days. When reaching an agreement with the landlord on the rental increase, carefully review the contract for any changes the landlord might have made.
If the rent of the property is AED 100,000 or less, than the property management fee is AED 5,000. On the contrary, if it’s greater than AED 100,000 then the property management fee is 5% of the rent.
Rent Increase Calculator is available in the website of Land Department, it will provide you the current market price and the percentage of increase that can be applied in the Annual Rent of the property. You can go to this link: http://www.dubailand.gov.ae/english/Tanzeem/Rentals/Rental_Increase_Calculator.aspx
Yes, the Law clearly states that the Rent’s Committee shall not consider any claims unless the lease is registered with Ejari.
Yes, a tenant can use a third party cheque provided they will be submitting a Letter of Indemnity from the Third Party and a passport or Trade License if it is a Company Cheque
Security Deposit 5% of the Annual Rent paid by the tenant in advance and held in reserve in the event of the depositor failing on a contractual obligation to protect the Landlord in a real estate lease. It covers Loss of Rent, Damage to the Property, Lost of Security Keys and Repairs that are not wear and tear.
No, the Landlord has no right to disconnect any utility service in the Property
Yes, a Tenant can terminate the contract, provided the Tenant will notify the Landlord two (2) months in advance and will be paying two (2) months rent as cancellation from the day of vacating the property and all the utility bills should be settled.
The Tenant has to pay the agreed Annual Rent depending on how many cheques both parties agreed with, the Security Deposit, the Commission of the broker, deposit for DEWA and Empower(if applicable) and Ejari Registration.
Yes, all customers will be required to obtain Ejari for DEWA since July 1st, 2017.
Once the required documents are successfully transmitted, it takes 1-2 days only for the Ejariapplication to process online.
It’s free of charge. Ejari is a system that is governed by RERA to make registration of rental / lease agreements easy and accessible to Owners and Real Estate Management Companies of various categories.
Usually the tenant or the real estate agent completes and takes care of the process and associated fees.In order to get an Ejari. You can visit one of the70 typing centers or you can register your tenancy contract online, with all the required documents neededto successfully register for Ejari.
Required documents to initiate Ejari registration include: 1. Copy of the title deed, 2. Copy of the tenancy contract, 3. Copy of the landlord’s passport, 4. Copy of the tenant’s passport and visa page. RERA charges per registration of tenancy contract is AED 160.00. Once the documents are submitted and the payment is made, registration will usually be completed at the same time.
A property before a structure has been constructed upon it; Under construction property.
The buyer of a freehold property in Dubai only needs to provide a copy of his passport papers to purchase a property in the primary market, i.e., directly from a developer. A company purchasing a property must provide the developer the company’s registration documents (Articles of Incorporation, Registration Certificate, POA of the person signing on behalf of the company, and Board of Directors Resolution).
Either entity, i.e., a person or a company, needs only to sign a property reservation contract with the developer to purchase a property. On handover of the property to the property purchaser, the property purchaser will have to register his property at the Govt. of Dubai Lands Dept. to obtain a title deed.
The property purchaser would be responsible for paying the fees to the Govt. of Dubai Lands Dept. to obtain a title deed (this normally amounts to 2% of the property value). The property value must be fully paid up so as to obtain a Title Deed from the Govt. of Dubai Lands Dept.
Buying an off plan property means you commit to purchasing a property either before or during the construction phase. It has significant advantages:
Plan and save money – It allows investors to get a purchase at the earliest and lowest possible price and buyers to pick the very best apartments in a specific development. In return, there’s a high chance of gaining the maximum return on their investment.
Sell before the completion date – Investors can sell off their off-plan property contracts prior to the completion of the projects and at a considerable profit (assuming the market is well-performed and proved popular.
Lower up Front Costs – Off plan property payment plans can and do vary from different types of developers in Dubai. Some of the developers only require a 10% down payment and the rest linked to constructions the required expenditure is relatively low.
The first step is to contact the developer and find out how much must be paid off of the property in order to obtain a sale No Objection Certificate (NOC). The exact percentage or figure is usually somewhere around 30-40% but will vary for different developers in Dubai.
The new homebuyer pays the seller an equal amount to what they’ve paid off to the developer (+/- any difference agreed on). Then the new buyer will take over the existing payment plan of the off plan property and pay all future due installments directly to the developer.
The emirate’s RERA has introduced numerous measures that needs to be met by developers to make sure the off plan project is completed. Of those measure, the developer must own 100% of the land belonging to the project. Additionally, they must either deposit 20% in escrow account, make a down payment of 20% as bank guarantee, or at least 20% construction completion before selling the off plan property. The regulatory arm of Dubai Land Department than requests contractors to submit a 10% performance guarantee.
It’s crucial that buyers do through research and advise looking the developer’s track record as well as reputation. Make sure the developer, project and project’s Escrow account are all registered in the Dubai Land Department’s Real Estate Regulatory Arm (RERA).
Investors can sell off their off plan property contracts prior to a project’s completion and so it varies from developer to developer. For example, before being able to sell it to a new owner, Dubai’s top developer Emaar Properties requires owners or investors to have 40% of their off plan property paid off. However, the 40% figure does depend from developer to developer, so it’s essential to check with the developer.
Buyers and seller must come to agreement with price and terms, sign contracts and apply for No Objection Certificate (NOC) where the new buyer is registered with the developer. Once transfer is complete, the new buyer will ultimately take over all the outstanding payments.
It’s important to point out that the new buyer is responsible for the 4% DLD Transfer Fee although it been paid by the first buyer.
The potential risks when purchasing an off plan property are:
Delayed Completion Time – There are usually delayed handovers of off plan properties and there are have been cases of projects being completed after scheduled completion dates. In this case, it’s highly advisable and important to do research on the project developer and look into their track record, Make certain any signed sale agreement ensures you are compensated for any unexpected or unscheduled delays.
Change in Market Conditions – The real estate market fluctuates all the time. If there’s a downward move in property prices, the property can be worth less than what the buyer has actually paid. It can affect off plan properties more as it may be harder to liquidate than ready-to-move-in properties.
Yes, in UAE, your sponsored members of the family will get a driving license. However, because they are under your responsibility, they will need a NOC from you.
The primary real estate market consists of new properties, which include new launches and ongoing projects from the developer.
Founded in 1960, Dubai Land Department (DLD) was established in order to safeguard the property rights in Dubai and is considered agovernment entity that provides a comprehensive range of real estate services. It handles all matters of legalization for purchase and sale of land, and is responsible for registration, organization and promotion of real-estate investment in the city.
While resident expatriates can generally borrow between 70% and 80%, non-residents can generally borrow 60% to 70%. It all depends on the lender, and the project they are lending on.
Firstly, lenders do not lend on every project currently being built. Often, developments are sold with no lendings at all (given the favourable payment structure system in Dubai and not meaning they aren’t saleable). On the other hand, it is possible to get a mortgage on an off-plan property here, unlike most places in the world.
Yes. Amlak, Tamweel, HSBC, Lloyds, Mashreq Bank, RAK Bank, National Bank of Dubai, United National Bank, Abu Dhabi Commercial Bank and Standard Chartered Bank, to name a few, lend on both ready-to-occupy and off-plan projects. Each one has different rates and terms. Some only lend to residents. You can also get mortgages internationally for property in Dubai. HSBC in the UK currently lends an asset-based mortgage.
It is usually based on your monthly income, less expenses, and then divided to three parts. This gives the figure used to calculate from, for each month over the term. They do not base it on how well the asset might perform, nor does it allow low loan-to-value (i.e. large down-payment with a small loan). This makes it limited. Even if you are earning a seriously good wage, do not assume that a bank will lend you substantial sums.
a) Is homeowner (mortgaging) financing available on freehold properties?
Yes, Home financing is available on all Nakheel real estate projects from Nakheel’s home finance subsidiary, Tamweel, and on Emaar projects from Emaar’s home finance subsidiary, Amlak. Mashreq Bank also offers mortgages. RAKBank offers mortgages only once the project is completed. A range of other banks and finance institutions are starting to offer mortgages as well. Lending criteria varies at each institution. As of yet, no financing institution is offering mortgages on freehold developments of any private developers.
b) How do I get finance?
Each financial institution has a checklist of loan criteria. The property purchaser will have to fulfill the financial institution’s loan criteria and provide the necessary documentation which includes but is not limited to: Copy of passport(s) for property purchaser(s), Bank Statement(s) of property purchaser(s) for 1 year, Credit History – Credit Bureau report (EQUIFAX, D&B etc.), bankers reference, credit card report.
c) When does the financial institution start charging interest? It depends on the bank. In most cases, interest is accrued during the construction period and the property purchaser will have to pay/clear this amount on handover of the unit. Then the property purchaser will have to repay principal and interest installments for the tenure of the loan.
d) What will be the APR or Interest Rate? What is the compounding method?
Depending on the bank between 5.5% to 6.5% p.a. payable on a declining principal balance. It may be monthly or quarterly.
e) What are the mortgage tenures?
Between 5 to 15 years depending on the financial institution.
f) Do banks or financial institutions send the statement every period to our overseas address?
Yes, which could be monthly or quarterly.
g) Who should we make the payment out to?
Payments should be made out to the name of the property seller for down-payment amounts or to the financial institution for loan repayments.
h) Is a mortgage registered at the Govt. of Dubai Lands Dept.?
Yes, when the property purchaser’s financing becomes a realty mortgage, it will be registered on each property at the Govt. of Dubai Lands Dept. Mortgage Section.
Yes. This is preferable. Most lenders will work out how much they are likely to lend to you before you have a specific property in mind. This means you can then go looking for something you know you can afford.
The early settlement fee was set at 3 per cent in June 2018. But now the Central Bank of the UAE directed local banks to reduce the early settlement fee on mortgages to a maximum of 1 per cent or Dh10,000, whichever is less, to those borrowers who want to exit their mortgages early.
The maximum loan during construction period is 50% and off-plan properties are typically cheaper than ready properties. When you pay 50% of the purchase price, it is preapproved at the application time and is guaranteed to be paid off at completion, regardless of the individual’s financial situation.
After paying 50% for an off-plan property, you can take 25% to 30% cash out. If the property during construction has increased in value, you can borrow 75% to 80% of the property value and withdraw more cash out. This process requires property revaluation and mortgage reapplication. However, if you’re content with the numbers and you’d like to receive cash at a low mortgage rate, it’s also another option. It is recommended to choose a plan that you’re comfortable and committed with and will give you the freedom to save up or explore other investments when the property is completed.
The real estate projects can be mortgaged to obtain a loan from banks or legally approved finance companies, provided that the value of the mortgage is deposited in the project’s escrow account to ensure that the deposited amounts are disposed of according to the law. The bank and the developer are committed to ensure that the purchasers fulfilled their contractual obligations towards the developer receive the ownership Certificates upon completion of the real estate project.
A mortgage may be transferred from one financer to another provided that a NOC is obtained from the mortgagee bank.
In accordance with the laws and regulations in force in the Emirate of Dubai, any real estate or real estate unit may be mortgaged as debt security, subject to the following conditions:
1.Such real estates must be registered at the DLD. 2.The mortgaged real estate or mortgaged real estate unit must be established and existing insurance mortgage in real or as per a judgment on the map at the time of the mortgage. 3.The insurance mortgage may be made only on a real estate or real estate unit on which it is valid to transact.
The mortgage includes the annexes of the real estate or the real estate unit mortgaged including the buildings, plants and allocated real estate and all the developments following entering into the mortgage contract.
Banks in the United Arab Emirates require security cheque because they are used in cases where the borrower fails to repay the mortgage. In this case, the bank will present the cheque, and if the cheque is cancelled, the bank will initiate legal procedures to take possession of the property to pay the outstanding debts.
This is not much different from other countries where banks can sign contracts to recover the property owed by customers for mortgage loans.
A security cheque is a guarantee required by any bank in the United Arab Emirates when issuing any type of loan (including credit card, personal or car loan or mortgage).
The bank requires you to send an undated cheque that can at least cover the full amount of the loan.
a) What are payment schedules and on-going installments? What is the currency of payment?
There are 4 payment installments methods – Payment Schedules (A, B, C, D) and there is a discount applicable for paying more upfront i.e. Payment Schedule A: Reservation Fee = 10% plus further installments Payment Schedule B: Reservation Fee = 30% plus further installments Payment Schedule C: Reservation Fee = 50% plus further installments Payment Schedule D: 100% paid on reservation. All payments to the building owner must be made in AED (UAE Dirhams). 1 USD = 3.68 AED (fixed rate). The AED fluctuates against the GBP. As on the date of this report the AED 5.56 = 1 GBP.
b) What form of payment is accepted?
Wire Transfer / Bankers Draft / Money Order / Credit Card (at a later date)
c) Does the building owner issue a receipt for every payment paid?
Yes.
d) Does the building owner send a statement of account to the property purchaser every month?
No, a receipt is sent only when an installment is received.
e) Is there a penalty for late payments?
Yes, if the property purchaser delays a payment, he is charged late payment interest at the rate of LIBOR + 4% (LIBOR is defined as Emirates Interbank Offer Rate which can be looked up in the Financial Times). If the property purchaser delays the payment of 3 installments, the seller reserves the right to cancel the sale and up to 30% of the unit’s value may be forfeited. f) Who should the payments be made to? If the property purchaser purchases the unit without financing, then the payment is made in AED via bankers draft or telex transfer to the building owner and NOT to its agents unless specifically authorized in writing by the building owner.
Developers reserve the right to cancel the property reservation agreement and re-possess the title of the property in case of default from the property purchaser. In such a case, the property purchaser typically stands to lose the instalments paid already and 30% of the property value.
If the property purchaser delays his installment payment beyond a grace period of normally 30 days from the date when the payment is due, they are usually charged interest at the rate of approximately 6%, and the developer typically reserves his right to cancel the contract.
Waiver of Dubai Land Department (DLD) registration fees is a common offer available from developers. DLD Fee is a 4% of property purchase price, plus an AED 580 admin fee. So DLD Waiver means that buyer will not have pay this fee, instead the developer will pay. Sometimes the developers offer anywere from 50% to 100% off on DLD fees, which means the buyer has to pay the rest of the fees, if required.
Typically, developers delay the staggered payment schedule if a property is not completed on time.
Yes, you can sell off plan property before the completion date in Dubai.
Eligibility :
- Minimum 5 million (fully paid, not mortgaged) worth property (more than one property also will accept) under the applicant name . 2.Person must be inside UAE
Steps of Procedure :
- Medical fitness test . 2.Hold the family visa / Cancel the family visa . 3.Cancel the visa for the applicant. 4.Visa Stamping (For 5 Years) . 5.Emirates ID (For 5 Years). 6.Un hold visa for family .
Requirements : 1.Title deed . 2.Passport . 3.Old Emirates ID . 4.Photograph . 5.Health insurance .
Fees :
- Medical (VIP) – 753 AED .
- EID (5 Years) – 572.50 AED .
- New (5 Years) visa – 888.75 AED .
- Management Fees – 100 AED .
Total – 2314.25 AED File Opening for Dependent Visa – AED 318.75 Note: The fees doesn’t include health insurance
You can get a two-year visa when you purchase a property in Dubai that is:
- Completed and handed over to you.
- Worth a minimum value of one million dirhams.
Note 1: This one million does not include the closing cost. You can read about the closing cost and other fees of buying a property in Dubai by contacting us.
Note 2:
If you decide to get a visa after few months from buying the property, then the purchase price will not be considered. You should conduct a property valuation, and the result of this valuation should be AED 1,000,000 or more to be eligible to get the visa. The valuation considers few factors e.g, the value of the last 10 sales transactions within last 3 years, the current market property listing prices, the condition of the property, and others… With the new long-term visa, for investors who invest in property value of AED 5 million or more, a 5-year visa is granted. The renewable 10 year-long visa is for investors setting up start-ups, businesses or branches of their companies of valued AED 10 million or more as long as non-real estate investments are not less than 60% of the total investment. It also applies to spouses and children, with conditions. The UAE announced a new law that provides a 5-year residency visa for retired expatriates with the possibility of renewal for those who wish to stay longer. Expatriates over 55 years of age are eligible if they have an investment in a property worth AED 2 million, have a minimum of AED 1M in savings, and an active income of at least AED 20,000 per month.
a) Can all family members get a UAE residence visa: i.e. Father, Mother, Father, and children under 18 and unmarried daughters?
Yes. Expatriate employees or employers can obtain a residency visa There are three ways they can change their status from an entry permit holder to a resident visa holder: official employment, company registration, and real estate acquisition.
Once they have a valid residency permit, male residents can sponsor his spouse and children (under 18 years of age) and any unmarried daughters above the age of 18 years.
Expatriate employers are issued residency visa for three years, while expatriate employees are issued residency visa for 1 to 2 years, depending on their labor contract.
The UAE cabinet granted long-term visas to certain expatriates such as entrepreneurs, specialized talents and researchers in the knowledge and science field, and outstanding students, with some conditions.
b) Who issues the residence visa and is it guaranteed?
The Government of Dubai issues it and it is guaranteed as long as the property purchaser owns the property, clears all security and medical tests, and is not rejected by the Ministry of Labor and Social Affairs.
c) If the property purchaser is not living in Dubai but plans to in the future, what will be the procedure to obtain a residence visa?
The type of residency visa you’re entitled to depends on the value of the purchased property. Once the property purchaser buys a property, he/she is automatically entitled to obtain a residence visa.
Applying for residency visa can be done either on the website of Federal Authority for Identity and Citizenship (ICA), which is the eChannel for citizenship and residency, or the General Directorate of Residency and Foreigners Affairs (GDRFA), which works under the UAE ministry.
d) If the property purchaser is not living in Dubai can they get a visa in a different person’s name such as their employees or other family members etc.?
No, only the principal property purchaser gets a residence visa but may sponsor his/her dependents.
You are eligible for UAE investor visa as long as your total investment is AED 1,000,000 or above in one of maximum three properties.
You are eligible for property visa against your Dubai property as long as the purchase value is AED 1M or above and you have paid off 50% mortgage
Eligibility :
- Minimum 2 million (fully paid, not mortgaged) worth property (more than one property also will accept) under the applicant name .
- The applicant must be 55 years old and above.
- Person must be inside UAE .
Steps of Procedure : 1.Medical fitness test . 2.Hold the family visa / Cancel the family visa . 3.Cancel the visa for the applicant. 4.Visa Stamping (For 5 Years) . 5.Emirates ID (For 5 Years). 6.Un hold visa for family .
Requirements : 1.Title deed . 2.Passport . 3.Old Emirates ID . 4.Photograph . 5.Health insurance .
Fees : 1.Medical (VIP) – 753 AED . 2.EID (5 Years) – 572.50 AED . 3.New (5 Years) visa – 888.75 AED . 4.Management Fees – 100 AED .
Total – 2314.25 AED File Opening for Dependent Visa – AED 318.75 Note: The fees doesn’t include health insurance
Yes, in UAE, your sponsored members of the family will get a driving license. However, because they are under your responsibility, they will need a NOC from you.
Recent amendments now allow real estate investors to obtain the highly sought-after Golden Residence Visa when purchasing a property that is worth no less than AED 2 million.
As per these new amendments, investors are also entitled to obtain this long-term visa when purchasing a property with a loan from specific local banks. Investors can also get the residence when buying one or more off-plan properties of no less than AED 2 million from approved local real estate companies.
This long-term, 10-year residency is granted to investors, entrepreneurs, exceptional talents, scientists and professionals, outstanding students and graduates, humanitarian pioneers, and frontline heroes.
Recent amendments also allow the Golden Visa holders to sponsor their family members including spouses and children of any age. They can also sponsor any number of support services (domestic help). Family members are allowed to stay in the UAE in the event of the death of the Golden Visa holder.
Commercial real estate will be subject to the five percent value added tax (VAT). This also applies to non-resident owners and tenants.
Whether leased out or sold, any commercial property such as offices, retail and even car parking is taxable, in the UAE. If it’s part of a residential property, then there’s no tax.
There is no special tax regime in the U.A.E. That means expats in Dubai can also benefit from the area’s policy of not taxing individuals. There’s no property tax on homes, as well as no income or inheritance tax.
Overall, residential properties are largely exempted from VAT unless you buy a hotel apartment from the developer for the first time e.g., if you buy in Rove Citywalk from Emaar, then you should pay 5% VAT.
Also, VAT does not apply to the 4% Dubai Land Department registration fees, but VAT does apply to the broker commission and to the trustee office fees.
No, you don’t have to pay tax if you are a resident abroad. You only pay if the Dubai property is designed for living in, such as your own home, and student and employee accommodation. Then it is considered residential and exempt for VAT purposes. However, 5% VAT applies to commercial properties.
Rent on residential properties is exempt from VAT. If its leased out on a short-term basis to non-residents, then it falls under the commercial category.
If the occupant has no Emirates ID and is leasing less than six months, then it would be deemed commercial from a VAT perspective.
Hotel apartments are under the category of commercial property.
Off plan property sales developers collect the 5% VAT on property price from the buyer and the same will be paid to Federal Tax Authority (FTA) on the buyer’s behalf.
Secondary market deals are 5% VAT applicable upon purchasing the property and payment receipts issued by FTA must be submitted to trustee’s office upon property transfer.