How to buy property in the UAE: a detailed guide
What are the requirements for purchasing property in the UAE? Can one buy an apartment in Dubai without citizenship? How does one get a mortgage to buy an apartment in the country? The answers you need can be found in our in-depth guide.
Who can buy real estate in the UAE?
According to the law, foreign nationals can buy real estate in the UAE, but in some areas of the country they may face restrictions on the form of ownership of the object. Depending on the location, the property can be purchased either in full ownership or on lease.
Full ownership of real estate implies perpetual ownership of the structure and the land underneath it. Citizens of the Arab Emirates and the Gulf countries (Bahrain, Kuwait, Oman, Qatar, and Saudi Arabia) can count on this right anywhere in the Emirates. But other foreigners can buy real estate in full ownership only in special areas. These areas are located in the two largest emirates of the UAE: Abu Dhabi has nine investment zones, and Dubai has about 50 freehold zones.
Tenure only applies to the building, not the land under it.
There are three types of leasehold ownership:
- a 99-year leasehold, which grants virtually the same rights as full ownership;
- a usufruct for 99 years, which prohibits alterations and improvements;
- musataha for 50 years, which grants the right to alterations.
Leasehold tenure applies only to the building but not to the land on which it is located. This type of property is available only to citizens of Arab countries.
Buying real estate in the UAE by the steps
To buy a property in the UAE, you will need to present a passport, visa, and proof of address in the Emirate. If the buyer cannot personally attend the purchase, he must issue a power of attorney to his representative.
The procedure for buying a property in the UAE takes from 4 to 10 weeks. The actions of realtors in the country are strictly regulated by the Real Estate Regulatory Agency (RERA) and the Dubai Land Committee (DLD).
Stages of the transaction:
1. Select a property.
You can choose the object in the UAE, both online and in person. You have at your disposal apartments and villas, both ready for delivery, as well as those under construction.
2. Conclude a preliminary agreement with the seller.
It is signed in English or Arabic. The contract must specify the basic parameters: the address and size of the purchased object; the amount of the terms and conditions of the transaction; the distribution of mandatory associated costs; and, in the case of a new building, the date of completion of the object and the amount of possible compensation for failure to meet construction deadlines.
You don't have to notarize the preliminary contract, but it is advisable to have an experienced lawyer help you draw it up.
3. Sign the agreement of sale.
The buyer and seller sign a “Contract F,” which is a Memorandum of understanding (MoU) that the buyer and seller sign to close the sale. The term of the signed agreement is 30 days (in the case of secondary real estate).
Then the buyer makes an advance payment, most often 10% of the transaction amount. Settlement takes place through a secure escrow account.
4. Obtain a certificate of no objection (aka NOC).
The seller and the buyer apply for this certificate together in the office of the developer. This document confirms that the seller does not owe any debts to the developer. It may take up to five working days to process the information.
5. Register the right of ownership.
The transfer of ownership is processed by the Dubai Land Department (DLD). On that day, the department issues a check for payment, and the buyer pays the full amount of the transaction. After that, the buyer receives a Title Deed and officially becomes the owner of the property.
Important: If you buy a property under construction, the procedure is simpler — you do not need an NOC or contract F. You just need to sign the Initial Contract of Sale, which will be reissued when the construction is completed. The transaction is then recorded in the provisional registry. If the developer, for whatever reason, is unable to complete the construction, the Dubai Land Department must either find another contractor or refund the buyers the money that was deposited in the escrow accounts.
Additional expenses when buying real estate in the UAE
1. Property transfer tax.
He is equal to 4%. Usually, the seller and the buyer pay this amount together in equal proportions. Plus, to this amount will be added 430 dirhams ($117) for the land, or 40 dirhams ($10) for construction outside the plan, or 580 dirhams ($157) for an administrative fee on the tax (for apartments and offices).
2. Property Registration Fee.
If the property is under Dhs 500,000 (approximately $136,000) in the UAE, this fee will be Dhs 2000 ($545) plus 5% VAT.
If the property is worth more than Dhs 500,000, the fee will double to reach Dhs 4000 ($1090) plus 5% VAT.
3. Title Deed Issuance Fee.
The fee is 250 UAE dirhams ($68).
4. Agent's fee.
The amount of commission is 2% of the property value.
The average cost of real estate in the UAE
You can buy a 90-square-meter apartment in the UAE for between $165,000 and $220,000.
The price to rent a one-bedroom apartment in the UAE is about $950–$1500. It is possible to rent a two-bedroom apartment in the country for $1400–$2000.
Utility bills in the UAE are on average $167 (plus $98 for internet).
Read in our article how to buy property in the UAE for cryptocurrency.
Buying a home with a mortgage in the UAE
If you decide to buy property in the UAE with a mortgage, the legal steps will go in a slightly different order: you'll need to get pre-approved for a mortgage before signing a purchase agreement, and you'll also need mortgage approval from DLD before applying for a NOC.
Additional fees when applying for a mortgage in the United Arab Emirates include a mortgage origination fee of 1% of the loan amount, a property valuation fee of 2500 to 3500 UAE dirhams ($680-950), and 5% VAT.
It is important to choose a bank responsibly before lending. The institution must have a good reputation and maintain a transparent policy.
The down payment on a mortgage in the UAE can range from 15% to 50% depending on the amount of the loan.
The interest rate on a 20-year fixed-rate mortgage in the UAE is 3.47%.
On our website you can find the right real estate agency in the UAE or contact directly the agent.
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