1. WHAT IS THE DIFFERENCE BETWEEN LIST PRICE, SALES PRICE AND APPRAISED VALUE?
List Price: The list price is the asking price of the property; this is negotiable.
Sale Price – The sale price is what the owner will settle at.
Appraised Value – The real estate agent is able to provide a comparative market analysis to give the buyer a sound idea of what is sold and at what rate, and what is available in the market for a comparable property. The list price is at the discretion of the Seller.
2. WHO PAYS THE REGISTRATION COST OF TITLE DEED?
The registration cost of Title Deed should be shared between the buyer and the seller, but in practice today, it is paid by the buyer. Standard fees are 2% and are paid by both parties, subject to negotiation between the parties.
3. DO I NEED A PROPERTY INSPECTION?
It is recommended that you get the property inspected. However, in the case of freehold property, if the property is newly built, and it falls under the guarantee of the contractor for structural defects. Maintenance is guaranteed for up to 1 year of the development. It is then up to the owner to ensure that he/she has a preventive maintenance contract on the property.
4. WHAT KIND OF HOME INSURANCE SHOULD I GET?
This is advisable when taking a mortgage on a property. There are a lot of insurance companies in the market that provide customized packages.
5. WHAT IS THE BEST TIME TO BUY?
The best time to buy a property is when the supply of real estate exceeds demand, so that the price and value of the property become attractive to a buyer, hence the term a ‘Buyer’s Market’.
6. DO I HAVE TO PAY TAXES?
In addition to lawyers’ fees and fees that must be paid to the developer or the real estate agent, there may be land registration fees and maintenance fees. For new–build developments, expatriates can expect to pay roughly 2% on land registration fees. The maintenance fee is set by the Owner's Association.
7. IN ADDITION TO THE MORTGAGE PAYMENT, WHAT OTHER COSTS DO I NEED TO CONSIDER?
a. Seller’s Fees
1. OWNING A PROPERTY IN THE UAE AS A FOREIGNER
In order to purchase property in the UAE, you must be over 21 years of age. If you satisfy this requirement, the first step is to make an offer. A formal sales contract is drafted and agreed upon between the parties; a deposit is made; the buyer obtains financing, if needed; the seller ensures that the property is not encumbered by anything that goes against what has been stipulated; final payment is made by way of a bank draft or cash in the land department, and the title deed is transferred to the new owner. There are several charges that may apply, for example, clearance of a mortgage, a new mortgage, an administration fee, so always be sure to have extra cash in case of unforeseen circumstances.
There are different sets of protocols depending on whether you purchase a completed property from a developer where you are the first time buyer, whether you purchase property that is not constructed from a developer, called an “off–plan” purchase, or if you purchase property from a private seller, called a “resale purchase”. If the purchase is from a developer, there is a payment plan in place, and at times, a mortgage/finance in place.
If the buyer is obtaining financing, the seller will often require that an expatriate be “pre–approved for home financing” before signing the sales contract.
2. WHAT IS A “FREEHOLD” PROPERTY?
The purchase of property on a freehold basis means that the property is registered in the owner’s name by way of a Title Deed registered in the Dubai Land Department. The owner has the right to sell, lease or rent his/her property at his/her discretion.
Areas for freehold properties are designated areas for expatriates, whereas non- freehold property is property limited to UAE Nationals and GCC Nationals.
A 2 year residency visa is granted for properties above AED 1,000,000.
3. DOCUMENTS REQUIRED FOR PURCHASING A PROPERTY
A valid passport.
4. PURCHASING “OFF–PLAN” PROPERTY IN DUBAI
The most important initial step is to ensure the project has been registered with RERA and that the developer has obtained the registration documents and escrow account registration from the relevant authorities. When purchasing property directly from a developer that is not constructed – an “off–plan” purchase – expatriates will need to submit a completed reservation form with a copy of their passport. The reservation form typically summarizes the basic terms and conditions of the sales agreement, the details of the payment plan, and the buyer and the seller’s personal details.
If purchasing property that has yet to be completed from a developer, ensure that the purchase agreement includes the completion date and the compensation awarded if the property is not completed by that time period. Furthermore, if the property is to be furnished, ensure the details of the furniture package are attached with the sales agreement. To complete the process of buying property in Dubai, you must transfer the deeds. This is done at the developer’s office if the property has yet to be completed or at the Land Department offices in Deira if the property is already registered.
The Title Deed is issued in two originals, one is held with the bank until the mortgage has been settled, the second original is held in the land department. A copy is retained with the Buyer. When the mortgage is paid in full, a letter of release and an NOC is given by the Bank and the original is given to the buyer
An NOC (non objection certificate) must be obtained from the developer in order to process the Title Deed in the land department. The NOC states that the developer has no objection that the property be transferred, and if there are any liabilities against the apartment, the developer will advise.
5. PURCHASING “RESALE” PROPERTY IN DUBAI
If purchasing from a private seller – a “resale” purchase – the buyer and seller will need to agree on the terms and conditions via a Sale and Purchase Agreement. This document also details the date of the final transfer of funds from the buyer to the seller. It is not binding.
The buyer then puts down a deposit, usually in the amount of 10% of the property price or alternatively, whatever amount has been negotiated. This amount is often non-refundable unless for some reason the seller is no longer able to convey the property to the buyer. It is also necessary to pay the real estate agent’s commission at this time. The Sale & Purchase Agreement is drawn up by the Buyers Agent, the 10% is made payable in the name of the Seller. The SPA covers the price, the terms of the purchase, and the broker’s commission.
6. WHAT IS RERA?
RERA – Real Estate Regulatory Authority which is part of the Dubai Land Department is a government agency which licenses real estate agents, brokers and developers and regulates all real estate activities in Dubai.
Although there are interesting developments across the UAE from Abu Dhabi to Ras Al Khaimah, more than 95 per cent of market activity is concentrated in the Dubai market. Each emirate has its own legal and judicial systems, Land Registry departments, and rules and regulations as to who can buy, and on what basis.
You need to get professional advice from a real estate broker, a finance broker or from the developer when considering a purchase. Whilst there is a federal law underpinning real estate transaction in the UAE, practically, at present, it has been left to the discretion of the individual emirate to decide upon its own framework and proposition to the market.
7. HOW TO CHOOSE A BROKER
When looking for agents to work with in the UAE or your home country, ask for the company’s registration number with RERA. It is also useful to ask about the company’s area(s) of expertise and range of services.
8. ARE ALL AGENTS, SALES REPRESENTATIVES AND CONSULTANTS REQUIRED TO HAVE QUALIFICATIONS AND BE REGISTERED WITH RERA?
Yes. Every individual working under a brokerage firm and as a broker of property in Dubai requires individual registration with the authorities and is issued a photo identity card with a license number from RERA. They have to attend and pass the RERA real estate course and exam, and they will be provided with an annual RERA card which is renewable. Every agent must be registered under the umbrella of a real estate company.
9. DO ALL AGENTS AND SALES REPRESENTATIVES HAVE TO CARRY THEIR REGISTRATION CARD?
Yes. Agents and sale representatives should always carry their RERA card. It is their license to work and provide clients with their real estate needs. Agents and sales representatives registered with RERA are required to abide by the RERA code of ethics and the best business practices as set out by RERA. Dealing with an unlicensed agent is dangerous, and there is currently no protection against malpractice.
1. HOW DO I APPLY FOR A MORTGAGE?
Many of the institutions that offer mortgages also offer the option of “pre–approved financing”, which allows you to have your loan approved prior to choosing which property in Dubai you would like to purchase. This expedites the overall process and satisfies those sellers that require financing before agreeing to sign a Sale and Purchase Agreement. Validity of the pre-approval is usually 30 days with most banks.
Properties without title deeds may not obtain Mortgage. Such properties can be only brought by cash buyers on Oqood (Pre Registration title)
However each bank has its own policies and procedures with the respective developers.
2. CAN I RESELL MY PROPERTY IF I HAVE A MORTGAGE ON IT?
Yes. You can resell the property if you have a mortgage on the property. The mortgage must be paid off to the bank to obtain clearance. The terms and conditions will vary from bank to bank.
1. HOW DO I LIST MY PROPERTY FOR RENT?
To list you property with us, you need to fill in the listing form and submit the following documents to advertise your property and rent it out to prospective tenants:
1. WHAT PAPERWORK DO I NEED TO SELL MY PROPERTY?
Depending on the status of your property, either complete or incomplete, you will need the following documents: