These days, the Dubai real estate market has become more affordable compared to the past few decades, thanks to several government schemes and the presence of a diverse range of properties at different price points. As a result, potential homebuyers from across the globe flock to Dubai to make their dream a reality.
However, some of these homebuyers often forget there are costs in addition to the cost of the property they are going to buy. And as a whole, this can lead to a significant amount of money. No matter if you are searching for apartments, townhouses, or villas for sale in Dubai, be sure to consider the following additional costs in advance.
Fees Payable to the Dubai Land Department
Irrespective of the type of property you buy, you must register the purchase with the DLD within 60 days of completing the transaction. If you fail to do this, your purchase will not be considered valid. This fee is 4% of the total property value. Although this should be divided equally between the seller and the buyer, the latter generally pays the entire amount.
Additionally, as the buyer, you will have to pay the property registration fee. If your property costs below 500,000 AED, you will need to pay 2,000 AED + 5% VAT. And if the property costs more than 500,000, you will need to pay 4,000 AED + 5% VAT.
If you have taken out a mortgage to make the purchase, you will have to pay 0.25% of your total loan amount to the Dubai Land Department to register it against the property.
Mortgage Fees
If you are taking out a mortgage to complete the property purchase, you will need to pay 1% of your loan amount + 5% VAT as bank mortgage arrangement fees. You will also have to pay anything between 2,500 AED and 3,500 AED + 5% VAT toward property evaluation fees. You will need to pay all these amounts to your bank.
It is important to understand that if the seller of your property still has a registered mortgage, first, you will need to repay that to receive a NOC, which will be required to process your property transfer with the DLD.
Agency Fees
With an abundance of townhouses, apartments, and , it has become crucial to hire a reputable real estate agency like fäm Properties to find the right property quickly. From valuable insights into the property that you are going to buy to information about the developer you are purchasing from, an experienced real estate agency will greatly help you in making an informed decision.
However, using the services of a real estate agency will essentially increase your property buying cost. This is because these agencies generally charge 2% of the total property value plus VAT.
Initial Deposit
When it comes to real estate markets, you will find that there are two types: primary and secondary. The primary real estate market comprises residential units or commercial units that are being sold for the first time. This often includes ongoing projects and new launches. The secondary real estate market comprises previously-owned houses and secondary properties.
No matter if you are going to buy the property in the primary or secondary market, you will need to pay an initial deposit to secure your purchase. If you will buy a ready property in the secondary market, most likely you will have to pay an initial deposit of 10% of your purchase price. You will need to pay this amount to the seller of the property.
Service Fees
Once you become the owner of a property, you must consider an additional cost, which is the annual maintenance charge on your property. You will need to pay this amount to the DLD. These charges are calculated based on the “Service Charge and Maintenance Index” of RERA (Real Estate Regulatory Authority). A particular charge per square foot is determined by this index and the charge varies from one community to another.
Insurance Fees
While purchasing home insurance is not mandatory in Dubai, it is strongly recommended. By purchasing a standard home insurance, you should get protection from accidents, fires, theft, potential loss, and natural disasters. To opt for a standard insurance plan, you should be prepared to pay at least AED 200 a year.
Parting Thoughts
When you consider all the things mentioned above, the total often comes out as a significant amount. From all these things, you can only eliminate agency fees and insurance fees. But not taking the help of an experienced real estate agency and not opting for home insurance may turn out to be disastrous.
Ideally, you should set aside a sufficient amount of money to deal with all these expenses efficiently. And you should start your planning much before you start searching for your property in Dubai.
Once you become the owner of a property, you must consider an additional cost, which is the.
