• 28 October 2024
• Business Setup

The Real Cost of Buying Property in Dubai

Dubai has established itself as a premier destination for property investment, characterized by luxury, economic expansion, and lifestyle benefits. However, prospective buyers should be aware that the costs associated with purchasing property in Dubai extend beyond the initial sale price. It is crucial for potential homeowners to comprehend these additional expenses to create an accurate budget. At Bizvise, we facilitate this process by providing guidance on the requirements for property acquisition in Dubai, including necessary licenses and regulatory compliance, enabling you to make well-informed and confident decisions.

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Understanding the Costs of Home Acquisition

For those interested in purchasing property in Dubai, expenses can be categorized into initial costs and ongoing financial commitments. Below, we outline the key categories and fees that contribute to the overall cost of acquiring a property in Dubai, along with obtaining your home license.

1. Costs Associated with Mortgages

Down Payment

When securing a home loan in Dubai, the down payment typically amounts to a minimum of 20% of the property's value, with higher percentages applicable for non-residents. Careful financial planning is vital, as this represents one of the most significant single expenditures in the property buying process.

Bank Mortgage Processing Fee

This one-time fee is charged by banks to process your mortgage application. Generally, it is around 0.5% of the loan amount plus a 5% VAT. Working with Bizvise, we can assist you in negotiating these rates to optimize your budget.

Property Valuation Fee

Banks also require an independent valuation of the property, which costs between AED 2,500 and AED 3,500 plus VAT. Bizvise provides expert advice to ensure you’re fully aware of each cost associated with your mortgage.

Mortgage Payments

Monthly payments for the loan depend on the interest rate, loan term, and down payment. For a AED 1 million home, monthly payments can range from AED 4,200 or more depending on the mortgage terms.

2. Government Fees

Fees paid to the Dubai Land Department (DLD) are critical for legal compliance when purchasing property. These are fixed by the government, so it’s best to budget for them early.

DLD Transfer Fee

At 4% of the property’s purchase price, this fee secures the transfer of ownership. Additionally, there’s a small AED 580 fee to process the documentation.

DLD Property Registration Fee

A flat AED 4,000 plus 5% VAT applies to all properties, making sure your property is registered legally with the DLD.

DLD Mortgage Registration Fee

For those using a mortgage, an additional 0.25% of the loan amount is payable to the DLD along with an AED 290 processing fee.

Oqood Certificate Fee (For Off-Plan Properties)

If you're purchasing off-plan, the Oqood Certificate registers the property under the buyer's name. This certificate costs AED 5,250.

3. Service Fees Security Deposit

For secondary market properties, a 10% security deposit on the purchase price is common. This deposit is held by a licensed real estate agent until the transaction completes, offering both parties security.

Agency Fee

Real estate agencies typically charge a 2% fee of the property's purchase price, along with 5% VAT. Bizvise connects you with trusted agents to ensure you get fair pricing and reliable service.

Conveyance Fee

Hiring a conveyancer ensures compliance with UAE legal requirements. The cost ranges from AED 6,000 to AED 10,000, depending on the property and services included.

4. Ongoing Maintenance Costs

Once you own a property in Dubai, ongoing maintenance is essential for preserving value and managing day-to-day living expenses.

Maintenance Fee

Maintenance fees are calculated per square foot and vary depending on the building or community. Bizvise helps our clients understand and budget for these maintenance costs by offering insights into the specific fees applicable to their selected property.

DEWA, Gas, AC, and Internet

The Dubai Electricity and Water Authority (DEWA) manages utilities, and monthly fees vary based on usage. Additional fees for gas, AC, and internet depend on providers and specific property needs.

5. Insurance

To protect your investment, insurance is strongly recommended and, in some cases, required.

Life Insurance

Required for mortgage buyers, life insurance rates typically range between 0.4% and 0.8% annually of the remaining loan amount. It protects the buyer's family by covering the mortgage in the event of unforeseen circumstances.

Property Insurance

Though not mandatory, property insurance safeguards against damage and unexpected repairs. Bizvise works with various insurance providers to ensure you receive comprehensive coverage options to protect your home.

Upfront vs. Ongoing Costs: Essential Budget Planning

For an AED 1 million property, upfront fees alone can add up to approximately AED 281,000. This total includes mortgage fees, government fees, and agency service costs. Understanding these costs early will ensure smoother financial planning and stress-free budgeting as you progress through your home purchase.

How Bizvise Can Support You

Bizvise, we provide expertise in:

Home Licensing & Regulatory Compliance

We guide you through every necessary regulatory step, ensuring compliance with DLD and other agencies.

Property Financing & Mortgage Support

Bizvise has partnerships with reputable lenders and offers resources to find a mortgage plan that suits your needs and budget.

Agency and Conveyance Services

We facilitate connections with licensed agents and conveyancers to ensure your home-buying experience is as smooth as possible.

Insurance Planning

Safeguard your investment by utilizing our network of reputable insurance providers.

Conclusion

Acquiring property in Dubai entails more than merely negotiating a sale price; it necessitates meticulous budgeting for initial fees and ongoing expenses. Bizvise offers comprehensive support to guarantee that every facet of your journey, from the preliminary search to obtaining your home license, is managed with expert guidance and meticulous attention to detail. With Bizvise, you can be assured that all costs and fees are thoroughly accounted for, allowing you to concentrate on discovering and enjoying your ideal home in Dubai.

For those prepared to start their home-buying journey, Bizvise provides tailored assistance to ensure a hassle-free experience. Contact us today to commence your journey toward property ownership in Dubai with assurance and clarity.