Real Estate in Dubai: Purchasing a Property and Related Expenses

Real Estate in Dubai: Purchasing a Property and Related Expenses

Anyone planning to buy a property in Dubai, should take into account the additional costs associated with the transaction when planning their budget. Real estate in Dubai is not taxed. Instead, there are dedicated fees in favor of the Dubai Land Department (DLD), as well as commissions.

Government agencies, real estate agents or developers, and mortgage lenders charge different fees. We will explain more about these below.

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Dubai Land Department Fees

To protect buyers and sellers, Dubai’s real estate market has introduced certain rules. They must be obeyed by everyone with no exceptions. One such rule is the mandatory fee payment. The amount depends on the type of property and the specific area.

The Land Department fees can be considered a one-time tax paid to the government of the emirate. The fee is 4% of the property value. In Dubai, the buyer and seller split the payment 50/50. Thus, each party pays 2%. When buying an under-construction property (off-plan property), developers most often offer buyers an exemption from paying this fee and pay it themselves as a pleasant bonus.

Along with the mandatory transaction registration fees, buyers are also required to pay a property registration fee. Its amount also depends on the property value. Buyers who use mortgage funds must also pay mortgage registration fees.

Below are all the fees that you would have to pay to DLD:

  • Dubai Land Department fee; 4% of property value, plus administration fees:
    • 580 AED (158$, 1 108 ¥) – for apartments in Dubai and office premises;
    • 430 AED (118$, 821¥) – for a land plot;
    • 40 AED (11$, 77¥) – for off-plan properties.
  • Registration fees for properties with a value of less than AED 500,000 (136,128$, 955,620¥) – 2000 AED (545$, 3822¥), plus 5% VAT;
  • Registration fees for properties with a value of more than AED 500,000 (136,128$, 955,620¥) – 4000 AED (1090 $, 7644 ¥), plus 5% VAT;
  • Mortgage registration fee for the Dubai Land Department– up to 0.25% of the mortgage amount, plus 290 AED (79$, 554¥).

Important! Payment of fees must be performed within 60 days. Otherwise, the purchase will be canceled. If you don't use a mortgage to buy a property, you don't have to pay the fee.

Real Estate in Dubai: Purchasing a Property and Related Expenses

Agency Fees

If you buy a property with the help of a real estate agent, you are expected to pay a fee for the agent’s work. An experienced agent will help buyers make an informed and sensible decision, as well as ensure that they go through all the stages of the purchase and sale transaction smoothly.

To ensure the legal accuracy and security of the transaction, buyers often involve the services of lawyers and translators. These experts ensure that your papers, documents, and contracts comply with UAE law.

The expenses can be split in the following way:

  • Agent fee – 2% of the property value, plus 5% VAT;
  • Lawyer’s fee – from approximately 6000 AED (1633$, 11,467¥) up to 10,000 AED (2722$, 19,112 ¥).

Insurance Deposit

To confirm the intention to purchase a property, the buyer must pay an insurance deposit. The deposit will be kept by a trustee (intermediary) until the property is fully transferred to the buyer. The initial security deposit will be up to 10% of the property value or more, depending on the property. The amount is usually collected by a registered RERA broker, the regulatory arm of the Land Department.

Mortgage Registration

Buyers purchasing property on credit are required to pay mortgage fees in accordance with mortgage rates. Mortgage fees are divided into mortgage processing fees, processing fees, and appraisal fees.

If you have a registered mortgage, then you need a NOC, a certificate of no objections. Mortgage registration fees in Dubai range from AED 500 ($136, ¥955) to AED 5,000 ($1,361, ¥9,556).

Basic fees when buying a property with a mortgage:

  • Mortgage processing fee – 1% of the bank mortgage amount, plus 5% VAT;
  • Property valuation fee – from AED 2500 (680$, 4778¥) up to AED 3500 (952$, 6689¥), plus 5% VAT.

Real Estate in Dubai: Purchasing a Property and Related Expenses

Insurance Premiums

Dubai has not yet introduced compulsory property insurance, but this kind of insurance is highly recommended for buyers of new-generation residential properties. Insurance provides optimal protection against potential damage. If the buyer purchases a property with a mortgage, they need to have life insurance. It will cover the bank's expenses in the event of an accident or sudden illness of the client.

Insurance premiums when buying a property in Dubai include:

  • Property insurance– approximately AED 1000 per year;
  • Life insurance – from approximately 0.4% to 0.8% of the mortgage amount per year.

Property Maintenance Fee

After the transfer of property ownership, the buyer automatically becomes the new owner. Next, the new owner will be required to pay an annual cost, also known as a maintenance fee. These fees are payments for the upkeep of the property and utilities. Fees are paid to the Dubai Land Department. The maintenance fee is based on the RERA Maintenance Index, per square foot of the real estate unit.

Electricity and Water Supply Fees

Another key expense in Dubai is the fees to DEWA, the governing body for electricity and water management in Dubai for all households. The range of DEWA fees depends on several factors, such as property type and the area where the development is located.

The cost of connecting DEWA services ranges from AED 2,000 ($545, ¥3,822) for an apartment to AED 4,000 ($1,090, ¥7,644) for a villa. The amount may vary depending on the size of the property.

Real Estate in Dubai: Purchasing a Property and Related Expenses

Receive the Support of Professionals When Buying Property in Dubai

Start your journey in the Dubai real estate market with Emirates.Estate! Our experts will select a property according to your request, organize the purchase of an apartment in a newly built development in Dubai, and also provide qualified after-sales service. Leave a request on our website using the feedback form or call the number for a consultation with the manager to receive an initial consultation.

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