Dubai real estate is a great option for long-term investment. This is why it is in great demand across the world. Although the Arab housing market experienced a major shock during the global economic crisis caused by the coronavirus pandemic, the situation is now gradually improving. This can be seen in the statistics from the analytical service Property Monitor. According to the source, in September 2019, 1,066 ready-made housing units were sold in Dubai, in 2020 - 1,732 units, and in 2021 - 1,051 units. The real estate market is recovering, attracting more and more foreign investors. We will tell you about how to buy Arab housing properly and profitably.
Table of contents
- How can a foreigner purchase real estate in the UAE
- The procedure for registering real estate in the UAE
- Property tax in the UAE for foreigners
- Is it possible to conduct a real estate transaction remotely?
- Emirates.Estate will assist you to purchase the best apartment in the UAE!
The process for any foreigner to purchase residential and/or commercial properties in the United Arab Emirates includes:
- The signing of a purchase and sale agreement.
- Transferring a deposit of 10% to 50% of the total value of the property to the seller. This depens on who the transaction is concluded with, whether it is finished property or off-plan, or if the mortgage is used.
- Signing a contract between the buyer and the developer for the maintenance of their property.
- Registering the property deal and transferring ownership rights.
- First, the buyer and the seller sign an agreement, a sample, which is established by the Dubai Land Department. The annex to the agreement can include additional terms of the transaction. Also, at this stage of the process, the assistance of an official broker may be needed. Especially since the broker will take into account all the finer details of the transaction and stipulate them in the agreement.
- Next, the buyer transfers the deposit (as rule it is a cheque issued in the name of the seller) to the seller. The advance payment usually ranges from 10% to 50% of the property value. This cheque must be kept by a third party, which is often a broker. So if the transaction is completed successfully, then the buyer is refunded the deposit. Alternatively, if the buyer refuses to purchase the property, the deposit remains with the seller.
- After making a deposit, the seller asks the developer for a No Objection Certificate (NOC) authorizing the transaction. This document is the certificate and states that the seller paid for the electricity, gas, water, and other services. Also, when issuing this certificate, both the seller and the buyer are present. Furthermore, the buyer can also conclude a new contract in their name together with the developer for housing maintenance.
- After the certificate is issued, the registration procedure usually takes place (in the office with the developer, or remotely via the RERA application), which must be attended by both parties or their legal representatives. The buyer and seller pay a registration fee of 4% of the cost of the property and provide the necessary documents for verification to the Dubai Land Department. Now, the buyer officially receives the title deed and keys to their very own property.
Real estate tax for foreigners in the UAE when purchasing a property includes the following mandatory payments:
- Registration fees paid by the seller and the buyer.
- Stamp duty when issuing a certificate of ownership (paid for by the property buyer).
- Fees for the agency services, which are paid for either by the seller only or by both parties, depending on which type of property is being sold.
- Federal property sales tax (for the seller).
The registration fee, which has been 4% of the total property value since 2013, is paid for at the Dubai Land Department when signing the sales contract. This fee can be split between the buyer and seller. What’s more, the fee can also be paid in full by the buyer alone, depending on what the parties have written in the agreement.
Often, it is only the buyer who is responsible for paying the registration fee. However, sometimes construction companies do charge extra for this fee. For instance, when the property buyer pays only part of the fee.
Also, the registration fee is a one-time payment of AED 2,000 ($545), to register a property with a value of not more than AED 500,000 and AED 4,000 ($1,090) for options with higher prices.
In addition, there is also a fee of $70 ($257) involved for issuing a document confirming the legality of the property’s ownership. This document which is actually a certificate is issued by the local court. Usually, within a period of three days after the new owner submits a request.
The cost of the services of licensed real estate agents and brokers, whose presence is mandatory when signing the purchase agreement, is usually 2% of the total transaction amount if the buyer purchases a newly built property. Usually, the seller pays this service fee to the realtor. Similarly, if it is a resale property, then both the buyer and the seller pay the real estate agent's fee.
Alternatively, if the buyer obtains a mortgage loan to purchase a property, then they are obliged to pay a commission in the amount of 1% of the total loan. In this case, the registration fee will be calculated differently. It will then amount to 0.25% of the loan amount and also AED 290 ($79).
Federal tax is levied on both the sale and lease of commercial premises in the UAE; all other types of real estate transactions are not subject to this fee.
Yes, it is possible that the best solution would be to find a trustee who can represent you in the transaction. The power of attorney must be drawn up and notarized, after which the representative will conclude the transaction for you.
Start searching for a home in the UAE right now! Emirates.Estate has collected the best properties for sale in the United Arab Emirates! We are happy to help you choose a place to live and we are also ready to provide legal assistance in preparing documents. Purchasing an apartment in the UAE with our help is always safe and reliable!