The process of buying a house or property in general can seem particularly daunting for first timers. No matter where in the world you are, there are certain legal aspects attached to buying real estate that you need to look out for. The same applies in Dubai. So what are the legal steps to buying a property in Dubai? Let’s take a look.
THE LAW FOR BUYING PROPERTY IN DUBAI
The legal aspects of how to buy property in Dubai are regulated by the Real Estate Law No. 7 of 2006: Land Registration Law in the Emirate.
Article (4) of Law No. 7 of 2006 outlines who can buy and own property in Dubai. According to the law, you can buy real estate anywhere in Dubai if you are:
- A UAE citizen
- A GCC citizen
Under the same law, foreigners have the option to buy properties on freehold or leasehold ownership in Dubai, but only in the areas designated for foreign property ownership.
LEGAL STEPS TO BUYING A PROPERTY IN DUBAI
Whether you’re looking for the perfect home or a lucrative real estate investment, the process of buying a property in Dubai, is reasonably straightforward and streamlined.
There are four basic legal steps of buying property in Dubai. In the next section we chronologically breakdown the legal aspects you need to be aware of when making a real estate purchase on cash:
1. ESTABLISHING A BUYER AND SELLER AGREEMENT
Once you’ve found the right property on Bayut or any other property portal, the first step is to negotiate and outline the terms of the sale with the seller.
The ability to negotiate is perhaps the biggest advantage you have when comparing buying property on cash vs mortgage. Use it to your advantage. You can do it on your own, but it’s probably best to enlist the expert help of a real estate agent.
When agreeing to the terms of sale, make sure there are no ambiguities between you and the seller over the selling price, mode of payment, and any other considerations that are important to you.
2. SIGNING THE AGREEMENT OF SALE
The second legal step of buying property in Dubai, is signing the sale agreement, also known as Memorandum of Understanding (MOU).
The MOU is normally called Form F – one of the RERA real estate forms in Dubai. Form/Contract F is available on official website of Dubai Land Department. Normally, the real estate agent will take care of getting the contract ready for you.
Once the contract is ready, both the buyer and the seller have to sign it, in front of a witness (usually the agent) at the Registration Trustee office.
The buyer also needs to pay a standard 10% security deposit on the property to the Registration Trustee, which is returned once the property transfer is finalised.
3. APPLYING FOR A NO OBJECTION CERTIFICATE (NOC)
Next up, you and the seller, along with the real estate agent, need to meet at the developer’s office (for example, Dubai Properties, Emaar or other property developers in Dubai).
The objective of this meeting is to apply and pay for a No Objection Certificate (NOC) to transfer the ownership.
The developer will issue the NOC for a fee after ascertaining that there are no outstanding service charges on the property.
4. EFFECTING THE TRANSFER OF OWNERSHIP WITH DUBAI LAND DEPARTMENT
Once you’ve obtained the NOC, the last legal step of buying a property in Dubai is meeting the seller at the Dubai Land Department office to effect the transfer.
For the property transfer to take effect, you must have the following documents ready with you before visiting the DLD office:
- A manager’s cheque for the property price payable to the seller
- The original identification documents of buyer and seller (Emirates ID, passport and visa)
- The original NOC issued by the developer
- Signed Contract F (MOU)
After the formalities are completed, a new title deed will be issued in your name and you will officially become a property owner in Dubai.
FREQUENTLY ASKED QUESTIONS
HOW LONG DO THE LEGAL STEPS OF BUYING PROPERTY IN DUBAI USUALLY TAKE?
The process of buying a house in Dubai can take anywhere between two to ten weeks. The process usually takes longer if the property is already mortgaged or being purchased on mortgage.
WHAT ARE THE ADMIN COSTS INVOLVED IN BUYING PROPERTY IN DUBAI?
The admin costs of buying property in Dubai comprise:
- Dubai Land Department fees – 4% of the property value
- Fees for issuing the Title Deed – AED 520
- Admin fees to be paid to DLD – AED 4,200
- Agent’s fee of 2% of the property value
- NOC charges starting from AED and can go up to AED 5,000
WHAT IF I AM BUYING PROPERTY ON MORTGAGE?
If you’re buying property on mortgage, the legal steps will slightly vary. You need to get a pre-approval on mortgage before you sign the sale agreement. An approval on the mortgage from the DLD is also required before you can apply for the NOC.
WHAT IF THE SELLER HAS AN EXISTING MORTGAGE ON THE PROPERTY?
When the owner is selling a mortgaged property in Dubai, the transaction becomes slightly complicated. In this case, the buyer must settle the original mortgage on the property in full before applying for the NOC. The situation is riskier for the buyer and entails a few more legal steps to buy property in Dubai.
CAN NON-RESIDENT FOREIGNERS BUY PROPERTIES IN DUBAI?
Yes, the emirate’s law allows for non-resident foreign property ownership in Dubai given certain conditions.
Both resident and non-resident foreigners can only buy properties in the designated freehold areas in Dubai. Some of the prominent freehold districts in Dubai include:
- Arabian Ranches
- Palm Jumeirah
- Dubai Marina
- Downtown Dubai
Besides the designated areas, there are other rules for foreign property ownership in the UAE that must be adhered to.
So, there you have it – four simple sequential legal steps to buy property in Dubai.
Obviously, the process varies when you go out to purchase a commercial property or are buying off-plan properties in Dubai. Either way, real estate investment is a huge financial commitment and it pays to weigh the pros and cons of buying property in Dubai, before taking the plunge.