Buying a house or any other property can be daunting for first-timers. No matter where you are, you must be aware of legal considerations linked to investing in real estate. The same applies in Dubai. Want to know how to buy a property in Dubai? Here’s an overview of the legal procedures that must be followed as per the city’s real estate laws.
THE LAW FOR BUYING PROPERTY IN DUBAI
The legal aspects of buying properties for sale in Dubai are regulated by Real Estate Law No. 7 of 2006: Land Registration Law.
Article (4) of Law No. 7 of 2006 outlines who can buy and own property in Dubai. According to the law, you can purchase real estate anywhere in Dubai if you are:
- A UAE citizen
- A GCC citizen
Under the same law, foreigners can also buy properties only in areas designated for foreign property ownership. There are different types of property ownership for foreigners in Dubai, including freehold and leasehold. Buyer rights are the basic difference between freehold and leasehold property ownership in Dubai.
When you buy a house on a leasehold basis, you will have property rights for a set period of time. However, when you buy a property on a freehold basis, you will have complete ownership of the property and the land on which it is built.
LEGAL STEPS TO BUYING A PROPERTY IN DUBAI
Whether you’re looking for the perfect home to live in or a lucrative real estate investment, buying a property in Dubai is relatively straightforward.
There are four primary legal steps for buying property in Dubai. In the next section, we chronologically break down the legal aspects you need to know to answer how to buy a property in Dubai.
1. FORMULATING A CONTRACT BETWEEN THE BUYER AND THE SELLER
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 sale with the seller.
When purchasing property in Dubai and the UAE, you have two options: pay cash or apply for a mortgage. The ability to negotiate is perhaps the biggest benefit when you buy a property on cash vs mortgage. Cash buyers have a better idea of their budget, so they can barter for a lower price.
You can complete this stage without the assistance of a real estate agent or a lawyer. Any reputable Dubai real estate agency or legal compliance firm should handle the rest.
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 or any other important factors.
2. SIGNING THE AGREEMENT OF SALE
The second legal step in buying property in Dubai is signing the sale agreement, also known as the Memorandum of Understanding (MOU).
The MOU or Form F in Dubai is one of the RERA real estate forms. Form/Contract F is available on the official website of the Dubai Land Department. Usually, the real estate agent will get the contract ready for you.
Once the contract is ready, the buyer and seller must sign it before a witness (usually the agent) at the Registration Trustee’s 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. APPLICATION FOR A NO OBJECTION CERTIFICATE
The buyer, seller and real estate agent need to meet at the developer’s office (for example, Dubai Properties, Emaar Properties, Nakheel Properties or other leading 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 only if there are no outstanding service charges on the property.
4. EFFECTING THE OWNERSHIP TRANSFER WITH DLD
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 for the transfer to become effective.
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 the buyer and seller (Emirates ID, passport)
- 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?
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 purchased on the 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 + AED 430 for land or AED 40 for off-plan or AED 580 admin fee for apartments and offices
- Property Registration Fee
- Properties value below AED 500,000: AED 2,000 +5% VAT
- Properties value above AED 500,000: AED 4,000 + 5% VAT
- Fees for issuing the Title Deed – AED 250
- Agent’s fee of 2% of the property value
WHAT IF I AM BUYING PROPERTY ON A MORTGAGE?
The legal steps will vary slightly if you’re buying property on a mortgage. You need to get pre-approval on a mortgage before signing the sale agreement. Approval on the mortgage from the DLD is also required before applying for the NOC.
Extra fees include the Bank Mortgage Arrangement fee, which is 1% of the loaned amount. Moreover, there is a Property Valuation fee between AED 2,500 to 3,500 + 5% VAT.
You can read our comprehensive list of FAQs on Mortgage to get all your questions answered.
WHAT IF THE SELLER HAS AN EXISTING MORTGAGE ON THE PROPERTY?
The transaction becomes slightly complicated if the owner is selling a mortgaged property in Dubai. 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.
CAN NON-RESIDENT FOREIGNERS BUY PROPERTIES IN DUBAI?
The emirate’s law allows for non-resident foreign property ownership in Dubai, given certain conditions.
Residents and non-resident foreigners can only buy properties in the designated freehold areas in Dubai. Some prominent freehold districts in Dubai include:
- Arabian Ranches
- Palm Jumeirah
- Dubai Marina
- Downtown Dubai
Besides the conditions mentioned above, other rules for foreign property ownership in the UAE must be adhered to.
So, you have four simple sequential legal steps to buy property in Dubai.
The process varies when you purchase a commercial property or buy 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.
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