How to buy a property in Dubai – A comprehensive guide
Are you wondering how to buy a property in Dubai? With its stunning skyline, luxurious lifestyle and lucrative investment opportunities, Dubai has become a hotspot for real estate investors. Whether you’re looking for a dream home or a profitable investment, this guide will provide all the information you need regarding the legal steps to buying a property in Dubai.
THE LAW FOR BUYING PROPERTY IN DUBAI
It’s essential to understand the legal requirements before committing to the purchase of a villa or an apartment for sale in Dubai.
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The main law governing property ownership in Dubai is Law No. 7 of 2006.
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
Are you curious about how to buy property in Dubai as an expat? Non-residents and foreign nationals can only buy property in areas designated for foreign property ownership. Article 3 of Regulation No. 3 of 2006 outlines that freehold property ownership is limited to specific areas.
Types of Property Ownership in Dubai
Dubai offers two primary types of property ownership: freehold and leasehold. Freehold ownership grants full ownership rights to the buyer, who can use, lease or sell the property without any restrictions. On the other hand, leasehold ownership allows the buyer to own the property for a specific period, usually up to 99 years.
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 (up to 99 years). However, when you buy a property on a freehold basis, you will have complete ownership of it and the land on which it is built.
When choosing between freehold and leasehold properties, consider your long-term goals, investment objectives and budget. Freehold properties provide greater flexibility and potential for capital appreciation, while leasehold properties may offer lower purchase prices and higher rental yields.
LEGAL STEPS TO BUYING A PROPERTY IN DUBAI
How to buy a property in Dubai is a relatively straightforward process whether you’re looking for the perfect home or a lucrative real estate investment.
Four primary legal steps exist in the process of buying a property in Dubai. In the next section, we chronologically break down the legal aspects you need to know to answer the question, ‘how to buy a property in Dubai?’
Before you proceed with the process, start your property search. Determine your budget and requirements. Consider factors such as property type, size, location and proximity to schools, hospitals, restaurants and transportation.
Working with a reputable real estate agent is crucial when buying property in Dubai. An agent can help you find suitable properties, negotiate prices and guide you through the legal and administrative processes.
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 and can push for a lower price.
You can complete this stage without the assistance of a real estate agent or a lawyer. 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.
Any reputable Dubai real estate agency or legal compliance firm should handle the rest.
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). This legal document outlines the terms and conditions of the sale, including the purchase price, payment schedule and other relevant details.
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 must also pay the Registration Trustee a standard 10% security deposit on the property, which is returned once the property transfer is finalised.
3. APPLICATION FOR A NO OBJECTION CERTIFICATE
The buyer, seller, and real estate agent must meet at the developer’s office (e.g., Dubai Properties, Emaar Properties or any 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. This certificate confirms that there are no outstanding service charges or other obligations on the property.
Remember, Form F and NOC are key documents for buying property in Dubai.
4. EFFECTING THE OWNERSHIP TRANSFER WITH DLD
Once you’ve obtained the NOC, ownership transfer is the last legal step of buying a property in Dubai.
You’ll need to visit the Dubai Land Department (DLD) to transfer property ownership. You’ll submit the necessary documents there, including valid identification, the sale agreement and proof of payment. Then, you’ll pay the transfer and registration fees as required by the DLD.
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 completing the transfer process, the DLD will issue a new title deed in your name as the new owner of the property. This document serves as legal proof of ownership and should be kept safe. You need to complete property ownership transfer for apartments and villas for sale in Dubai.
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FAQS ABOUT HOW TO BUY PROPERTY IN DUBAI
HOW LONG DO THE LEGAL STEPS OF BUYING PROPERTY IN DUBAI USUALLY TAKE?
The entire process of buying property in Dubai can take two to ten weeks. It 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 (read more on how to get a mortgage in Dubai). It would be best 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, 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?
If the owner sells 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. This situation is riskier for the buyer and entails more legal steps.
CAN FOREIGNERS BUY A PROPERTY IN DUBAI?
Given certain conditions, the emirate’s law allows non-resident foreign property ownership in Dubai.
Residents and non-resident foreigners can only buy properties in the designated freehold areas in Dubai. Some prominent freehold districts in Dubai include:
- Dubai Marina: Known for its waterfront apartments and luxury lifestyle.
- Palm Jumeirah: An iconic man-made island offering high-end villas and apartments.
- Downtown Dubai: Home to the Burj Khalifa and the Dubai Mall, with a mix of residential and commercial properties.
- Arabian Ranches: A family-friendly community with spacious villas and townhouses.
- Jumeirah Village Circle: A growing community with affordable apartments and townhouses.
Besides the conditions mentioned above, other rules for foreign property ownership in the UAE must be adhered to.
HOW TO BUY OFF-PLAN PROPERTY IN DUBAI?
You must secure the following steps to successfully off-plan property in Dubai:
- Determine your budget and desired property type
- Research developers and projects thoroughly
- Consult a specialised real estate agent and explore showrooms
- Secure a reservation with a deposit and sign the MoU
- Choose a flexible payment plan that suits your finances
- Complete the legal process by obtaining NOC, registering the property, and acquiring the title deed.
- Get pre-approved for a mortgage (if needed), stay informed about progress, conduct a final inspection and address any defects.
Like any other financial decision, you must consider the pros and cons of buying off-plan property in Dubai.
WHAT ARE THE MOST COMMON HOME-BUYING MISTAKES IN DUBAI?
Some common mistakes when buying a home are rushing into a deal, lack of research and skipping inspection.
So, you have four simple sequential legal steps to buy property in Dubai. According to the data, there have been over 98,000 sales transactions for apartments in Dubai in the past 12 months, indicating that the real estate market is continuing to grow steadily. Additionally, the sale transactions for villas in Dubai were recorded to be worth AED 112 billion over the last year, which shows that the investors have strong confidence in the market.
The process for buying off-plan properties in Dubai varies slightly. 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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