Mastering real estate terms: A quick guide

• Regulatory Bodies
• Buying Property
• Property Ownership
• Legal and Financial Terms
• Common Terms
• Renting Property
• Getting a Mortgage
• Other Useful Terms
• FAQs

The impressive Dubai skyline matches the complexity of its real estate terminology. Sounds familiar? Well, the UAE’s market is filled with common real estate jargon that newbie buyers and sellers may be unfamiliar with, adding a layer of uncertainty to complex property dealings. Whether you want to invest in a home, get a mortgage or sign the deal for off-plan developments, we have come up with a list of common real estate terms to add to your growing professional vocabulary.

But why should you become familiar with real estate terms?

Understanding real estate key terms is crucial to making informed decisions in the Dubai property market. The Dubai Land Department (DLD), Real Estate Regulatory Agency (RERA), Ejari, and Oqood systems create a unique Real Estate Glossary UAE.

Dubai’s real estate scene features distinctive ownership structures that might puzzle first-time buyers. For example, freehold ownership gives complete legal rights of the land and property to buyers, while leasehold properties usually come with 99-year lease periods. The concepts of built-up area (BUA) and saleable area can greatly affect your property valuation and buying decisions.

Yes, Dubai’s real estate market presents great opportunities to investors and homeowners, with attractive rental yields. And a solid understanding of DLD real estate terms, regulations and other related laws puts you ahead in the game. Remember, even seasoned property buyers might struggle without this knowledge.

MyBayut breaks down the key real estate terms you should know before entering this exciting market. Let’s make Dubai’s property language crystal clear together!

Key Regulatory Bodies and Systems in Dubai Real Estate

Before we look into real estate definitions, Buyers and investors must understand the regulatory bodies that control Dubai’s property market.

Dubai Land Department (DLD)

The Dubai Land Department guides the city’s real estate narrative. DLD acts as the central authority that oversees all property activities in Dubai and provides secure transaction execution. The department documents property transactions, issues ownership documents and helps facilitate investments.

Real Estate Regulatory Agency (RERA)

RERA serves as DLD’s regulatory arm. This agency creates policies and plans that boost foreign investments in Dubai’s property sector. The agency’s duties cover licencing real estate agencies, regulating developer trust accounts, supervising owners’ associations and monitoring property advertisements.

You will find several important RERA forms for property buyers, including Form A (listing agent-seller agreement), Form B (buyer-agent agreement) and Form F (buyer-seller agreement).

Rental Disputes Centre (RDC)

The RDC offers specialised legal services to resolve rental disputes between landlords and tenants. It handles complaints about evictions, rent increases and service interruptions.

Trakheesi and Licencing

DLD manages Trakheesi, an online portal that simplifies real estate processes through smart services. The portal manages real estate licences and permits effectively. Property advertisers must obtain a marketing permit (Trakheesi permit) before publishing any advertisements in Dubai. This system reduces false and duplicate listings while ensuring legal property transactions.

Makani and Al Sa’fat Systems

Makani (“my location”) gives every building and public place in Dubai a unique 10-digit code. His Highness Sheikh Mohammed Bin Rashid Al Maktoum approved Al Sa’fat in 2016 as Dubai’s green building rating system.

New buildings must meet Al Sa’fat’s requirements to receive the Silver Sa’fa rating. Builders can aim for higher Golden or Platinum Sa’fa ratings through additional standards.

Real estate glossary for buying property

Whether you want to purchase a property or invest in one for the long term, it pays to know the real estate terminologies that come with property sales.

Here are some helpful real estate terms for beginner agents and new buyers.

Equity

When we say equity, we mean the money value of a property after all charges, such as those relating to a mortgage, have been paid. This figure usually changes from one day to another since the price of property keeps fluctuating and you continue to make payments as well. For example, if you pay off part of your mortgage, the equity is increased.

Buyer’s Agent

Also known as a selling agent, a buyer’s agent is a licenced real estate professional whose responsibilities include:

• Locating their client’s (the buyer’s) next property.
• Negotiating the property’s price on behalf of the buyer.
• Acquiring the best price and sales process for the client.
• Serving as a fiduciary or trustee for the buyer.

Escrow account

An escrow account is where the money is saved for a specific purpose and withdrawals are restricted to make it easier to achieve said goal. In terms of real estate, an escrow account is managed by a lender to collect tax payments and advance insurance payments from a homeowner.

Land Lease

In a traditional home purchase, buyers own the home and the land on which it is built. In other circumstances, there is a land lease involved. A property purchase that comes with a land lease means that while the buyer owns the home, they will still have to pay rent for the land to the landowner.

Appraisals

A real estate appraisal is the valuation of a property. Basically, it is an estimation of a home’s current market value. Usually carried out by professional appraisers, an appraisal is generally calculated by comparing the recent sale of homes (often of comparable size and condition) to the appraised property. The process also involves a thorough inspection and considers upgrades like an added stairwell.

Market Value

When a realtor talks about the market value, they mean the most likely amount that the property would bring in an open and competitive market. There is no easy or universal way to determine the market value in real estate. However, with real estate appraisals and recent comparable prices, we do get things done to ascertain a fair market value (FMV).

Return on Investment (ROI)

Among real estate definitions, the Return on Investment is a metric that helps you ascertain the return on a property’s investment relative to the investment’s cost. For example, if you are a property owner, subletting your apartment gets you a steady income and the ratio between the amount you gain vs the amount you invest is called ROI.

For sale by owner (FSBO)

Properties that are up for sale without a real estate agent as a middleman are often listed for sale by the owner or FSBO. There are several benefits to this for sellers.

One of the more obvious is that they won’t have to pay a commission fee to a real estate agent. A look at the pros and cons of buying properties directly from owners in Dubai can give you a perspective of the steps involved in For Sale by Owner properties.

Closing

The final stage of a real estate transaction is known as closing. Part of this is a closing date when a seller and buyer officially go under contract on the sale of a home. The property is legally transferred from the seller to the purchaser on this date.

Closing costs

Closing costs are fees to be paid on a property sale on the closing date. In the UAE, this cost includes the property registration fee, real estate agency fee, land department, mortgage registration and processing fees. It can go up to 5% to 7% of the total sales price.

Commission

Sellers who rely on real estate agents to find buyers also have to pay them a commission fee as part of their service package. The commission is based on the price of the property to be sold. This amounts to about 5% to 6% of the total price in the UAE.

Understanding Property Ownership Types

Property ownership stands as the foundation of Dubai’s real estate terminology. Your rights as a buyer and what you can do with your investment depend on different types of ownership.

Here’s an overview of the basic ownership types to help you understand real estate terms for buyers and renters.

Freehold vs Leasehold Explained

Dubai freehold ownership laws give you complete rights over the property and its land. A freehold owner can sell, lease or live in the property whenever they want. The Dubai Land Department registers your name as ‘landowner’ in the registry. You receive a title deed that lasts forever and your heirs can inherit the property after you.

Leasehold ownership in Dubai lets you occupy a property for a set time, usually 99 years. The land doesn’t belong to you with leasehold rights. The property goes back to the freeholder when the lease ends unless you extend it.

The main differences between freehold and leasehold ownership are:

• Freehold gives you total control over modifications and renovations
• A leasehold needs the freeholder’s written approval for big changes
• Your heirs can inherit freehold properties
• You must register leasehold agreements through the Ejari system
• Remember that Dubai has designated freehold areas where foreigners can purchase property

What is a Non-Freehold Area?

Dubai’s non-freehold areas are neighbourhoods exclusive to UAE and GCC nationals. Foreign investors and expatriates can’t buy property in these designated non-freehold zones.

Musataha Agreements and Lease Periods

Musataha agreements create a unique property right in Dubai. The holder (Musateh) can build structures or plant on someone else’s land for a specific time. Decree No. 23 of 2022 states that Musataha rights for commercial land can last up to 35 years at first. The owner can extend this to 50 years maximum.

The Musataha holder owns any buildings they construct during this time. They need to finish construction within five years after registration. This setup creates a middle ground between freehold and standard leasehold agreements.

Off-plan property

An off-plan property is a piece of real estate before a structure has been constructed on it. So, buying off-plan property in Dubai means purchasing a property that hasn’t been built yet.

Selling off-plan property in Dubai benefits developers since it helps create a buzz around sales, thereby increasing demand. And since such real estate is heavily discounted, it also proves advantageous for buyers.

Essential Legal and Financial Terms for Buyers

Buyers must understand legal and financial real estate terms to successfully handle property transactions.

Here’s a guide to the essential Dubai documents and contracts for property buyers you should know about.

SPA (Sales and Purchase Agreement)

The Sales and Purchase Agreement is the lifeblood of any property transaction. This binding contract spells out the terms between buyer and seller. SPA contains property details, agreed purchase price, payment terms and completion timelines.

New developments in Dubai start with heads of terms or a memorandum of understanding. The seller’s lawyer then prepares the SPA draft. Both parties get legal protection through this document. It sets clear obligations, prevents disputes and makes financing easier.

MOU (Memorandum of Understanding)

Real estate agents prepare the MOU, also known as Form F, which both buyer and seller must sign. This RERA-approved document lists the terms and conditions of property purchase. Buyers must pay a 10% security deposit to the Registration Trustee. You have 30 days to complete all required documentation while the MOU stays valid.

When learning more about the role of MOU in property transactions, it’s helpful to become familiar with the differences between MOU and Sales Agreement.

POA (Power of Attorney)

A POA lets someone else represent and act on your behalf in property transactions. Property owners who can’t be physically present in Dubai find this document valuable. The POA needs both English and Arabic versions. A public notary must verify it. Documents from outside Dubai need UAE embassy legalisation.

Title Deeds

The Dubai Land Department issues title deeds in Dubai as official proof of property ownership. 

This legal document transfers real estate ownership from a seller to a buyer. After the formalities are completed, the new deed is issued in the buyer’s name, making them the official owner of the property. There is also a fee involved in issuing the title deed. All in all, a title deed is one of many considerations in property buying steps in Dubai.

This document shows your plot number, title deed number, issue date, property type, building number, mortgage status, area size and purchase value. Completed properties come with a title deed. Off-plan purchases start with an Oqood certificate that later becomes your title deed.

Escrow Accounts and Completion Bonds

Buyer payments for off-plan properties go into escrow accounts for safekeeping. DLD and RERA regulate these accounts to protect your investment. Developers can only access funds after reaching specific construction milestones. Law No. 8 of 2007 requires developers to keep 5% of the total value in escrow for one year after registering your unit.

Home insurance

Home insurance is a requirement for buying a home. Its primary purpose is to protect a homeowner from liabilities against any loss or accidents on the property, like theft, damage from natural disasters. With this in mind, getting the right home insurance in the UAE is important by acknowledging factors like expected coverage.

No Objection Certificate (NOC)

This legal document affirms that there are no objections from the developer to another person buying the property. Developers usually require it during property sales in the UAE. Commonly abbreviated as NOC, a No Objection Certificate also confirms that all utilities and service charges have been paid and accounted for.

Practical Real Estate Glossary UAE

Beyond legal frameworks, practical real estate terms are the common language in property transactions. These real estate terms definitions directly affect your buying decisions and your experience in the market.

BUA and Saleable Area

Built-Up Area (BUA) is the total construction area of a property that includes all covered spaces. It includes rooms, walls, staircases, balconies and terraces. Saleable Area is different – it leaves out common spaces like lifts, corridors, foyers and staircases. This area focuses on the gross floor space you own.

Ejari and Oqood Systems

Ejari (meaning “my rent” in Arabic) works as a standard registration system for tenancy contracts. RERA created this system to make rental agreements official and legally binding. The system lets you access basic services like DEWA connections and dependent sponsorship.

Oqood handles off-plan property transactions. The DLD system helps buyers and developers process property deals transparently. Property ownership gets registered before you receive your title deed.

You can learn the key differences between title deeds and Oqood.

Post-Handover Payment Plans

These plans let buyers pay some property costs after getting their keys. The payments split between pre and post-handover usually follow 30/70, 50/50, or 60/40 ratios. Most plans run for 3-5 years without interest charges.

Snags and Furnished vs Unfurnished

Snags are possible defects in new homes that need fixing before final handover. Finding these issues early means the developer will fix them at their cost.

Furnished homes come with all amenities you need, while unfurnished properties might not include kitchen appliances. You’ll pay more rent for furnished options, but you save money on buying furniture.

Gated Communities and Short-Term Rentals

Gated communities have security gates and round-the-clock surveillance for better privacy and exclusive amenities. Emirates Hills, Arabian Ranches and Palm Jumeirah are popular examples.

Short-term rentals (holiday homes) follow Department of Economy and Tourism rules instead of Ejari. These furnished properties need special permits and must meet standards for cleanliness, security and insurance.

Real estate terms to know for renting a property

What are the most common real estate terms in the UAE for tenants?

If you plan on renting out your property or living as a tenant, here are some phrases you can add to your mental dictionary of real estate terms:

Tenancy Contract or Lease Contract

A prospective tenant and landlord need to enter into a tenancy contract or agreement before the tenant can move into the property. This is a legally binding rental agreement that states clauses from both parties and allows occupation for a certain period of time. For example, a tenancy contract in Dubai may include details about who pays for certain services and to what extent residents can carry out maintenance, if any.

Rental Yields

Let’s end it with another easy one. A rental yield is synonymous with ROI. When we say ‘rental yields for apartments in Business Bay were as high as 8% last month’, we mean the same thing as we do when we say ‘the average ROI in Business Bay is 8%’.

Lease

Properties that are on contract to be used by a lessee for a specific period of time in return for periodic payments are said to be on lease.

Lessee and Lessor

A tenant who rents property from a landlord is known as a lessee. In such a case, the lessor will be the landlord who grants the lease to the tenant.

Lease Agent

A licenced real estate lease agent role is being responsible for leasing real estate properties and signing them in place of a lessor.

Security deposit

Add “security deposit meaning” to your real estate key terms list. This is a refundable deposit paid to a landlord and is usually set at 5% of a property’s annual rent. Think of it as security against any damage to the home you will stay in as a renter. A tenant’s security deposit is returned in full if the property is in the same condition before the move-in. All outstanding bill payments have been made before the contractual term ends.

Rent to own

Homeowners who can’t pay the full price of a home upfront need a mortgage to finance their purchase. — with a good credit score and down payment being necessary prerequisites. An alternate solution is a rent-to-own agreement where a buyer agrees to rent a property for a specific time with the option to buy it before the lease runs out. Such schemes in the UAE come with fees. For instance, a rent-to-own scheme UAE Dubai requires a buyer to pay 2% of the sales price, title deed issuance fee and other payments before entering the agreement.

Top real estate terms for getting a mortgage

Mortgage and Pre-Approval

Banks issue mortgage pre-approval to show how much they’ll lend you and confirm your home loan eligibility. You usually get this initial notification within 3-5 business days. Remember, it’s not legally binding. You must be at least 21, have steady income and maintain good credit to qualify for getting a mortgage in Dubai.

Mortgages or mortgage loans in Dubai are used to purchase a property or borrow money against the value of the said property. A mortgage is a legal agreement between a lender and a borrower. It gives the lender the right to take the property from the borrower if he defaults on his loan payments with interest.

Whether you intend to acquire a mortgage or process one for a client, here are the real estate terms you must be aware of:

Down payment in real estate

A down payment on a townhouse is the minimum amount you are required to pay the mortgage lender upfront. It’s usually between 5%-20% of the property’s total value and most often comes from your savings. If you hear a phrase like ‘Ahmed put down a 20% payment on his villa’, that means Ahmed has made a 20% down payment.

Mortgage interest

The interest charged on a loan to purchase a home is known as mortgage interest. It may be fixed or variable and is calculated as a percentage of the total amount of a mortgage by a lender.

Fixed rate

You can either opt for a mortgage with a fixed rate or one with a variable rate. A fixed-rate mortgage is where the interest paid on the borrowed amount is fixed or locked for a certain time period. Typically, this will usually extend from one to five years. The interest rate will only revert to a higher value once this period expires. The hiked value can either be a fixed margin above a bank’s own rate or above the EIBOR rate. The security against bank-based interest rates is one of the advantages for those who opt for fixed-rate mortgages.

Variable rate

A variable rate mortgage is where the interest rate changes depending on inflation — with the interest rate generally linked to a one, three or six-month EIBOR.

Such an option often appeals to those who prefer long-term mortgages since it spares them from paying high reversion rates after a certain period, as is the case with fixed mortgages.

Default

If a buyer defaults on a loan, it means that they have not made their mortgage loan payment on time or is behind on payments.

Mortgage broker

Acquiring a mortgage loan can seem complex if you aren’t familiar with the ins and outs of the process. Most homeowners rather rely on the expertise of a professional mortgage broker to deal with home loans for them. Think of one as an intermediary or independent advisor responsible for arranging a loan between a bank and the borrower to fund a property.

Conventional mortgage

In a conventional mortgage, a borrower’s loan repayments include an interest rate paid to the bank. The charged interest is their profit for lending you funds.

Islamic mortgage

Islamic mortgages follow Sharia Law and are a popular form of mortgage in the UAE. According to Islamic law, charging interest on a loan is forbidden. A bank that follows Sharia’s principles and offers halal financing options will profit by typically buying a property on the borrower’s behalf and leasing or renting.

EIBOR (Emirates Interbank Offered Rate)

An Emirates Interbank Offered Rate or EIBOR is a fixed rate that banks in the UAE lend to each other. The current lending rate can be crucial information, whether you plan to invest in or sell property in the country. These rates change daily and can be checked on the official website of the Central Bank of the UAE.

Other real estate terms

Can’t get enough? Apart from the mentioned phrases, here are some other real estate terms that you may come across:

Art Deco

Art Deco originated in the 1920s in France, then became massively popular in Western Europe and the US in the 30s. As you can see in the image, art deco is slightly over the top, flashy, elegant and regal. You can recognise it by layered lighting, polished and shiny chrome and brass fixtures, geometric shapes and angular patterns, mirrored pieces, or sprinkled glass. You can also spot it by polished wood, metal and glossy paint. Keep in mind, an object such as a clock can also be an art deco, not just a room or a whole building.

En-suite

This is quite common, although some of you might not know it. In a nutshell, en-suite refers to a bedroom with a direct connection to a bathroom and vice versa. It’s a big plus for a property listing and worth memorising.

Pergola

A pergola is a garden fixture, shaded walkway, passageway, or sitting area between four pillars that usually support cross-beams and a sturdy open lattice. A beach pergola is very common in Dubai, especially with curtains made of floaty sheer fabrics for extra shade.

It is not to be confused with an arbour, which is also a type of gazebo but one that contains a seat in the middle, akin to a loveseat.

Amenities

This word is one of the most common ones on Bayut, but since the UAE is such a multi-cultural environment, we have to brush up on its meaning as well. When a property listing says ‘villa with an abundance of amenities’, that means the villa probably comes with a garden, a swimming pool, a barbeque area and other desirable property features.

Pied-à-terre

Like en-suite, this real estate term comes from French. If a reasonably wealthy person owns or rents a small unit some miles away from their primary residence, that apartment or house is called a pied-à-terre. In short, it is an extra little abode used sporadically for relaxation or retreat for those who can afford it.

Frequently Asked Questions

Is it more beneficial to buy or rent a home in the UAE?

The UAE’s real estate market is one of the most successful in the world. However, some are still uncertain whether it will be a good decision to rent a property or buy one. The decision depends on factors like your personal preferences, length of stay and financial situation. Please look at our guide on renting versus owning property in the UAE for a better idea of available prospects.

What kind of mortgages are available in Dubai?

While some buyers can purchase homes in cash, not everyone has that kind of money saved up, with most opting for mortgage home loans in Dubai. This includes types like capped mortgage, discount rate mortgage and others. 

How do I get a mortgage in Dubai?

You need to qualify for a mortgage in Dubai. At present, UAE nationals, persons between the ages of 21 and 65 and those with a specific monthly income can apply for the loan. Learn how to get a mortgage in Dubai for a more detailed account of the process.

That concludes our guide on the real estate terms buyers, sellers and real estate agents should be familiar with. You’ll be talking like a real state expert before you know it! Moreover, avoiding house buying mistakes like overbidding or neglecting inspections can save you a lot of stress and money in the long run.

For more insight into the UAE real estate market, stay tuned to MyBayut.