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Step by step instructions on buying property in Dubai

If you want to acquire your own real estate in Dubai, but do not know the specifics of the process, then this article will help you to understand the nuances of the procedure for buying and selling a home. According to the local legislation, foreign citizens have the right to own real estate in Dubai in specially designated areas. Below we will tell you in detail how to choose and purchase real estate in the Emirate.

Why it is Important to Work with a Realtor

Hiring an experienced realtor allows you to make the selection process faster and more efficient. A skillful specialist will help you to find the best housing options based on your budget, purchase purpose (passive income or permanent residence) and other wishes.

According to RERA requirement, all real estate agencies in Dubai are required to go through a licensing procedure. In total, there are four types of permits, each one of which gives a specific agent the right to carry out a certain type of real estate transactions and allows you to work in clearly delineated areas. The higher the license class your realtor has, the more real estate options they will be able to offer you.

In addition to the selection of housing, a realtor will assist you in dealing with all the procedural difficulties and preparing the necessary documents in accordance with the requirements of Dubai Land Department.

In general, the UAE’s legal framework does not prohibit buyers from choosing real estate on their own, without involving an agent. But the further procedure for paperwork and transfer of ownership should be carried out through a law firm or real estate agency.

If you nevertheless decide to select the desired property on your own, then it is important to pay attention to the following points:

  • choose the most suitable areas for buying real estate;
  • learn what related documentation you may require for checking and reserving real estate;
  • read the full package of documents for the purchase / sale transaction.

How to Buy Real Estate in Dubai: Step-by-Step Instructions for Finished Homes and Off-Plan Projects

Depending on the development stage of the property you like, the purchase procedure may differ. Let us take a look at the procedure for buying a finished property:

  1. Discussion of terms. At this stage, you and the seller need to agree on all the details of the future purchase, including cost, timing, furnishings and other nuances. If the agreed conditions suit each of the parties, then you can proceed to drawing up a purchase and sale agreement.
  2. The agent draws up a contract in accordance with the requirements of Dubai Land Department and sends it to the buyer for signing.
  3. Аfter signing the contract, the buyer must pay a deposit in the amount of 10% of the value of the purchased property. It is issued in the form of a check addressed to the seller. The deposit receipt must be kept by the agent. Its transfer to the seller can be made only in the presence of a representative of Land Department at the time of ownership transfer to the name of the new owner.
  4. Along with the deposit, the buyer must provide the agent with a check for payment of the service fee (2% of the price of the property). It will be possible to cash out such a check only after the successful completion of the transaction.
  5. The contract, certified by the buyer, is handed over to the seller together with a copy of the deposit receipt.
  6. At this point, both parties to the agreement, or their representatives, must apply to the developer for a no-objection certificate (NOC). It acts as a confirmation that the owner has no debts related to this property. If there are any, then the owner undertakes to pay off all debts, and only after that they will be able to receive a NOC certificate. Depending on the location of the building, two certificates may be required: one from the property developer and the other from a master-developer of the area. Registration of this document can take from three days to one month.
  7. After receiving the NOC certificate, the buyer and seller or their authorized representatives can proceed with the transfer of ownership. To do this, you need to contact the office of Dubai Land Department and provide a valid certificate of ownership and a letter from the developer. If the interests of any of the parties are represented by an agent, then they must have a valid power of attorney.
  8. Upon receiving a certificate of ownership in the name of the new owner, the buyer must pay the full cost of the property. There are several options to do so: the buyer pays 90% of the amount, and the agent transfers the signed pledge check for the remaining 10%; the buyer repays 100% of the cost and the security check is canceled. Provided that the purchase is made through a payment plan or credit funds, payment is made according to the contract.
  9. Upon completion of the transaction, the new owner will receive a title deed in their name within three business days.

The procedure for purchasing a finished property and a property under construction is quite similar. In both cases, the conditions are discussed, the contract is signed and the deposit is paid. The differences begin at the stage of receiving a letter from the developer:

  1. Since the building has not actually been put into operation yet, in order to obtain a NOC certificate, buyer must register in the state registry of properties under construction (Oqood). Along with this, you must pay a registration fee of 4% of the value of the property and a fee of AED 1000 or USD 275.
  2. Immediately after receiving a letter from the developer, you may proceed with the registration of the transaction in Dubai Land Department. Real estate transactions at the development stage are carried out by appointment only. The waiting time can be from 3 to 20 days. To complete the purchase, buyer and seller or their representatives must provide: the original Oqood registration certificate, receipts for payment of all fees and duties, a NOC certificate and the original sales contract between the seller and the developer.
  3. After the completion of the transaction and payment of the full value of the property (minus 10% of the deposit, unless otherwise provided in the terms of the contract), buyer is issued a new OQOOD certificate. It is important to keep all receipts for payment of fees until the completion of construction and receipt of the title deed. Otherwise, all registration fees will have to be paid again.
  4. As soon as the Oqood certificate for the new owner is ready, the developer must prepare a new sales contract in the name of the current owner of the property.

Possible Costs

When purchasing a finished home, you may face the following expenses:

  • NOC registration – AED 500 – AED 5000 (USD 136 – USD 1360), which must be paid to the developer. This amount is often repaid by seller;
  • real estate commission – 2% of the cost of housing;
  • re-registration of property rights – 4% of the price. In addition, you will need to pay AED 580 or USD 160 for the issuance of the corresponding certificate;
  • administrative fee – AED 4 200 or USD 1145, which will need to be paid to the Dubai Land Department;
  • in the case of mortgage lending, an additional fee must be paid in DLD in the amount of 0.25% of the loan amount.

In addition to the expenses mentioned above, developers charge an annual maintenance fee for real estate, and when making a purchase and sale transaction, buyer must pay this amount in advance.

In case of real estate purchase off-plan you will need to pay:

  • registration fee – 4% of the cost (Oqood) + AED 3 000 or USD 817;
  • payment plan – from 1.5% monthly to 5-10% quarterly, according to the developer’s terms;

After purchasing a house at the construction stage, the buyer is provided with 2 documents: a sale and purchase agreement (SPA) and a temporary real estate register (Oqood).

Features of the Ownership Right of Real Estate in Dubai for Individuals and Legal Entities

All the intricacies of owning, buying and selling real estate by individuals and companies in Dubai are regulated by Law No. 7 of 2006 (Property Law). According to Article 4, the right to own real estate in the emirate belongs to UAE citizens, citizens of the countries participating in the Cooperation Council of the Gulf States, joint stock companies and companies fully owned by them. All other buyers have the right to purchase real estate in areas specially designated by the Government. Foreign buyers have the right to:

  • purchase real estate for an unlimited period in Freehold zones;
  • own real estate for 99 years with the possibility of extension (Uzufruct).

In other words, UAE and Gulf nationals can buy any property throughout Dubai. As for the representatives of other states, they can only own real estate in specially designated areas.

Individuals wishing to buy real estate for subsequent lease or for private use can select housing in Freehold zones. These include the downtown areas of Dubai: Downtown Dubai, Business Bay, Dubai Creek Harbor, Dubai Marina, etc.

A number of additional restrictions are provided for foreign companies. If the owner of the legal entity is not a UAE citizen, then the acquisition of real estate on behalf of such a company is possible only in freehold zones. The specifics of the transaction may vary depending on the type of a company and its representation in other countries.

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