An ultimate guide for expatriates on how to buy a property in Dubai

  • August 19, 2021

An ultimate guide for expatriates on how to buy a property in Dubai

Dubai opened its real estate sector back in 2002 for non-Emiratis and this decision garnered a huge interest from global investors. Call it the distinctive charm that Dubai holds, the allure of luxurious lifestyle complemented with the strong infrastructure or the tax-free living that tempt people to fly to Dubai. And this is what appeals to the most of the global investors and expatriates to consider Dubai for buying a property.

Note: Foreigners and expatriates are entitled to buy properties for sale in Dubai that are located in designated freehold or leasehold areas. They may acquire freehold ownership rights without any restriction or obtain leasehold rights for up to 99 years.

What makes Dubai real estate market attractive to foreigners?

  • Dubai real estate market is thriving and always brimming with investment opportunities that promise positive growth.
  • Another driving factor is that the country is peaceful, politically stable and one of the safest places in the world to have home.
  • The tax-free status of the United Arab Emirates is a significant factor in attaining international property buyers’ interest. Though 5% Value Added Tax (VAT) was introduced in 2008, yet residential properties in Dubai retain the status of tax-free. Dubai residential properties are either zero-rated or are completely exempted from tax. Commercial properties are subject to a 5% VAT.
  • Another stellar reason for expatriates and foreign investors to buy properties in Dubai is to become residential visa holders. Anyone who invests at least AED 1 million in a completed freehold property with a valid title deed is entitled to the UAE residential visa. Seeing the spike in interest, the number of property units available to foreigners has also been considerably increased, over time. Despite COVID-19 led lockdown, positive sentiments are registered in Dubai realty market, with abundant of apartments, villas and townhouses are available for sale.

How to buy a property in Dubai?

After knowing the perks of buying a property in Dubai, you may have made up your mind to give it a try. The property buying process always seems daunting, especially in the first go and in a foreign country. Initially, buying a property in Dubai may also seem complex but the legislating bodies and the Dubai Land Department has strived to make the property buying process swift, smooth and straightforward.

A foreign investor needs to have a valid passport, be able to work with a registered real estate agency in Dubai or directly with the developer to find the suitable property and complete the necessary formalities. Note: According to Dubai real estate experts, it takes almost 30 days to complete an average property transaction – from the date on which Sales Agreement was signed.

Government’s initiatives to attract foreign property investors

The UAE government gives considerable weightage to foreign investment in the real estate sector thus it keeps working to introduce new reforms and initiatives to make home ownership attractive to potential buyers. For instance; - Investors can get a 3 year renewable residential visa, if the property investment is AED 1 million or above - 5 year renewable visa if the property is worth AED 5 million or more - Retirees (over 55 years in age) will get 5 year renewable visa if the property investment is AED 2 million or more. Real estate developers also introduce innovative investment schemes to make their real estate projects more appealing for foreign investors.

How to choose a property in Dubai?

As a foreign investor and expat, you can choose from an array of properties, at different locations, and large selection of developments. Before starting online search and finalizing an option, consider few things to help you make right decision: - Conduct a thorough background check of the developer and find out his track record -  Make sure the agent, you have picked to work with is registered with the official regulatory agency - Being a foreign national, be sure that you can buy in the given area and in the chosen development - Be sure about the amount that you are expected to pay at every stage of transaction and other fees such as agent’s fee, and transfer fee - Conduct an independent analysis to check the property is being offered at a fair market value - Always negotiate on the asking price - If you need mortgage to buy a property in Dubai, ensure to get your loan pre-approved - Take legal advice before finalizing any deal - Read contract thoroughly, as you will have to abide by the contractual obligates after signing the document - If there are any concerns, raise them and discuss with the relevant party Note: Sealing the deal without taking legal perspective in consideration can cause problems, so be sure about this point. Moreover, if you think that you are not being treated fairly, you can contact Real Estate Regulatory Authority (RERA), as they can scan your contract and provide with specific advice.

What to consider before buying a property in Dubai?

When it comes to buying a property in Dubai, real estate agents may enquire about the purpose to buy – whether it is for investment purposes or for personal use. If you are buying it for personal use or to rent it ahead, consider the following factors before making any decision: -  Location -  Developer - Facilities available in the development - Nearby facilities - Size of the property - Service charges - Market situation - Currently, even if you are buying it for personal use, you may plan to rent it out ahead in future – so analyse it from tenant’s perspective.

Fees associated with buying properties in Dubai

Dubai is globally known for low-tax environment but there is specific cost / fees / tax associated with buying properties in Dubai. It is crucial to get an idea of all these fees in advance as, it will help you set your budget and define your purchasing power.

                                                               
CategoryFee / Tax in AED
Land Registry Tax4% of property value plus AED 540
Registration charges for properties up to AED 500,000 in value2,000
Registration charges for properties above AED 500,000 in value4,000
Real estate agent’s feeAround 2% of property value
Valuation fees2,500 to 3,500
Oqood Contract Fee (if purchasing from a developer)4% of property value
Conveyance Fees6,000 to 10,000

Note: Other fees include initial deposit, mortgage registration charges, and mortgage processing fees – if you need mortgage to finance your purchase.

Documents required to buy a property in Dubai

Having a real estate agent, who is registered with RERA and you can trust to buy a property in Dubai is of paramount importance. Depending upon your budget, requirements, and investment goals, he can suggest you an off plan property, ready to move townhouse, villa or an apartment. Anyone can buy a property in Dubai as long as the property exists in the designated areas for non-Emiratis. However, to go ahead with the property purchase process, you need: - A valid passport -  Proof of residency status (if you are entitled to reside in Dubai under any type of visa or permit, you can purchase a property.) - Proof of your existing residential address - Salary slips or certificate to support your income statement - Bank statement to support that you can afford the purchase

Real estate legislation regarding real estate sector in Dubai

When it comes to buying a property in a foreign country, you must be cautious and consider legal aspects before closing the deal. Following are some laws associated with real estate sector in Dubai: Law No. (6) of 2019: Ownership of Jointly Owned Real Property in the Emirate of Dubai Law No. (7) of 2013: the Land Department Law No. (14) of 2008: Mortgage in the Emirate of Dubai Law No. (7) of 2006: Real Property Registration in the Emirate of Dubai Law No. (7) of 2019 Amending Law No. (7) of 2006: Real Property Registration in the Emirate of Dubai Article No. (3) of 2006: Determining Areas for Ownership by Non-UAE Nationals of Real Property in the Emirate of Dubai Article No. (18) of 2019: Adding Land to the Areas for Ownership by Non-UAE Nationals of Real Property in the Emirate of Dubai

Legal steps related to buying a property in Dubai

Following are the legal steps attached to buying a property in Dubai that you need to take a look: 1.     Once you have found a property of your choice, the first step is to finalize the terms of sale. It is crucial to legally bind both parties (seller and buyer) to certain terms and conditions regarding buying and selling of property. A lawyer or a real estate agent can help you enlist the terms and conditions. 2.     The second step is to sign the legal sale agreement also known as Memorandum of Understanding (MOU). This document is available on the official website of Dubai Land Department and a real estate agent can get the contract ready for you. Once the contract is ready, both parties will sign it. 3.     Next step is to arrange a meeting of both buyer and seller along with the real estate agents at the developer’s office. The purpose is to apply for a No Objection Certificate (NOC) to transfer the ownership. The certificate will be issued by the developer against a meagre amount after determining that there are no outstanding charges on the property. Note: The buyer can get a mortgage loan, if required. 4.     Once the NOC is obtained, the next step of buying properties in Dubai is to meet at the Dubai Land Department office to finalize the transfer. After all these formalities are completed, a new title deed will be issued in the buyer’s name in order to officially become the new property owner.

Frequently Asked Questions (FAQs)

Is it easy to buy a property in Dubai?

Buying a property in a foreign country may seem a difficult step but the regulatory authority and the government has made the process of buying a property in Dubai easy and hassle-free. All you need is to pick a property that matches your requirement and follow the process. 

How much do I need to buy a property in Dubai?

When it comes to buying a property in Dubai, you need to pay 10% of the total value of the property (in case of off plan property) and 25% of the total value of the property (in case of a completed property). And not just this but you need to take into account other fees associated with the purchase of property in Dubai.

What if I need mortgage to buy a property?

You can avail this option, as several banks in Dubai lend mortgage loans to expats. However, the property buying process may slightly vary, as you need to get a pre-approval mortgage before you sign the sale agreement. Dubai Land Department (DLD) also needs to approve the mortgage before you can apply for the No Objection Certificate (NOC).

Where can expats buy a property in Dubai?

Expats can buy properties in leasehold or freehold areas in Dubai. There are 23 areas dedicated as freehold areas in Dubai where non-nationals are allowed to buy properties. A leasehold property is where expats get living rights for a particular period (which can be no more than 99 years) but they cannot make any changes to the property.

Can I get residency visa with the purchase of property in Dubai?

There is no direct procedure that allows you to buy a property in Dubai and get a residency visa in return. There are certain conditions associated with the purchase of property such as the property value should be at least AED 1 million or more to start the residency procedure.

What to consider before buying a property in Dubai?

The first and the foremost important pointer is that the real estate agent that you have chosen must be registered with the regulatory authority, the developer is authorized and the project is also approved by the regulatory authority.

What to do if something goes wrong during the purchase process?

Dubai real estate sector is regulated by the Real Estate Regulatory Authority (RERA), so if you feel that you are not being treated fairly, you can contact the agency directly with your concern. Moreover, it is advised to work with the registered real estate agent and a solicitor who thoroughly understands the procedure.

Can I rent out my property in Dubai?

Yes, if by any means you do not want to live in your property or you are buying a second property for investment purpose, you can rent out a property in Dubai. There are no additional taxes involved, if you buy a second property in Dubai.