Loans to Buy Property in Dubai
Making a decision to buy property is never easy – particularly if you want to buy property in Dubai, which is continually developing. The prospect of holding property there may be appealing if you are attracted to the real estate market. The good thing is that this is a possibility if you have the financial means to do so.
Can Visa Holders Buy Property in Dubai?
Since the property market in Dubai is growing by the day, it may be a very appealing option to make an investment there. But can a visa holder do this? The good thing is that yes, this is a possibility worth considering.
Starting in 2002, as several legal changes were implemented, foreigners have been given the right to buy, sell or rent property in Dubai. While there are some regulations you should know about – we’ll discuss them later on, the process has been notably simplified.
Documents Required to Buy Property in Dubai
When purchasing property in a different country from yours, you might stumble across different laws and specifications. This is why, similar to when you’re looking for the best remittance services, if you are interested in the real estate market in Dubai, you should get your facts straight.
As an individual buyer, you need to have your passport when you intend to purchase property in Dubai. You should also offer evidence that you have paid all the fees that apply in your case.
In addition to that, if you want to apply for a mortgage in Dubai, this will entail the involvement of a bank. So, the process might be prolonged and complicated. It’s best to choose the bank you work with carefully.
How to Buy Property in Dubai
The process of purchasing property in Dubai isn’t that difficult to follow – everything considered. Let’s briefly go through all the steps.
Usually, the first step would be for the buyer and seller to agree on the terms of the contract. This is followed by the signing of a Memorandum of Understanding (MOU). Afterward, the buyer usually has to pay a deposit worth 10 percent.
The next step would be a meeting of both parties at the offices of the developer. This is done in order to get a No Objection Certificate (NOC). Once the NOC is issued, the next step is for the two parties involved to go to the office of the Dubai Land Department. At this point, ownership is effectively transferred from one party to another.
Typically, the Dubai Land Department requests that the purchase price is completed as a manager’s check, made payable on the date of the transfer. As soon as all these formalities are carried out, a new title deed is typically provided in the name of the buyer.
Once again, if the buyer acquires the property with the help of a mortgage, then this will entail the involvement of a bank. In the case in which the seller already has a mortgage on the property, then he/she will have to settle on the terms with the bank before initiating the NOC application.
Considering that this usually makes the affair riskier for the buyer, the transaction might be significantly more complicated.
Fees Related to Buying Property in Dubai
As you might expect, if you want to buy property in Dubai, this means that you’ll need to pay several fees. Here is a list of some of the fees you might be liable to pay:
- Abu Dhabi transfer fee, which could range from one percent to two percent
- Registration fees – for properties below AED 500,000, these could account for AED 2,000.
- Registration fees cont. – for properties above AED 500,000, these could account for AED 4,000.
- Mortgage processing fee – up to 1 percent of the total amount of the loan
- Mortgage registration fee – 0.25 percent of the loan, as well as AED 10 fee
- Estate agency fee – this is usually 2 percent of the purchase fee
- Valuation fee – AED 2,500 – AED 3,500
- Conveyance fees (if they apply in your case) – AED 6,000 – AED 10,000
- Oqood fee (in the case of off-plan properties) – 4 percent of the purchase price of the property
- Down payment – usually 25 percent of the total cost of the property
When you intend to buy property in Dubai, you also have to pay a tax for land registry. This is a one-time tax only, accounting for 4 percent of the sale price of the property. Usually, this is split between the seller and the buyer of the property. But, in practice, in most cases, the buyer typically pays this fee.
Usually, a property transaction in Dubai lasts roughly 30 days or so until it is completed. This is relatively time-efficient: just like Stilt might be rated as being more time-efficient than an Indian bank. This is primarily why Indian students might be at a better advantage to choose Stilt while studying in the US.
10 Things to Know Before Buying Property in Dubai
If you are eager to buy property in Dubai, you shouldn’t simply go for it, but take some time to do some research. Since we want to make things easier for you, we’ve done this on your behalf. Here are some things that you should definitely consider prior to making an investment here.
1. Dubai’s Location
Did you know that Dubai is an important part of the GCC state United Arab Emirates? This also means that Dubai is officially run by his highness Sheikh Mohammed bin Rashid Al Maktoum. Evidently, he has played an important part in making Dubai one of the most influential and important business centers in the 21st century.
2. The Way in Which Authority Works in Dubai
Each country is governed differently. Evidently, prior to making an investment in Dubai, you should assess the way in which the authority is distributed in the emirate. In 2006, his highness Sheikh Mohammed bin Rashid Al Maktoum officially became the ruler. He is also the most authoritative figure in the government of Dubai, which boasts the primary executive authority in the emirate.
Moving on, it’s worth noting that the government in Dubai comprises of 30 distinct departments that are in charge of dealing with the main issues in the city. This would include matters concerned to the health system, safety and security, education, finance, court, infrastructure, and of course the property market, which is developing by the day.
3. The Dubai Land Department
If you’ve never heard of the Dubai Land Department, now it’s the best time to find out more about this. Basically, it represents the executive entity whose role is to regulate and control the real estate market activity.
According to a law that was issued back in 2013, the purpose of the department is to cope with the registration, promotion, and organization of real estate in Dubai. This is accomplished by adhering to high international standards. In addition to that, this department aims at attracting more and more investors from all over the world.
4. Freehold Areas in Dubai
You might know by now that many foreigners hold property in Dubai. And this is possible thanks to a new law that was introduced in 2000. Accordingly, the real estate authority in Dubai at that time decided to make it more accessible for foreigners to buy and own property there.
Nonetheless, this is restricted to specific areas that are known as freehold areas. Which are these freehold properties, though? These are found in Emirates Hill, Um Hurair, Jebel Ali, Al Barsha, Al Gouz, Nad Al Shiba, Ras Al Khor, and so on.
5. Dubai’s Demographic Structure
Another important consideration is, without a doubt, the demographic structure in Dubai. If you didn’t know until now, you should note that Dubai features a mixture of different ethnicities and nationalities.
The population in Dubai is approximately 2.7 million. And no less than 88 percent of this total consists of expats. Furthermore, roughly 71 percent of the population in Dubai accounts for Asian ethnicities such as Pakistanis, Indians, South Asians, and many others.
6. Leasehold Areas
Before you go ahead and buy property in Dubai, you should assess that full ownership is allowed only in designated areas. That is to say, this isn’t allowed in every locality in Dubai.
More specifically, in some designated areas, there is a strict lease time for certain properties. This can range from 10 to 99 years. Some of the most popular leasehold areas in Dubai are Discovery Garden, Deera, Jumeirah, and others.
In the position of an interested buyer, one of the first things you should do is check whether the area you are attracted to is a freehold or a leasehold area.
7. Dubai Is Expanding
One of the reasons why so many people want to buy property in Dubai is because the future of the city seems to be very promising. Simply put, the city is growing at an unbelievable rate.
This is why so many real estate investors consider that it is a good idea to invest in this direction. Some of the most important large-scale projects that are taking place at the time being are the construction of Al Maktoum International Airport, or the construction of Dubai South City, among many others.
This is why we are always eager to observe the way in which Dubai is bound to grow in the years that follow.
8. Why Do You Want to Invest?
It’s a sensible thing to assess the reason why you intend to invest in Dubai. Some people recommend consulting with an agent. That is because some areas are better suited for investment than others. In this way, you can get the most out of your money.
Some of these properties are renowned for their high capital growth rate per year, the high rental value, and their proximity to important commercial centers and amenities.
Meanwhile, if you want to buy property in Dubai as you plan to settle there in the foreseeable future, you should choose accordingly. That is to say, you should consider the property’s proximity to hospitals, schools, recreational centers, and so on.
9. The Real Estate Finance System in Dubai
Did it occur to you that the real estate finance system in Dubai might be different? While it is true that financing services for property buyers are widely common, it is however limited to the companies and banks that have been previously authorized by the United Arab Emirates Central Bank.
As for the majority of home loans in Dubai, the rate varies from 3 to 4 percent. In order to qualify for a mortgage, the lender usually assesses the eligibility of the investor by considering his/her financial ability to make repayments. Factors such as minimum salary, the company for which the applicant works, and others are taken into account.
10. The Importance of the Location of the Property
You might be tempted to buy property in Dubai if the price is on point, lured by the prospect of fast expansion. Nonetheless, it always pays off to do some research regarding the area where you want to make the investment. You should also find out factual information about the developer.
For the most part, considering the level of insecurity in the Middle East, Dubai is relatively safe. The security system there is state-of-the-art and the police system is highly efficient. This is why many top investors collaborate with renowned real estate brands in Dubai such as Emaar or Damac.
If you have made up your mind to buy property in Dubai, you should consider the information presented in our brief guide. This may or may not be the right call for you. It all depends on your individual financial and personal circumstances. Make sure you weigh all the pros and cons to ensure that you’ve made a sensible decision!