Common Real Estate Questions

Here are just a few frequently asked questions about buying, selling, and renting real estate in Dubai. Also, we suggest to check out the links below for a more comprehensive dive into your real estate search.

Property ownership: Freehold or Leasehold?

Starting from 2001, foreign investors are allowed to buy properties in Dubai on a leasehold basis. In 2002, an official order was passed for buying the properties as a freehold.

Both types of the property ownership are present on the Dubai’s real estate market.

Basically, the leasehold means that you are leasing the property from a landlord (freeholder) for a number of years. The lease term is generally up to 99 years in the UAE and it can be renewed.

If you own the freehold, it means that you have an absolute ownership of the property and the land it stands on. The freehold is mostly preferred option.

How to buy/sell a property in Dubai

There are four legal steps to be followed:

Establishing an agreement of sale, – MOU (the Memorandum of Understanding). The buyer and the seller outline terms and conditions of the agreement, highlight requirements and responsibilities of each party. A template (‘Contract F’) is available on the official website of the Dubai Land Department (DLD);
Signing the MOU: as a common practice, a 10% deposit of the property value is made by the buyer to the seller upon the MOU signing;
Applying for a No Objection Certificate (NOC): the buyer and the seller meet in the office of a developer and apply for the NOC. The developer will issue the certificate only after settling any outstanding fees on the property in regards to the service charges;
Effecting the transfer of ownership: the transfer takes place in the DLD office. The buyer is required to make a payment of the property price by a manager’s Cheque. A new property title deed is issued in the buyer’s name.

How Can I pay? Cash buyer vs Financed buyer

A cash buyer is someone who is ready to make a full payment on a property in cash. No lender involved, it is a direct money payment in exchange for the property.

A financed buyer (also called a mortgage buyer) purchases a property by securing financing from a lender (applying for a loan from a bank).

Additional fees when buying a property

Generally, following fees are applicable when buying or selling properties in Dubai:

NOC fees – AED 500 – 5,000 to the developer;
Real estate agent’s commission – usually 2% of the property purchase price;
Transfer fees – 4% of the property purchase price plus admin fees in the amount of AED 4,000 plus VAT 5% to the DLD;
Mortgage registration fees (if applicable) – 0,25% of the registered loan amount to the DLD;
Practice shows, that developers usually ask to settle annual service charges in advance. Therefore, the buyers should be ready.

Can I get residency if I buy a property in Dubai?

There is no possibility to get a lifelong residency in the UAE if you are not a GCC national, even if you purchase a property. However, a long-term residency permit can be obtained depending on the investment amount and the property value. Read More

Can I get residency if I Buy Property in Dubai

How long does it take to get a mortgage approval?

Typically it takes around 3-4 working days for the pre-approval and additional 4-5 working days to obtain the final offer mortgage letter from a bank.

Off-plan or Ready-built properties?

It’s a good question to ask yourself or your real estate expert when considering on buying a property. An option you will go for depends on your investment goals and financial opportunities.

A ready-built property (on-plan) is available for the immediate occupancy. Where an off-plan property hasn’t been completely built yet (its completion might take from 2 – 4 years).

Do I pay tax in Dubai?

Dubai imposes no annual property taxes, no property purchase taxes nor capital gain taxes. However, stay vigilant about a housing (service) fee, and a VAT (value-added-tax) on commercial properties.

Housing fee

The housing fee is collected by the Dubai Electricity and Water Authority (DEWA) on behalf of the Dubai Municipality in exchange for its services. It’s charged to an account on the basis of 5% of the annual rent amount (for tenants), or 0.5% of the property purchase price (for expatriate owners residing in their properties). Leases for commercial properties are taxed at a flat rate of 10%.

VAT

The VAT is taxed on any commercial property, whether leased out or sold, such as offices, retail and even car parking, at a flat rate of 5%.