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The costs of buying a property in Dubai

Cost Breakdown: Buying a Property in Dubai

Dubai's real estate market presents numerous opportunities for investors and homebuyers alike. However, understanding the associated costs is essential for making informed decisions. In this guide, we dissect the expenses involved in purchasing a property in Dubai, categorizing them into costs applicable regardless of payment method, additional costs for those opting for a mortgage, and post-purchase expenses to anticipate.

Costs of Buying a Property (Cash or Mortgage):

  1. DLD Fees: The Dubai Land Department (DLD) levies 4% of the property price along with administrative fees, varying based on property type. This fee constitutes a significant portion of the initial expense.

  2. Registration Fees: Properties valued below AED 500,000 incur a registration fee of AED 2,000 plus 5% VAT, while those exceeding AED 500,000 face a fee of AED 4,000 plus 5% VAT.

  3. Agency Fees: Reputable real estate agencies typically charge a commission of 2% of the property price plus 5% VAT.

  4. Conveyance Fees: These cover legal and administrative aspects of property transfer, typically ranging from AED 6,000 to AED 10,000.

  5. Security Deposit: Buyers often pay around 10% of the property price as a deposit to secure the purchase, collected by a RERA-registered broker.

Costs of Buying a Property Using a Mortgage:

In addition to the aforementioned expenses, opting for a mortgage entails the following:

  • Mortgage Registration Fees: Up to 0.25% of the loan amount plus AED 290, charged by the DLD for mortgage registration.

  • Mortgage Arrangement Fees: Typically around 1% of the bank loan amount plus 5% VAT, covering mortgage arrangement charges by the bank.

  • Property Valuation Fees: Banks typically require property valuation, costing between AED 2,500 to AED 3,500 plus 5% VAT.

Additional Post-Purchase Costs:

While not directly involved in the property transaction, these costs should be budgeted for:

  • Insurance: Home insurance, averaging AED 1,000 annually, is recommended. Life insurance may also be required for mortgage holders.

  • Service Charges: Annual charges for property maintenance and amenities, varying based on property size and facilities.

  • DEWA Deposits: Setting up Dubai Electricity and Water Authority services incurs costs ranging from AED 2,000 to AED 4,000.

  • Moving Fees and Furnishings: Variable costs depending on property size and furnishing requirements.

Conclusion:

Understanding these costs is crucial for a seamless property buying experience in Dubai. Stay informed about market trends and seek guidance from experienced real estate professionals for optimal decision-making. With proper planning and budgeting, purchasing a property in Dubai can be a rewarding investment.