Buying a property in Dubai involves various costs beyond the price of the property itself. Here’s a breakdown of potential hidden and additional costs you might encounter:
Registration Fee:
Dubai Land Department charges a fee for property registration which is typically 4% of the property’s purchase price. The registration fee is paid to the Dubai Land Department (DLD) for recording the transaction and establishing official property ownership. This fee is substantial, typically amounting to 4% of the property’s purchase price, and is due at the time of property registration.
Real Estate Agent’s Fee:
Generally, the buyer pays 2% of the purchase price to the real estate agent as a commission. Real estate agent’s fees compensate the agents who facilitate the property search and transaction. In Dubai, this fee is generally about 2% of the property’s purchase price and is paid upon the successful closing of the sale.
Legal Fees:
Hiring a lawyer, while not mandatory, is advisable for conducting due diligence. Legal fees can vary depending on the property and the complexity of the deal. Legal fees are not mandatory but are highly advisable to safeguard your interests. Hiring a lawyer can help in reviewing contracts, conducting due diligence, and ensuring compliance with local property laws. The cost varies based on the lawyer’s rates and the transaction complexity, and it’s typically billed either at key transaction stages or at the completion of services.
Mortgage Registration Fee:
For those financing their purchase with a mortgage, a mortgage registration fee is applicable. This fee, charged by the DLD, is usually about 0.25% of the mortgage amount and is paid when the mortgage is officially registered.
Valuation Fee:
Before a mortgage is approved, the property will need to be valued by a professional. This fee can range depending on the property and the valuer. A valuation fee is also necessary when obtaining a mortgage, as banks require a professional appraisal to determine the property’s market value before approving the loan. This fee varies by property and appraiser but must be paid upfront at the time of valuation.
Property Transfer Fee:
Apart from the registration fee, there might be a property transfer fee if the property is being resold. The property transfer fee is an administrative cost for transferring ownership from the seller to the buyer. This fee varies and should be verified directly with the DLD. It is payable at the time of ownership transfer.
Service Charges:
These are annual charges paid by owners for the maintenance of common areas and amenities in residential communities. The amount varies by development. Service charges are annual fees paid by property owners for the maintenance of common areas, amenities, and building security. These charges differ by development and depend on the amenities offered.
Oqood Fee:
For off-plan properties, there is an Oqood (contract) registration fee which is approximately 4% of the property value. An Oqood fee is required for registering the sales agreement with the DLD. This fee is approximately 4% of the property value and is due at the time of contract registration.
Developer’s Fee:
Some developers may also charge an administrative fee for processing the property purchase, which varies by developer and is often integrated into the purchase price or due at closing.
Insurance:
Property insurance and life insurance (if you have a mortgage) are additional costs to consider. Insurance costs, including property and life insurance (the latter often required with a mortgage), protect against property damage and mortgage liability, respectively. These costs depend on the property value, coverage level, and insurer, with payments typically made annually.
Connection Fees:
Connection fees for utilities such as water, electricity, and gas are charged when these services are established or transferred to the new owner’s name, with costs varying by service provider.
Maintenance and Renovation:
Any immediate maintenance or renovation costs should be factored in. As these can vary widely depending on the property’s condition and the nature of the renovations required. These expenses are paid as services are rendered or upon completion of the work.
It’s important to get a clear breakdown of all expected costs from your real estate agent or consultant when buying property in Dubai to avoid surprises.
