Owning a home is a dream shared by the majority. Nothing quite beats the feeling of a personally owned place. The experience of owning a property can further be enhanced by an ideal location. Dubai for instance is a preferred choice for real estate investments. The world-class facilities provided by the city of gold make any opportunity in Dubai a hard pass.
With numerous perks of owning a property in Dubai, there are some strings attached too. We have compiled a list of the hidden costs of buying and owning property in Dubai to give you an in-depth overview of the process.
Property Market in Dubai
Dubai, one of the richest Emirates has long been a major attraction for people around the globe. If you take the pros and cons of moving to Dubai into consideration, the many perks easily outweigh the few downsides. The world-class infrastructure, an effective law and order system, and the availability of almost all major brands along with local markets make it the perfect place to settle.
Dubai also holds the privilege of breaking the barriers with the introduction of freehold zones – making way for foreigners and expatriates to purchase properties in the city. The difference between freehold and leasehold properties in Dubai can help you better understand the zones.
All in all, Dubai has gained unprecedented popularity for its lucrative property market. Good rental prices, adherence to contractual terms, and great resale values all contribute to making the city popular among the masses.
Hidden Costs of Buying and Owning Property in Dubai
As more and more people and businesses aim to get property in the city, the hidden costs of buying and owning property in Dubai should also be taken into consideration. Let’s go through the extra cost of buying and owning a property in Dubai to help you plan your budget better.
Hidden Cost of Buying Property in Dubai
There are several additional costs with buying property in Dubai you should be aware of. Detailed below are the additional costs of buying property in Dubai:
GOVERNMENT CHARGES
All types of properties bought in Dubai are liable for payments to the Dubai Land Department (DLD). Every property purchase should be registered with the DLD. Transactions not registered at the DLD within 60 days of the purchase are deemed void.
The DLD fees amount to 4% of the total property value. Additionally, for a property bought through a bank loan, the buyer must pay 0.25% of the loan amount to the DLD. This fee does not apply to properties bought in cash. There is also an AED 290 fee if you purchase a property on a mortgage.
- DLD Fees – 4% of the total property value
- Property Registration Fees – AED 2000 and 5% VAT for properties valued under AED 500,000
- Property Registration Fees – AED 4000 and 5% VAT for properties valued above AED 500,000
- For properties bought on a mortgage – 0.25% of the total loan amount and AED 290 admin fee
AGENCY CHARGES
Agency charges are also among the hidden costs of buying and owning property in Dubai. Whether you are looking for a rental apartment in Dubai or want to buy one, agency services can make the process smooth. There are several advantages of hiring a real estate agent, however, the services come with a cost.
A real estate agency usually charges 2% of the purchase price, however, these can vary depending on the location and type of property. Additionally, there is a conveyance fee ranging from AED 6,000 to AED 10,000. These types of fees for buying property in Dubai are only applicable if conveyancer services are used during the process.
MORTGAGE CHARGES
If you buy a property on a mortgage, the additional cost of doing so should be considered as well. There are different types of mortgages in Dubai which come with some additional costs.
Banks usually charge 1% of the loan amount and 5% VAT as a mortgage arrangement fee. Additionally, there is the property valuation fee which ranges from AED 2500 to AED 3500 along with 5% VAT.
Furthermore, for a property where the current owner has a mortgage registered, the buyer would need to pay off the current mortgage. The buyer gets the Non-Objection Certificate (NOC) once the existing mortgage is paid. The NOC is compulsory in this case to register the property with the DLD.
INITIAL DEPOSIT
For all property transactions, the buyer is required to submit an initial deposit amount to secure the deal. For ready properties in secondary markets, the amount is usually 10% of the property value. The amount is held by a RERA-authorised broker until the property transfer process is completed.
INSURANCE CHARGES
Insurance fees are also among the hidden costs of buying and owning property in Dubai. Although home insurance is not compulsory in Dubai, it offers protection against theft, damage, accidents and natural disasters. The insurance charges can vary depending on the service you choose.
Life insurance, on the other hand, is compulsory if you have applied for a mortgage. In most cases, the amount is charged on a monthly basis but annual payment options exist as well. Banks usually have their own insurance policies for loan seekers.
Hidden Cost of Owning Property in Dubai
Once the transfer process is completed and the buyer becomes the owner, there are other hidden costs associated with owning the property. Listed below are the hidden cost of owning property in Dubai:
DEWA REGISTRATION CHARGES
Dubai Electricity and Water Authority (DEWA) is responsible for providing utility services to the residents of the city. Opening a DEWA account is essential for Dubai residents to avail the services. There are some costs associated with availing DEWA services.
DEWA charges for metre installation usually range from AED 2,300 to AED 4,000. These charges may vary depending on the number of metres installed.
SERVICE FEES
Additional expenses to consider are the annual service charges. Annual maintenance charges are to be paid to the DLD based on the RERA maintenance index and service charge. The RERA index determines the charges per square foot and the locality of the property.
These charges contribute to the upscaling of the community such as security, elevators or landscaping, etc. The up-to-date charges can be checked on the RERA official website.
FAQs
What are the hidden costs of property investment in Dubai?
Government service costs, agency fees and mortgage charges are among some evident hidden costs for Dubai property investors.
What are the hidden costs of property ownership in Dubai?
DEWA registration fees and annual property maintenance charges are some of the hidden costs property owners should know about.
How much does it cost to buy a house in Dubai?
The cost of buying a house in Dubai may vary on factors like property location, size and available amenities. For more details, explore these villas for sale in Dubai.
These were all the hidden costs of buying and owning property in Dubai. Owning a property in Dubai comes with several advantages. The property market is highly lucrative for individuals and businesses alike. By considering these hidden costs, you can plan your budget better with an estimation for the actual buying a house in Dubai cost.
Even with these hidden costs, owning a property in Dubai is a big deal. The forever-evolving real estate market has the tendency to give you remarkable profits whether you sell the property or put it up for rental.
Additionally, go through these hidden costs of renting in Dubai if you are looking for a rental place. If you want to buy a property in Dubai and avail all the benefits that come with it, check out the following:
Stay tuned to UAE’s top property blog for home-buying tips and more.
Related Posts
