Navigating the Costs of Buying Property in Dubai
Dubai's real estate market is full of opportunities for investors and homebuyers alike, offering a diverse array of properties. Understanding the comprehensive costs involved in purchasing a property in Dubai is crucial for making informed decisions. RealTrust is here to guide you through these costs, whether you're buying with cash or opting for a mortgage.
What Are the Actual Costs of Buying Property in Dubai?
When purchasing property in Dubai, the financial planning doesn't stop at the down payment. Prospective buyers need to account for various upfront fees, which typically range between 6%-8% of the property’s value. Fortunately, RealTrust can assist in possibly financing some of these fees to ease your initial financial burden.
Here's a breakdown of the upfront costs associated with buying property in Dubai:
DLD Fees: The Dubai Land Department (DLD) levies a 4% charge of the property price plus administrative fees, depending on the property type. This fee forms a significant part of the initial costs.
Registration Fees: For properties under AED 500,000, the fee is AED 2,000 plus 5% VAT. For those over AED 500,000, it's AED 4,000 plus 5% VAT.
Agency Fees: Purchasing through a reputable real estate agency incurs a commission of 2% of the property price plus 5% VAT.
Conveyance Fees: These fees cover the legal and administrative aspects of transferring the property, typically ranging from AED 6,000 to AED 10,000.
Security Deposit: Often, a deposit of about 10% of the property price is collected by a RERA-registered broker to secure the purchase.
Additional Costs When Opting for a Mortgage
Choosing a mortgage to finance your home purchase involves the above costs plus:
Mortgage Registration Fees: Up to 0.25% of the loan amount plus AED 290, charged by the DLD.
Mortgage Arrangement Fees: Generally about 1% of the loan amount plus 5% VAT.
Property Valuation Fees: Required by banks, costing between AED 2,500 and AED 3,500 plus 5% VAT.
Ongoing Costs After Purchase
Post-purchase, expect to incur the following:
Insurance: Home insurance, while optional, is recommended and typically costs around AED 1,000 annually. Life insurance may also be required with a home loan.
Service Charges: These annual fees cover maintenance and amenities, varying by property size and facilities.
DEWA Deposits: For Dubai Electricity and Water Authority services, ranging from AED 2,000 for a flat to AED 4,000 for a villa.
Moving Fees and Furnishings: These vary based on property size and furnishing needs.
Making the Fees Manageable
If the additional costs seem daunting, RealTrust can help explore options like 'free financing' from certain banks, which allows you to finance significant fees such as the DLD fees, folded into your mortgage and spread over its term.
Global Cost Comparison
Interestingly, buying and selling property in Dubai is less expensive compared to major global cities like London, New York, and Sydney. Plus, Dubai lacks ongoing holding costs like property taxes, making it even more attractive.
Conclusion
Understanding the full spectrum of costs involved in buying property in Dubai is essential for a smooth transaction. RealTrust provides expert guidance and solutions, ensuring that your investment in Dubai’s real estate market is both wise and well-planned. Stay informed and prepared with RealTrust to make your property investment in Dubai a resounding success.
