The UAE has become a popular place for foreign investors and expats. In recent year’s changes to the law have opened up the UAE property market to foreigners. As such, purchasing property in the UAE is now relatively straightforward, provided that you have the finance.

Requirements

• The UEA government has a 6-month visa for property buyers, called the “Property Holders Visa.”
• This allows foreign investors to stay in the UAE for six months while they investigate investments.
• To qualify for this, the property you buy must have a value greater than 1 million Dirham ($272,000).
• You must be buying as an individual, not as a company

Mortgage Requirements

More often a mortgage in the UAE can be hard to obtain with an extensive paperwork requirement and typically a requirement to put down up to 20% as a down payment. Due to the complexity it is advised that you obtain a mortgage specialist for this.

• Mortgages in the UAE are paid in monthly instalments, with 15 years mortgages the most common. Residents of India cannot mortgage their property in UAE and raise loans. Indian residents are also not permitted to give guarantee to the loan from a non-resident.
• The maximum length of a mortgage plan is 25 years.
• Mortgage repayments, combined with any other monthly expenses, must not exceed 35% of net monthly income.
• As exchange control is a complex subject, it is advisable to obtain appropriate professional advice before deciding to take out a mortgage in a foreign currency.
• Mortgage rules change often in the UAE. Keep up-to-date by consulting local news and the Central Bank of the UAE.

Purchasing A Resale Property Requirements

• Buyer and seller agree terms
• A Memorandum of Understanding (MOU) is signed and a deposit (usually 10%) is paid.
• The parties meet at the offices of the developer to apply for a No Objection Certificate (‘NOC’) to sell the property.
• The developer will usually issue the NOC against a payment of a fee.
• Once the NOC is issued, the partied are able to go to the office of the ‘Dubai Land Department‘ to officially transfer ownership. The ‘Dubai Land Department’ will insist on payment being made in the form of a manager’s cheque. Payable to the seller on the date of transfer. Once formalities are completed, a new title deed will be issued in the name of the buyer.
• If the buyer is purchasing with a mortgage, then the bank’s involvement will be required. If the seller has a mortgage on the property, the buyer is required to settle the seller’s mortgage in full prior to the NOC application. This increases the risk for the buyer and means the transaction is more complicated.

Typical Fees

The following fees will generally apply to the sale and purchase of real estate in the UAE:

• NOC fees – these can range between AED 500 and AED 5,000 and are payable to the developer, usually by the seller. Certain developers also levy a refundable deposit upon the buyer which is only refunded when the buyer presents the new title deed at the developer’s office and their records are updated.
• Real Estate Agent’s commission is 2% of the purchase price
• Transfer fees – these are calculated at 4% of the purchase price. An additional amount is paid towards admin fees which currently is not in excess of AED 5,000 and is paid to the ‘Dubai Land Department’.
• Mortgage registration fees (if applicable) are calculated at a rate of 0.25% of the registered loan amount and paid to the ‘Dubai Land Department’.
• Developers ask for their annual service charges to be paid in advance. Buyers should therefore account for their pro rata share upfront.

Next Steps

Contact Harrison Brook and discuss how we can assist with your current situation to ensure that your finances are working in your favour now and in the future for whilst purchasing property in the UAE.

The information contained herein is for informational purposes only which is subject to change and should not be relied upon. You should seek advice from a professional adviser before embarking on any financial planning activity.