How to properly purchase real estate in the UAE?

15.04.2024 19.04.2024 142 0 0

The United Arab Emirates is a leader in the top countries in demand for buying a home among foreigners. One of the most popular destinations is Dubai. Due to the dynamic development of the economy and the status of an international financial center, the city is becoming an increasingly desirable place for investment and relocation. The acquisition of real estate in Dubai provides advantageous opportunities for investors and those who are looking for a second home. Let’s consider what are the advantages of purchasing a foreign housing stock and the specifics of the purchase.

Why you should think about buying a property in the UAE

The advantages of investments are numerous, the following points deserve special attention:

• Relatively affordable housing prices, which makes this market attractive even for those with limited financial resources.
• No taxes. Buyers are exempt from paying taxes on property, capital gains when using it, as well as when receiving an inheritance, which allows them to receive a net profit from investments.
• Ease of payment. Mortgage lending is available to foreign investors, while some banks offer special conditions for expats.

The housing market is characterized by a wide range of properties of various types and price categories. The offers range from luxury beachfront villas in Abu Dhabi to urban residential apartments in Dubai with cutting-edge amenities. Many properties are offered fully furnished, allowing new owners to avoid additional costs of furnishing.

What you need to know about ownership

Foreigners of non-Arab origin can purchase housing and commercial real estate in the territories belonging to the UAE freehold zones. In these communities, objects are registered as personal property, which gives the owners the right to sell, lease, donate or inherit property.

Between 2006 and 2008, several legislative acts were signed specifying the list of free zones in Dubai, Umm Al-Quwain, Ras Al-Khaimah and Ajman. Since 2019, the possibility of buying freehold real estate for foreigners has expanded to Abu Dhabi, and 3 years later, Sharjah for the first time introduced freehold zones where real estate can also be registered by foreigners as personal property with disposal rights.

In Dubai, a significant part of the territory already belongs to the freehold zones. There are such areas in the city center, in the suburbs, on the 1st line by the sea. This provides foreign investors with ample opportunities to purchase a house or apartment in new buildings in Dubai.

What to pay attention to when choosing a home

Regardless of whether a house or apartment is chosen in Dubai or in another emirate, the general rules for evaluating an object are as follows:

• Location. It is important to assess the proximity of housing to transport hubs, educational institutions, hospitals, shops and other key infrastructure facilities.
• Amenities in the community. It is necessary to study the infrastructure of the area as a whole and correlate its features with your own preferences. It is likely that the tastes of young people, couples with children and pensioners will differ.
• Size. You need to make sure that the area of the house or apartment meets the needs of future residents or investment goals.
• Market conditions are no less important. Knowing the market situation will allow you not to make mistakes when choosing an object within the planned budget limit.
• Maintenance costs should be clarified before the time of purchase. Utilities, maintenance and property management in each residential complex have different costs.

For the most complete and up-to-date information, it is recommended to contact a professional real estate consultant.

The legal framework governing real estate transactions in the UAE

Law No. 7 of 2006 serves as the basis for the process, granting the right to citizens of the UAE and the Gulf States to purchase real estate in any area of Dubai, while foreigners can own housing stock in specially designated freehold zones or on long-term leases lasting up to 99 years.

Steps to purchase housing in the United Arab Emirates

• Step 1: choosing the housing you are interested in. Both ready-made facilities and apartments in new buildings under construction are available.
• Step 2: Signing the purchase and sale agreement. To complete it, you can download Form F, also called a Memorandum of Understanding (MOU), from the website of the Land Department (DLD). Additional conditions may be included in the document by agreement of the parties. The contract is signed by both parties in the presence of a witness, preferably at the office of the registration trustee. The buyer is obliged to pay 10% of the value of the object as collateral.
• Step 3: Get a certificate of no objection. At this stage, in order to issue it, it is necessary to contact the developer, which will allow completing the registration of the change of ownership. This procedure is performed when buying ready-made housing from a private person, and not from a developer. When purchasing a new building under construction in Dubai, this document is not required. The certificate is issued subject to the absence of arrears in the payment of utilities and other fees.
• Step 4: registration of the change of ownership. To re-register the ownership right, it is necessary to prepare and submit all the required documents to the registrar’s office, be present in person or through a proxy. The process of transfer of ownership usually takes place quickly and without difficulties.

Administrative expenses related to the purchase of housing

They include:

• Dubai Land Department Fees: 4% of the property value plus additional contributions of 430 AED ($117) for land plots, 40 AED ($11) for off-plan projects or 580 AED ($158) for the purchase of apartments and offices.
• The fee for registration of the property, which depends on the value of the object. For properties that are priced below 500,000 AED ($136,000), the amount is 2000 AED ($544) plus 5% VAT.
• For housing stock worth more than 500,000 AED ($136,000) – 4000 AED ($1088) plus 5% VAT.
• The fee for issuing a certificate of ownership is 250 AED ($68).
• The real estate agent’s commission usually corresponds to 2% of the value of the property.

The main mistakes when buying a home in the UAE

Unfortunately, it is impossible to guarantee a 100% successful real estate transaction in any country, as the result consists of many circumstances. However, it is quite possible to reduce risks if you avoid typical mistakes, including:

• The lack of a detailed approach to studying the state of the market, as well as the reputation of the seller of a particular object. A high-quality inspection of the selected apartment allows you to reduce the cost of repairs in the future.
• Ignoring the infrastructure of the area where the selected housing is located.
• Errors in budget planning. Additional transaction costs must be taken into account in advance, as well as the possibility of using credit funds. It takes time to get a mortgage, which can lead to the loss of a specific object.
• Lack of understanding of the specifics of the contract registration process and refusal of assistance from realtors. For example, all real estate transactions must be registered with the relevant government agencies. At the same time, documents issued in a foreign language must be notarized and accompanied by a certified translation into Arabic.

Work only with real estate agents who are registered with RERA (Real Estate Regulatory Authority). This is not an expense item that you can save money on. Compliance with the proposed recommendations will help to avoid typical mistakes and ensure the successful acquisition of real estate in the UAE.

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