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Property purchase

Foreign purchase issues

In 2002, Sheikh Mohammed announced that freehold ownership of certain Dubai properties by foreigners would be permitted. In 2006, the Sheikh issued Law Number Seven, formally permitting freehold ownership by non-citizens and non-resident former citizens of properties in certain areas and developments. Although Sheikh Mohammed has announced the law, the mechanisms are not yet in place to put property ownership in the emirate on the same footing as in more established buying locations, as by-laws are still being created covering the finer details. It is therefore recommended for the buyer to employ the services of a reputable lawyer to guide them through the process, although legal representation is not required by law.

No formal conveyancing

Having selected an area or a development, the buyer can approach the developer or the agent. If the buyer wishes to purchase a resale property, the ongoing lack of a formal conveyancing system means that the buyer’s lawyer should ensure that the original developer transfers the title from vendor to seller to insure against fraud. A developer will frequently ask for a fee for this service which can be up to 2% of purchase costs.

Buying off-plan

If the property is off plan, as is far more common, the buyer will select a unit and pay a holding deposit (refundable) of around 5% of the purchase price. Contracts are then drawn up and a payment schedule agreed. This varies between developments but generally more stage payments are required than in established Western markets.

Check your contract

Buyers looking to ‘flip’ or ‘turn’ properties during construction need to check their contracts very carefully. Many developers require a percentage of any pre-completion resale profits, and some contracts limit the number of times a property can be sold before completion, thus narrowing the field of potential buyers.

Costs and taxes

The following is a guide to the costs and taxes associated with the purchase process:

• Notary fees – from around AED60 (approximately €12)
• Mortgage registration charge – around 1% of the property value, or AED10,000 (approximately €1,920) according to the particular lender
• Land registry fee – 1 – 1.5% of the property value
• Transfer fee – may be payable to the developer at a rate of around 1 – 2% of the property value
• Agent’s fees - normally 1 – 2% on resale properties; often does not apply to new-build properties as in that case their fee will be paid by the developer

Related items

Documents and Reports

	Dubai property investment report (307Kb)
	Dubai country guide (821Kb)
	Dubai property buying guide (759Kb)
Documents and Reports

Other related pages

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