How to Buy a House in Dubai?
With Expo 2020 in full swing, the Dubai real estate market has seen a spike in new developments and launches across the city, resulting in a multitude of property investment opportunities. Buying a property in Dubai can be one of the best investments; nonetheless, there are different factors to consider.
The Dubai government granted foreigners the right to leasehold property in 2001, and in 2002, Dubai became the first emirate to implement the Freehold Law, which allows foreigners to buy, sell, and rent property without any special regulations or approvals. With expatriates accounting for more than 70% of the population, it is not uncommon for foreigners to buy a house in Dubai.
Whether you’re looking to invest or relocate to Dubai, be it for work or to start a business, you’ve probably contemplated buying property in Dubai. Before taking the plunge, it is important to understand all the complexities of buying property in Dubai. As a real estate broker in Dubai, we are constantly asked how to buy a property in Dubai by buyers and investors alike. This guide will walk you through the entire process of buying a house in Dubai.
TYPES OF PROPERTY OWNERSHIP IN DUBAI
Leasehold and Freehold are the two main types of property ownership in Dubai. One of the key differences between the two types of property ownership is the buyer’s rights.
# Leasehold Ownership
Leasehold Property Ownership offers the lessee, regardless of nationality, the right to live in or occupy a property for a term of up to 99 years. Buying a leasehold property in Dubai grants the owner a long-term lease on the property but not on the land on which it is built. The landlord will reclaim ownership of the property at the end of the lease terms. As expats are not allowed to buy a property in non-designated areas in Dubai, leasehold property ownership can be a viable option. And the lease can be renewed once it expires.
# Freehold Properties
Buying freehold property in Dubai gives the owner (irrespective of the nationality) outright ownership of the property, including the structure and the land it sits on, for the rest of their lives, with the owner’s name registered as the “landowner” in the Dubai Land Department (DLD) land registration. A property of this type can be leased, sold, or even modified freely at the owner’s discretion. However, expats can only buy freehold properties in Dubai in specific freehold areas. Districts such as Palm Jumeirah, Dubai Marina, Jumeirah Beach Residences, Downtown Dubai, Jumeirah Lake Towers, Emirates Hills, Arabian Ranches, Jumeirah Village Circle, Business Bay, and others are among the most popular freehold locations in Dubai
FACTORS TO CONSIDER WHEN BUYING A PROPERTY IN DUBAI
Buying a property in Dubai, whether you are a first-time buyer or a seasoned investor, can be both exhilarating and daunting.
Before kick-starting your house-hunting journey, establish a budget. Consider the hidden costs of buying a property, such as legal fees, maintenance costs, and down payments. If paying in cash, make sure the funds are available in the UAE at the time of transfer. On the other hand, if you opt for a mortgage, make sure you consult a mortgage expert and have them obtain pre-approval from the bank, which will determine how much you can spend. When applying for a mortgage in Dubai, keep in mind that a minimum deposit of 25% is required.
# The 3 W’s – Why, What, and Where to buy a property?
The next essential step is to determine what you want to buy and why. Do you prefer to live in an apartment, a townhouse, or a villa? If you are buying to rent out, make sure you have an in-depth knowledge of the Dubai property market.
Whether you are buying a home for investment purposes or to live in for the long term, it is vital to choose the right location based on accessibility. Do you prefer living in the city or near the beach? Do you consider public transportation, schools, and retail outlets to be important? Are you buying a home for personal use or as an investment?
There are three main possibilities to opt for: Off-Plan Properties for sale in Dubai, Ready Properties directly from the developer, and Secondary Market. The good news is that you can buy apartments in Dubai or any other property type with a mortgage or installments.
# Look for a Certified-RERA agent
Hire a realtor with extensive local expertise and a proven track record of selling properties in the area you want to buy; one you can trust to find your dream house or investment based on your budget and other requirements. When looking for a real estate agent in Dubai, be sure they are RERA-certified and updated with the latest Dubai market regulatory laws.
UNDERSTANDING THE HOUSE BUYING PROCESS IN DUBAI
When buying a house in Dubai, you have the choice of purchasing directly from the developer or a private seller. If you are an expat looking to buy off-plan property in Dubai, you will need to fill out a reservation form, submit a copy of your passport, and pay a reservation deposit, among other documents. On the other hand, if you are buying a ‘resale’ property, you will need to sign a Memorandum of Understanding (MOU) with the seller. As a buyer, you will be required to deposit a security cheque in the amount of 10% of the property’s value, which will be refunded once the property transfer is complete. The cheque will be cashed only if you decide not to purchase the property. Following the receipt of funds, the legal transfer of deeds will occur.
DOCUMENTS REQUIRED TO BUY A HOUSE IN DUBAI
- Original identification documents of both the buyer and seller (Passport, Visa, Emirates ID)
- Payslips for salaried employees or trade licenses for business owners
- Bank and credit card statements for the last six months
- Original NOC issued by the developer certifying that all dues have been paid
- Signed Contract F (Memorandum of Understanding)
- Life insurance, if buying with a mortgage
MISCELLANEOUS FEES INVOLVED WHEN BUYING A PROPERTY IN DUBAI
- NOC Registration Fees paid to the developer
- Real Estate Agent Commission
- Dubai Land Department (DLD) Charges, 4% of the property value
- Administrative Fee paid to DLD
- Mortgage Registration Fee
- Valuation Fees
- Property Registration Fees
- Annual Maintenance Fees / Service Charges
TYPES OF PROPERTY VISAS AVAILABLE IN DUBAI
The UAE introduced a long-term resident visa in 2019, granting investors the opportunity to reside in the country provided certain criteria are met upon purchasing a property in Dubai. The most common types of visas offered to foreigners who own a property in the UAE are the three-year and five-year resident visas.
# Six-Month Multi-Entry Visa
Although the six-month multi-entry visa is easy to obtain, it does not come with an Emirates ID. As a result of its similarity to a tourist visa, it allows the holder to visit Dubai multiple times for six months. This type of visa is valid for any property valued at more than AED 1 million and can be used in any of the seven Emirates. It is generally granted by the Dubai immigration authorities and has no connection to the Dubai Land Department.
# Three-Year Residence Visa
Individuals interested in buying or investing in a property worth at least AED 1 million or more are eligible for the three-year visa, which can be renewed for a modest fee upon expiry. The three-year residence visa qualifies the holder to become a UAE resident and enjoy privileges such as an Emirates ID, a driver’s license, and family sponsorship. The visa is issued by the Dubai Land Department and generally costs between AED 13,000 to AED 15,000 valid for three years. This category of visa allows the holder to sponsor their dependents, but it does not enable them to stay outside of the UAE for more than 6 months at a time.
# Silver Visa: Five-Year Residence Visa
To be eligible for a five-year residence visa (Silver Visa), an individual must invest in a property (which can be spread among three or more properties) valued at least AED 5 million and have no mortgage or any other sort of loan or finance. In addition, the property shall be retained for a minimum of three years. The five-year resident visa holder will be entitled to sponsor additional family members to enter the country.
# Golden Visa: Ten-Year Residence Visa
Individuals who invest a total of AED 10 million or more in the UAE are eligible for a ten-year residency visa (Golden Visa), as long as no loans are taken out. As a rule, the holder must retain the investment for at least three years. Real estate can account for a minimum of 40% of the investment, which can be spread across up to three properties with a total value of at least AED 4 million. The remaining 60% of the funds can be invested in other sectors of the country. To expedite the process, the Golden Visa applicant may be granted a six-month multiple-entry visa.
If you are wondering how to secure a 10-year investment visa in Dubai, you’ll need to meet one or more of the following requirements:
- Investing in Dubai with a minimum investment of AED 10 million.
- Having a minimum capital investment of AED 10 million in your business.
- Forming a joint venture with an existing or new company with a minimum market capitalization of AED 10 million.
- Having a total investment of AED 10 million or more in all the aforementioned areas.
# Retirement Visa: Five-Year
The Retirement Visa allows expatriates and foreigners over the age of 55 to stay in the UAE after they have retired from their jobs.
To be eligible for the 5-year renewable visa, the holder must comply with the following criteria:
- The holder must be 55 years old or above
- Investing in a property valued at least AED 2 million
- Having a savings account of at least AED 1 million
- Having a minimum of AED 20,000 active income per month.
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