Expenses involved in buying a property in Dubai.

Dubai is a beautiful city and I am lucky to own a piece of realty here. While the property purchase process is simple and streamlined, there is not enough detailed content available online. Since I have been through the complete buying process, I thought of jotting down my experience so that it will help others. So without further ado, let’s get started!

Before you start the journey of searching an apartment for yourself, the first thing you need to do is to take a loan pre approval letter from bank of your choice. Pre approval letter basically tells that you are eligible for loan and mentions your loan amount eligibility. Having a pre approval also tells brokers/sellers that you are serious about buying.

Next thing you need to know is that you should only purchase apartments from RERA registered brokers. Each registered broker gets a Broker registration number(BRN). Below is the screenshot of the broker with whom I got involved in the purchase process. Amazing guy by the way!

Alright! Once above prerequisite is complete, you search for properties on websites like Bayut and PropertyFinder, go out with brokers for property viewing until you come across the property you love.

Let’s say you liked an apartment and you want to offer 1 million AED for the apartment. You will ask broker to raise an offer to the seller. Here negotiation process starts, seller demands more and you stick to your ground; a couple more to and fro and finally the seller agrees to sell at 1 million. Yay! the joy of a lifetime.

The next step is to sign the MOU(memorandum of understanding) between the buyer and the seller. The MOU dictates the terms of agreement between the buyer and the seller. Below is the screenshot of MOU I went through. After MOU is signed, you will have to give a deposit cheque of 10% of the agreement value. In our case it would be 100,000 AED. This cheque remains with the broker till the whole buying process is complete. They don’t cash it, they just keep it with them for security till the property transfer process is complete.

Next thing you need to do is contact your bank and share the MOU and broker contact details with them. The bank will then conduct a third party property valuation before giving you a final loan approval letter. You will have to pay property valuation fees online. In my case it was 2,625 AED.

If the property valuation is above or equal to the agreement value then bank agrees to give you the final approval letter. You will have to pay bank mortgage fee(4200 AED). You will also need to purchase property insurance (269 AED/year) and life insurance(1200 AED/year). Mortgage fee, property insurance and life insurance cost may vary based on the bank you select. If this is your first time buying the apartment, bank also asks you to provide certificate of proof from DLD(Dubai Land Department). You can generate that certificate using Dubai REST App. It costs 70 AED.

After all the above steps are complete, a date is finalized to transfer title deed from seller to buyer. Banker takes an appointment with DLD department to transfer the title deed. On this day, the buyer has to pay DLD fees i.e. 4% of the agreement value plus 580 AED. In our case the total amount will be 40,580 AED. You can pay this amount using credit card.

0.25% of the loan amount (2000 AED) as Mortgage registration fee, 250 AED Title deed issue fee, 20 AED knowledge fee and 20 AED innovation fee. Total 2290 AED. You can pay this amount using credit card.

3000 AED for registration trustee fee plus 5% vat. 1000 AED for ERES(Emirates Real Estate Solutions) fees plus 5% vat. Total 4200 AED. You can pay this amount using credit card.

After all the above payments are complete, the DLD department processes the documents provided by the bank and sends it to the authority for approval. The buyer receives an SMS from DLD department about In Process status. Once the authority approves(took around 15 minutes), the title deed gets transferred from seller to the buyer. The buyer receives another SMS with link to download the new title deed in buyers name. The whole process is online and not a single paper is wasted. At this stage, you are a proud owner of the apartment…Yay! Congratulations!

Once title deed is in your name, you have to pay broker his fees. It’s 2% of the agreement value. You will have to pay 20,000 AED plus 5% vat i.e. 21,000 AED. You can pay this amount via cash or manager’s cheque. This last payment completes the property purchase process.

Next, the buyer has to register with DEWA(Dubai Electricity and Water Authority) to transfer the premise number on his name. Each apartment has its own unique premise number. Electricity and water is billed against that number. To initiate the service, you will have to pay 2130 AED as a refundable security deposit amount. Buyer will also have to register with EMPOWER for cooling services. To initiate the service, you will have to pay 2000 AED as a refundable security deposit. Both DEWA and EMPOWER registration is an online process and the amount can be paid using credit card.

I hope this helps everyone who aspires to own a property in Dubai. Cheers!

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