There is more to purchasing a Dubai property than meets the eye. Many first-time buyers may receive a shock when they realize that they have to pay more money than just the purchase price for their Dubai property.
These extra expenditures are not always advertised so it is easy to be surprised when you are told what you have to pay in order to own the property you like. These extra fees are often called hidden fees but they are not really hidden. Good research will let you know what to expect when you finally decide to invest in a Dubai villa, townhouse, or apartment. Keep reading to learn about these extra fees.
To fully understand the true cost of owning a home, one must be aware of all the other costs involved in the purchase process. Not all of these extra expenses are disclosed right away.
To help you go into a Dubai purchase with your eyes wide open, here is a list of fees often called hidden fees, you can expect to pay:
1. A Security Deposit- This is a 10% fee to hold the property. Whether it is refundable or not depends on the terms and conditions of the contract. Make sure you understand those terms and conditions before you sign the contract.
2. Dubai Land Development Fees- This fee charges 4% of the purchase price plus administrative costs.
3. Registration Fee- The cost here depends on the purchase price of the property you want to own. Under 500,000 AED the cost is 2000 AED plus 5% VAT. If the property is sold for over 500,000 AED, then the fee is 4,000 AED plus 5% VAT.
4. Real Estate Agency Fees- Or you could call them the real estate commission. This is usually set at 2% plus 5% VAT. However, to get your business, an agency may negotiate their fee.
5. Conveyance Fee- This is the payment for the legal and administrative paperwork, etc., It runs between 6,000 and 10,000 AED.
6. Mortgage Registration Fee- If you are going to borrow money from one of the Dubai lenders, then you will be charged 0.25% of the mortgage balance plus 290 AED.
7. Trustee Fee- To facilitate the proper transfer of ownership a trustee is needed. These professionals charge between 2,000 and 4,000 AED.
8. Mortgage Arrangement Fee- This is like paying points in Western countries. The mortgage bank will charge 1% of the mortgage amount plus 5% VAT just for arranging the loan.
9. Property Valuation Fee- This fee is charged by the bank before they approve the loan. The fee for this service is between 2,000 and 3,500 AED plus 5% VAT.
10. Insurance- This is not mandatory in Dubai at this time however, banks may want to protect their interest so they may require you to get property and life insurance. The average cost for home insurance is roughly 1,000 AED per year while the life insurance cost ranges between 0.4% to 0.8% of the decreasing loan amount.
11. Service Or Maintenance Fees- These are payable to the Dubai Land Development company and charges are set according to the RERA Service Charge and Maintenance Index. The cost may vary from year to year.
12. Dubai Electricity And Water Authority Services- These fees are hook-up and service fees. An apartment may cost you roughly 2,000 AED to set up the DEWA service while a villa may cost you roughly 4,000 AED
One additional fee that is not normally mentioned is your moving costs. How much you pay for moving into your new residence depends on the mover and how many items you need to move in at the time.
Once you calculate all these extra costs you may discover that you cannot afford to buy the property you want. The good news is that you do not have to back out of the potential purchase.
If you shop around, you will find that some banks will loan up to 80% of these fees to help you complete your purchase. The bad news is that all of these fees may not qualify for this generosity.
You will have to talk to the banks to see what they are willing to lend. Once they make the loan it is folded into your mortgage loan and you repay the costs over time.
This is an important part of the purchase process in Dubai. These offices are also called Trustee Centers and they are usually authorized by the DLD to be the intermediary between the client and the DLD.
The duties these trustee centres do include but are not limited to:
Other duties the trustee centres perform include verifying property documents, ensuring compliance with DLD regulations, and collecting transfer fees required by the Dubai Land Department.
On top of all this, the trustee works to ensure a smooth transaction process and that all sales, purchases, and leases are compliant with the local laws. Also, they work to maintain the integrity of the real estate industry while keeping real estate transactions very efficient.
The word of caution is before you engage one of these centres, make sure they are duly authorized by the DLD. This is important as the transaction has to be registered with the DLD within 60 days or the transaction is void.
To make your Dubai sales or purchase run smoothly, contact our estate agency. We have over ten years of Dubai real estate experience and we know what it takes to ensure a smooth transaction.
Our Dubai estate agents are RERA-approved and they know the real estate market and its governing laws thoroughly. They will make sure that your transaction abides by all the Dubai laws and that you are fully aware of all fees involved.
When you want your transaction to run headache-free, call us. We know how to take the stress out of your international purchase.
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TRPE Real Estate is a company registered in Dubai, United Arab Emirates (License No. 999314) located at Office No 1001, Ascott Park Place, Sheikh Zayed Road, Dubai. We are regulated by the Real Estate Regulatory Agency (RERA) under office number 28357.
