For many expats in Dubai, owning a home is a dream come true. Until the introduction of freehold properties, most were limited to renting. Today, with property prices becoming more affordable, buying a home in Dubai has turned into a realistic goal for many. In fact, mortgage repayments in some cases are lower than rent, offering an attractive opportunity for both lifestyle and potential capital growth.
However, while purchasing property may seem straightforward, it’s crucial to understand the hidden costs and fees that come with it. From Dubai Land Department (DLD) fees to agent commissions and mortgage registration charges, these additional expenses can add up quickly.
Key Hidden Costs to Be Aware Of
1. Agent’s Commission
Working with a real estate agent can streamline the property-buying process, but it comes at a cost. Agents typically charge a commission of 2% of the property price, plus 5% VAT. This fee is usually due upon completion of the sale.
A qualified real estate agent can provide valuable insights into the market, help you navigate different communities and developments, and manage the buying process from start to finish.
In addition, hiring a licensed conveyancer is highly recommended to ensure all contracts, documentation, and financial arrangements are legally sound. Conveyancing fees generally range from AED 6,000 to AED 10,000, depending on the complexity of the transaction.
2. Transfer Fees
In Dubai, the Dubai Land Department (DLD) plays a key role in property transactions, implementing regulations to protect both buyers and sellers. One of the major costs is the DLD transfer fee, which is 4% of the property price. While technically shared equally between the buyer and seller, this fee is usually paid by the buyer.
Additionally, buyers must pay registration fees to the DLD:
- AED 2,000 + 5% VAT for properties valued below AED 500,000
- AED 4,000 + 5% VAT for properties valued above AED 500,000
3. Mortgage Registration Fees
If you’re taking out a mortgage, additional costs apply. Mortgage registration fees amount to 0.25% of the loan value, plus AED 290 for administrative charges. These fees must be paid directly to the DLD at the time of registration.
4. Ongoing Costs to Consider
Beyond the upfront expenses, homeownership in Dubai comes with ongoing costs, such as:
- Service charges: These fees vary depending on the property type and location, covering maintenance of shared areas.
- Utilities and DEWA registration: Fees for water, electricity, and other utilities.
Important Deadlines
Buyers should be aware that DLD fees must be paid within 60 days of signing the sale agreement. Failure to meet this deadline can result in penalties or cancellation of the transaction.
Final Thoughts
While Dubai’s real estate market offers excellent opportunities for buyers, understanding the hidden costs is essential to making a well-informed decision. Partnering with experienced professionals—such as licensed agents and conveyancers—can help you navigate the complexities of the process, ensuring your investment is secure and hassle-free.
By planning for these additional fees, you can enjoy the benefits of property ownership in Dubai without any unexpected surprises.
