In the past, purchasing property in the Middle East was not as easy as it is now. After the Prince issued Freehold Decree in 2002, which made it easier to sell, lease, buy and rent property, Dubai has become a global hotspot for property purchase. But just like every major decision in life, this one requires the buyer to remember a few simple tricks before purchasing a property in Dubai:
The purpose behind the purchase
With rising rent and people travelling in to spend their weekend in Dubai, it has become more profitable for expats and regular visitors to buy property in Dubai. Are you interested to buy a property for investment purpose or do you intend to live there yourself? It’s important to know the answer to this question. Then, it is vital to study the property market and invest accordingly. For example, if you don’t plan on staying in the property yourself, investing in an apartment would be a better decision than purchasing a villa, as apartments have better rental yields than the latter.
Types of properties
Off-plan properties involve developers and usually exist only in books. These are projects waiting to be completed after all units are sold or booked. In this case, when looking for an off-plan property, look for these things to ensure safe choices: Reputation of developer, location off-project, design and models of the project.
Resale properties usually have private ownership. During the purchase of a private property, usually a MOU is signed and buyer has to put down a deposit or booking fee of 10% before the final purchase happens. This differs from people to people. These fees are usually non-refundable. If the property is handled by an agent, then the buyer should get to an escrow agreement before full purchase, in case of any complications. This ensures security for both the sides.
Inspection is the key
When purchasing an existing property from a seller, it would be wise to hire a professional and registered surveying company. A thorough check-up can alert you of future maintenance costs and what you are actually getting into. Especially for villas, this is very important as most are kept unattended for months. You need to make sure that no unprecedented problems get handed to.
Beware of hidden debts and liabilities
Make sure the property is free of any liabilities or debt before you sign any papers. Ask for a N.O.C (no objection certificate) from the seller. The certificate is given by developers and usually checks the sites several times before giving green signal to the Dubai Land Department.
Professional Legal Advice
Seeking professional legal help is the smart thing to do. This ensures avoidance of fraud and makes the entire purchasing process risk free. In-house lawyers, registered by the Dubai Land Department, can ensure escrow facilities so the process is transparent and fair for both the buyer and seller.
Obtain bank “pre-approval” before finalizing
It’s important to have your finances in place before signing any document. In this way, time, energy and even legal complications can be avoided. Make sure that everything is pre-approved by the bank or lending institution and you have the required funds to go through with your desired purchase.
Additional costs of Property purchase
Keep in mind that there are other costs and fees associated with property purchase transactions. For example, there is additional legal fee, payments to real estate agent or developer fees in some cases. According to the Government, Dubai Land Department fees is4%, Agency Fees is 2% and Mortgage Registration fees is 0.25%. Land registration and maintenance costs are also fixed costs which need to be accounted for. Thus, consider these factors as part of your financial planning as they sum up to quite an amount.
Read and understand the contract carefully
In almost every country there is, a legal document needs to be signed for a transaction to be complete. In Dubai, people sign Sale and Purchase Agreements (SPA) or Memorandum of Understanding. These papers include terms and conditions which both the buyer and seller discuss and agree to. It is very important for the buyer to thoroughly go through and understand the document before signing it.