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Understanding Costs: What to Expect When Buying a Property in Dubai in 2024

agent breaks down the cost of buying a property in Dubai

The Dubai real estate market continues to captivate both residents and global investors, driven by strong economic growth and favorable residency policies. In 2024, with the city's reputation as a dynamic hub for investment, more expats and long-term residents are opting to purchase homes rather than rent.

However, knowing the costs of buying a property in Dubai is essential for making wise financial choices, particularly if you are a first-time buyer. These costs include government fees, service fees, mortgage-related charges, brokerage fees, and optional expenses such as home insurance.

In this article, we'll break down the costs of buying a property, helping you make an informed choice and budget appropriately.

Dubai Land Department (DLD) Fees

Dubai has strict processes relating to property transfers. To register your property and validate the transaction, you must adhere to Dubai Land Department (DLD) regulations within 60 days.

As part of this process, you must pay the following government fees to the Dubai Land Department:

DLD Cost	Amount
Dubai Land Department Fee	4% of the purchase price + AED 580 admin fee for the title deed
Property Registration Fee	AED 2,000 plus 5% VAT for properties valued below AED 500,000 AED 4,000 plus 5% VAT for properties above AED 500,000.
Mortgage Registration Fees	0.25% of the mortgage amount + AED 290

Real Estate Agency Fee

There will be a real estate agent commission to cover the expertise and time spent by your agent, as well as a conveyancing fee.

Your real estate agent and conveyancer are responsible for ensuring that all legal requirements are met according to the laws of the United Arab Emirates. These fees may include a wide range of costs, such as administrative, legal, and other expenses necessary to ensure the entire process is carried out smoothly and efficiently.

Real Estate Agency Costs	Amount
Agency Fee	2% of the purchase price + 5% VAT
Conveyancing Cost	Typically costs from AED 6,000 to AED 10,000, depending on the services offered.

Mortgage Costs

If you choose to buy using a mortgage, it's essential to keep in mind that there are additional fees that you may encounter.

The Bank Mortgage Arrangement Fee usually amounts to 1% of the loan value plus an additional 5% VAT.
The fee for property valuation varies and is typically between AED 2,500 to AED 3,500, plus an additional 5% VAT.

Mortgage Costs	Amount
Bank Mortgage Arrangement Fee	Usually 1% of the loan value plus an additional 5% VAT.
Property Valuation Fee	Typically between AED 2,500 to AED 3,500, plus 5% VAT

Insurance Costs

Although home insurance is not mandatory, it is highly recommended to avoid large unexpected costs in the event of an emergency.

When purchasing a property with a mortgage, you will usually be required to take out a life insurance policy. These costs can be as follows:

Insurance Costs	Amount
Home Insurance	About AED 1,000 - but depends on the property
Life Insurance	Typically charged at 0.4-0.8% per annum on the decreasing loan balance.

Security Deposit

When purchasing a property, the buyer must deposit 10% of the agreed transaction value in the seller's name. This deposit is a security measure typically held by the appointed real estate agent until the property transfer is finalized. It is important to note that the deposit is refundable if the transaction falls through due to unforeseen circumstances or breaches of contract.

However, if the buyer withdraws from the transaction without valid cause, they may forfeit their deposit. It is recommended to carefully read through the terms and conditions of the contract before depositing to ensure clarity and understanding.

Other important considerations

Apart from these direct costs, there are additional expenses to keep in mind:

Service Charges: Service charges are annual charges for maintaining common areas in your community. These fees vary by community and should be factored into your budget.
DEWA Fees: When considering the costs of purchasing a property in Dubai, it is essential to factor in the DEWA fee. This fee is charged by the governing body responsible for managing electricity and water connections in all households throughout Dubai. The cost of the DEWA fee varies depending on the type of property. The deposit for DEWA can range from AED 2,000 for an apartment to AED 4,000 for a villa, depending on the number of meters.

Conclusion

When considering a property purchase in Dubai, it's essential to know the various costs that may arise beyond the purchase price.

You can make a more informed and confident decision by carefully reviewing and factoring in these additional costs. With some research and preparation, as well as the expertise of an experienced real estate agent, you can navigate the buying process with ease and peace of mind.