Purchasing property on the secondary property market follows a simple process and procedure through the Dubai Land Department (DLD) and with the support of the Registration Trustee offices.
The different types of transactions will include (a) cash seller to cash buyer; (b) mortgage seller to cash buyer; (c) cash seller to mortgage buyer; (d) mortgage seller to mortgage buyer.
Choosing your property – due diligence
Careful due diligence is critical when deciding to purchase a property, key steps include:
Broker search
When a broker is engaged, buyers and sellers should verify broker registration details via the DLD website or app.
Title search
Obtain a copy of the property title deed and carry out a search with the DLD to confirm the property registration details.
Non-GCC nationals can only purchase property in designated freehold areas in Dubai.
Development/management search
The developer and owners’ association/body corporate manager (for joint owned/strata developments) should be reviewed. This is to ensure, in each case, a good track record of delivery and management.
Review of master plan
For purchases within master community developments, master plans should be reviewed to determine whether future development, within the master community, may impact the perceived value of the property you are looking to purchase.
Inspection
It is advisable to contract inspection services for the purpose of assessing any defects in the property, which may impact on the price you are willing to pay for the property or your decision to purchase.
Service charges
Service charges applicable to a property can vary and can change.
Service charges can be verified by the DLD.
If service charges for a particular property have not increased for some time, this could be a sign that a material increase is imminent.
Chattels
Ensure the status of moveable chattels is clearly established, in terms of what chattels will stay with the property post sale and those which will be removed by the seller. These will be detailed in the MOU and should be identified early to avoid surprises.
Securing your property – The sale and purchase transaction
The sale and purchase transaction include the following stages:
Financing pre-approval in the case of a mortgaged buyer
Buyers can secure a ‘pre-approval’ from their mortgage provider to avoid their deposit payment from being forfeited due to lack of finance.
Sellers have the security that the transaction can be completed.
Power of attorney
Buyers can choose to appoint a representative to act on their behalf for the purchase.
Need to execute a specific power of attorney at a UAE notary (or if executed outside the UAE the power of attorney will need to be notarised, authenticated and translated into Arabic for use in the UAE).
Sales agreement / Memorandum of understanding (MOU)
Sellers and buyers will need to register a sales agreement or ‘MOU’ with the DLD outlining the terms of the agreement which, amongst other things, will provide for the payment of a deposit by the buyer (typically 10% of the purchase price).
The DLD have a standard “Property Sales Contract” otherwise known as the RERA FORM F available for download on their website for the purpose of completing the MOU.
Buyers can request via this document additional terms and conditions to be stated in the MOU, such as an “opt-out” clause protecting the buyer against the loss of the deposit if the property’s bank valuation is lower than expected (in the case of a mortgaged buyer).
It is recommended that the MOU be reviewed by a lawyer to ensure the interests of the buyer are protected.
Propert valuation
A property valuation is carried out by a Licensed provider to ascertain the asset value, independent of the purchase price, for the purpose of calculating the transfer fee (Calculated at 4% of the property’s value).
With a mortgage buyer, the bank will conduct a valuation of the property.
Liability letter (if a mortgaged seller)
Obtained from the seller’s mortgage provider, this letter details the outstanding amount of the mortgage and consequently the amount that will need to be paid to discharge the mortgage.
Clearance documentation (if a mortgaged seller)
The Seller’s bank will release all the property documentation once the mortgage has been discharged. This includes the original title deed and mortgage release letter addressed to the Developer and DLD.
Developer no objection certificate (NOC)
The No Objection Certificate is provided by the developer of the building or community within which the property is located. All the service charges, maintenance and DEWA charges and any outstanding fines will need to be paid prior to the release of the NOC.
Both parties will sign the property developers NOC form, stating that both parties agreed to obtaining the NOC.
In the case of a mortgaged seller, the NOC can only be obtained after the mortgage has been discharged.
Transfer of ownership
Type | Payee | Calculation |
|---|---|---|
Transfer fee | Dubai Land Department | Purchase price *4% + AED 580 (transfers between related parties may qualify for a lower ‘gifting’ rate of 0.125%) |
Mortgage Release | Dubai Land Department | *AED 1,290 + AED 300 (admin fee + VAT) for mortgage release (Non-Islamic)
*AED 1,560 + AED 300 (admin fee + VAT) for lease to own (Unit/Villa/Apartment) (Islamic mortgage) *AED 1,410 +AED 300(admin fee + VAT) for lease to own (land) |
Mortgage Registration Fee | Dubai Land Department | 0.25% of loan amount + AED 290 (admin fee) |
Agency Fee | Real Estate Brokers | 2% of purchase price + VAT |
Registration Trustee Fee | Trustee Office Name | AED 4,000 (flat fee) + VAT |
*All fees and charges are subject to change without prior notice.
**For bulk transfers it may be possible to negotiate agent and trustee fees.
It is recommended you seek proper guidance from a professional conveyancer who will support and guide the you throughout the entire property transaction process.
