Buying a home in UAE

Steps of buying a home in UAE

To grace your interest in buying a house in Dubai, I have put together a step by step process to help you get familiar with the arrangements of purchasing a home in Dubai UAE.

Buying a house in Dubai normally takes 2 – 10 weeks, which commonly depends on whether there are mortgages involved on either the purchaser or the seller. Dubai has been a popular spot for real estate investment since it initiated the Freehold ordinance.

The legislature permits foreign investors to procure and sell properties in the Emirates. It also yields a brilliant opportunity for a lot of expatriates who are projecting a long-term stay in Dubai.

Buying a property, whether it is to live in or as an investment, involves a wide range of processes because of the many ways one can buy.

Buying off-plan

This is the simplest but longest step in terms of time, as it starts with an online registration process. Buying a property on the secondary market is much quicker.

The secondary real estate market is the market where all existing or already built real estate assets are put for exchange. Thus, freshly built houses are not acknowledged as a part of this market. Typically, in a secondary market, one property owner sells to prospective owners. But there are still several factors to consider.

Finance is at the core of this, but not just from the buyer’s perspective. The financial status of the seller also comes into play: for example, does the seller have a mortgage on the property they aspire to sell?

Make full cash transaction

This is the quickest way of purchase and guarantees no hassle.

To purchase a house, the transaction costs for buying property fall between 3 percent (for the low-value property with no brokers) to 7.5 percent (brokers and a full suite of advisors with property value over Dh500,000) of the actual price, excluding mortgage-related charges and interest rates.

If a mortgage is the required mode of purchase, then get bank pre-approval for the loan. Typically, this will take one to two weeks and that depends on finalization of the paperwork which is submitted to the bank.

The process

Each bank may have a distinct set of demands based on the occupation of the buyer or whether the borrower works in the private sector, the public sector, or is self-employed. This process has fees combined with it, while a pre-approval is only valid for around 45-60 days.

Minimum documents at this stage would be a passport, visa, Emirates ID, six-month bank statement, six-month credit card statement, payslips (as applicable) or letter of incorporation and company accounts covering the last 6 months, salary certificates stating all allowances and the application form along with the requisite fees.

The pre-approval will outline the general terms of the mortgage, but the last terms of the mortgage will depend on the actual property purchased. Once a buyer’s offer has been accepted, the seller’s agent will produce the memorandum of understanding (contract) which outlines all the costs and responsibilities of both parties. The buyer at this point pays a 10 percent deposit in the name of the seller, but the cheque is normally held by the seller’s agent.

The next step is for the buyer’s bank to carry out a valuation. They inspect the property, commenting on its condition and to ensure that it is secure enough for the bank to lend. This is performed by an external chartered surveyor company that reports its findings back to the bank.

Once the buyer has final approval, the seller will apply for the No Objection Certificate (NOC) from the developer. This can take up to seven working days to complete and, typically, this document has only a two-week lifespan. Once both parties have final approval from the bank, NOC from the developer and clearance letters from the seller’s bank (if applicable), then an appointment is booked at the land department to complete the transfer.

The Registration Trustee will require a security cheque for 10 percent of the sale value, which is returned when the property transfer has been concluded. The cheque will only be cashed if the purchaser changes plans on buying the property.

They register the MOU (memorandum of understanding) with the DLD (Department of Land Development) at any Authorized Registration Trustee office. The purchaser, seller, and agents have to be present at the Registration Trustee office. The MOU represents a “finality” to the decision of buying, but not the actual purchase.

The Registration Trustee will require a security cheque of 10 percent of the sale value, which is returned when the property transfer has been concluded. The cheque will only be cashed if the purchaser changes plans on buying the property. In certain cases, when a force majeure is declared, the purchaser and seller may mutually agree on a “penalty” value that is lower than the security cheque. However, this is not the norm.

The whole buying process, from offer to collect keys, can take as little as 10 to 14 days if the transaction is cash and the seller has no outstanding mortgage. However, it can also take up to 45 days if there are mortgages involved.

On the day of transfer, the buyer and seller, along with the agents and the bank representatives, will meet at the land department. When all processes have been certified and the buyer has paid 2 percent plus payments to the land department and, of course, the purchase price to the seller and commission to the agent, they are given the title deed in their name along with keys and access cards. They then become the proud owner and a part of the successful Dubai property market.

This should get you started and put you in the works whenever you decide to buy that dream home to live in Dubai.