The first step in buying real estate is an oral offer to a seller. In Dubai, a foreign national needs no special permission to make the purchase, and unlike in some countries, he can own real estate directly.
When the oral offer is accepted, an initial real estate sales contract is drafted and executed between the parties. The negotiated amount of deposit is placed by the buyer to the seller.
An initial deposit, usually 10 per cent or 15 per cent of the selling price, is also required when buying direct from a developer and is paid to the developer in order to secure the property in the buyer’s name.
Each seller will offer a different payment plan. The deposit is generally non-refundable, unless the seller of the property ultimately fails from his part.
An understanding of the few but important terms or requirement may also be helpful guide to a potential buyer of real estate in Dubai. Getting informed about the latest legislations on real property laws in Dubai can even help the buyer maximize his goals in purchasing real property.
Holding Deposit - this secures the property for a period up to one month usually, allowing the buyer time to put up funds through either financing or transferring of cash funds. This deposit is non-refundable and can range from AED20,000 to AED1,000,000 depending on the property price.
Memorandum of Understanding – a contract made between the buyer and seller to secure the sale. A holding deposit is paid to the agent or seller to make the contract more binding.
Different types of Freehold - freehold usually indicates that the owner of this kind of title enjoys the most superior form of private property ownership. A purchaser can have freehold title in land, in a free standing villa and also for an apartment, the latter kind of ownership is usually called common hold and not freehold.
Freehold is available on many of the developments in Dubai; some projects are 99-year lease.
Payment Terms for Completed Property - completed property needs to be paid for 100%. The developer will charge a transfer fee to put the property contract into the buyer’s name and the contract will follow in about 2 weeks.
Bank Accounts - buyers do not need a local bank account to arrange purchases.
Purchase Timescales - purchases normally take no longer than two weeks to complete. It is important to have your funds ready in order to prevent disappointment.
Government Tax - there are currently no government taxes of any kind when purchasing a property in Dubai, nor is there a capital gains tax. When the Dubai Lands Department registers title, buyers will pay a 1.5 per cent tax based on the purchase price of the property. If they have a mortgage, they will pay 0.25% of the value of the loan. These issues will hopefully be dealt with in the forthcoming law.
Residency - in general, the Dubai Government issues residence visas to new property-owners and their immediate family. The residency visa is arranged by the developer and is usually a 3-year renewable visa. It does not normally include a work visa. It is purely to allow the owner and his immediate family to reside here without needing to renew transit visas.
Re-sale - you can sell your property or assign your agreement to anybody. This means that they will take over the payments to be made to the developer. |
