If you are moving to the UAE, whether for work or to start a new business, you may be thinking about buying a home rather than renting, which is understandable given the rising cost of rent. Additionally, you are permitted to own property in the UAE in certain regions under the 2002 Freehold Property Law.
We have compiled ten key recommendations for purchasing real estate in the United Arab Emirates to make it easier for you.
Do Your Research
Before purchasing a home, experts advise conducting in-depth market research and evaluation.
Take into account all considerations. What kind of rental returns can you anticipate from the property? Is there demand there now, and will there be in the future? Is the neighborhood well established and connected? What amenities are there?
Take Note of Freehold or non-freehold
Whether it is freehold or not, the government of UAE has designated a sizable portion of the city as freehold land, allowing international investors to purchase entire properties outright.
There are still a number of non-freehold zones, most notably Jumeirah, Umm Suqeim, and Al Barsha that are open for purchase solely to GCC nationals.
However, recently created non-freehold neighborhoods like La Mer and City Walk in Jumeirah and Madinat Jumeirah Living in Umm Suqeim are now available for purchase by people of all nationalities.
Define Your Objective
Understanding the purpose of the purchase before making any real estate investments is crucial since it will help choose the sort of property to buy.
Knowing the type of property you want to invest will make your search easier and faster. Whether you want an apartment, condo, villa or a mansion, knowing what you think suits your lifestyle and interest will help.
Know The Property Type
You have the option of purchasing a preselling or a built property. You can choose the kind of property that is most appropriate for you based on your buying goals (for your own use or as an investment) and your available funds.
Pre-selling properties as everyone may know tends to be a lot cheaper and it's value could go and multiply as its about to reach its completion.
When considering about purchasing a house in the United Arab Emirates, location is the most crucial consideration to take into account. You must locate the ideal location that meets the requirements of both you and your family.
The following are the essential considerations you should make when choosing the location:
The distance between your workplace or business
Supermarkets, restaurants, malls and hospitals, pharmacies and other nearby amenities
Schools and parks in the locality (if you have children)
The overall community in the area
These elements will not only make your life more comfortable, but they will also have a big impact on the future selling and rental values of your home.
Finding a Reliable Broker
When you are certain of your area and the kind of property you are looking for, it's time for you to find a realiable and friendly broker who can handle all buying process.
All About Properties LLC will talk you through all the steps involved – from how to make an offer, the negotiation process, the paperwork required, obtaining the no-objection certificate, transfer appointments and the handover.
You're going to make an enormous leap and maybe spend the largest sum of money in your life. You will be able to proceed with the process and make wise decisions if you take the time to fully comprehend the processes in place.
Know the mortgage gap. Mortgage rates in the UAE are now favorable, however purchasers should be aware that the Central Bank of the UAE has set an 80% loan-to-value restriction for first-time buyers, also known as the mortgage cap.
This indicates that a first-time buyer will need a minimum deposit of 20%, and that this amount will increase to 40% for people purchasing a second home or a property worth more than DH 5M.
Don't waste time finding a suitable property, only to realize later that you don’t have the necessary funds to go through with the deal.
A larger down payment now will result in reduced yearly mortgage payments. LTV, or loan to value, is a word in finance used by lenders to describe the relationship between a loan and the value of a residence. Although it may be tempting to apply for the loan with the greatest LTV, it is best to pay a larger down payment and choose a lower LTV; this makes sure that your future payments are affordable and allows you to save money for other necessary and unforeseen events.
The maximum mortgage term in Dubai is approximately 25 years. However, a lot of folks choose a 10- or 15-year payment plan. Shorter tenors are preferable because they will generate less general attention.
For off-plan or pre-sale homes, you must provide the developer with a document outlining the terms and conditions agreed upon as well as the developer's designated completion date. You are entitled to a return of 5 to 15% of the initial down payment if the developer doesn't deliver the property by the specified date. An MOU is filed with the Dubai Land Department when choosing a secondary sale. MOUs must be thorough documents that clearly spell out the buyer's and seller's responsibilities. It must expressly mention the charge that must be paid to the developer, lender, government agencies, and real estate broker.
A minimum of 10% in cash, or the equivalent in property value, must be set aside in addition to the down payment when purchasing a home with mortgage financing.
The bank-empaneled valuers must conduct an impartial evaluation of the property. Based on the valuation amount given by the evaluator, the lender determines the finance amount. In some circumstances, the appraisal price may be less than the sale price, which would entail more money up front and less finance overall. An exit clause must be included in the MOU to limit this risk and safeguard the buyer from losing their initial deposit in the event that they fall short of the anticipated funding amount. The valuators' determination of market worth does not include transfer, brokerage fees, detachable goods, or furnishings.
Take Note of Other Fees
Correspondingly, first-time buyers should be aware that there are other costs to consider when investing real estate besides the deposit.
Before making a purchase and determining their return on investment, customers need to be aware of transfer fees, tax, agency fees, sales progression fees, mortgage arrangement fees, and mortgage insurance expenses.
To get all the information you require, I advise you to speak with a mortgage adviser. They can walk you through all the costs associated with purchasing your first property in the United Arab Emirates.
The buyer pays the majority of the transaction-related fees, which usually total between 6% and 7% of the purchase price.
The DLD fee is 4% of the purchase price, and you need to pay 0.25 per cent of the loan amount if you are taking a mortgage.
The fact that there are no income or capital gains taxes to reduce your earnings is one of the primary benefits of investing in UAE real estate.
Include other prospective expenses like furniture, moving expenses, and electricity prices in your budget.
Know Your Operational Cost
These would comprise any maintenance fees and service fees, all of which would change depending on the kind of property you purchased.
"Compared to an apartment or a serviced flat, villas and townhouses have reduced maintenance and/or service costs. The location and amenities available will also affect these fees. These ongoing expenses are levied annually in addition to the property value.
Plan your Exit Plan Scenario
Recognize the current real estate trends and keep an eye out for successful neighborhoods and emerging localities. According to him, it is important to take into account the amenities because they will determine the property's resale value.
While many properties have affordable pricing, the absence of facilities reduces their overall worth. When buying a property, purchasers are unaware of these hidden aspects. They only become apparent when it is time to leave.