The full cost of buying a home in Dubai

The price and the deposit

If you buy with cash, the price is paid to the seller at transfer, usually by manager's cheque at the trustee office. If you buy with a mortgage, the bank lends part of the price and you pay the rest yourself. The UAE Central Bank sets maximum loan-to-value limits for home loans, so every mortgage buyer needs a deposit; the share required depends on factors such as residency status, the price of the home and whether it is your first. Your bank will confirm the figure for your case.

When the sale agreement is signed on a ready home, the buyer commonly provides a security deposit, held until transfer. The amount and who holds it are set out in the contract.

The Dubai Land Department transfer fee: 4%

The largest cost after the price is the DLD transfer fee: 4% of the purchase price, plus an administration charge. On a home priced at AED 2,000,000, the fee is AED 80,000. By market practice the buyer pays it, although the parties can agree otherwise in the sale agreement.

For a ready home, the fee is paid at transfer, when ownership is registered in your name. For an off-plan home, the purchase is registered on the DLD's interim register, known as Oqood, and the fee generally falls due at that registration, early in the purchase rather than at handover. Developers sometimes offer to pay part or all of it as an incentive; if so, make sure the contract says so.

Registration trustee and title deed fees

Transfers are completed at a registration trustee office, a centre approved by the DLD to handle the paperwork, checks and payments of a transfer. The trustee charges a fee for the service, plus VAT, and the amount depends on the price of the property.

The DLD also charges for issuing the title deed in the new owner's name, and off-plan registrations on Oqood carry their own administration fees. These are modest beside the transfer fee, but they are due, and a full cost estimate includes them. The DLD publishes its current fees on its official website.

Agency commission: commonly 2%

If you buy through a broker, the agency's commission is commonly 2% of the purchase price, with VAT at 5% charged on the commission. This is market practice, not a rate set by law, and it is agreed in writing before you proceed. On a home priced at AED 2,000,000, 2% is AED 40,000, and VAT adds AED 2,000.

In Dubai, a buyer's agreement with a broker is recorded on the Real Estate Regulatory Agency's standard form, known as Form B, and the sale agreement between buyer and seller on Form F. Off-plan homes bought at a developer's launch are often sold with the developer paying the agency, and no commission charged to the buyer. Ask who is paying whom, and have it in writing.

Mortgage costs

Borrowing adds its own costs. The DLD charges a mortgage registration fee of 0.25% of the loan amount, plus an administration charge; on a loan of AED 1,500,000, 0.25% is AED 3,750. The bank will usually charge an arrangement or processing fee and a valuation fee, and will require life insurance, and commonly property insurance, for the term of the loan.

Banks set their own fees, and they differ. Ask each bank for its full list of charges in writing, not only its interest rate, and compare them side by side.

Costs particular to resale and off-plan

After the keys

Owning a home has running costs that a purchase budget should at least note. They include annual service charges for the building or community, charged by area, with approved service charges for registered projects published by the DLD; connection and a deposit with the Dubai Electricity and Water Authority (DEWA); district cooling charges in buildings that use it; contents insurance; and maintenance.

Putting it together

A full estimate for a ready home bought with a mortgage adds to the price: the 4% transfer fee and its administration charge; the trustee and title deed fees; the agency commission and its VAT; the 0.25% mortgage registration fee; and the bank's own fees and insurance. For a cash purchase, leave out the mortgage lines. For off-plan, check what the developer is paying, and when each registration fee falls due.

Hamd Properties, the real estate company of Hamd Holdings, is built around this arithmetic. Its first promise to buyers is the full cost before you view: Dubai Land Department, trustee, agency and mortgage fees added in, for every home on a shortlist. Its guides and calculators set the numbers out step by step.

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