For any individual looking to buy properties in Dubai, price is a major factor influencing the purchase decision. With that being said, it is common for buyers to oversee the extra expenses associated with buying a home in Dubai. It may sound surprising, but these additional costs may account for up to 10% of the total price the property is being sold for. Therefore, it is necessary for buyers to be aware of these costs to make informed decisions. These costs encompass various fees related to mortgages, insurance, government departments, etc. Let’s explore the various charges that property purchases in Dubai can incur.
Government Fees
The DLD is a government department that regulates real estate transactions in the Emirate of Dubai. To complete the transfer of ownership, the buyer is required to pay specific charges.
Below we have listed what these costs are:
Dubai Land Department (DLD) Fees
4% of the property price + admin fees ranging from approximately AED 40 to AED 580 depending on the type of property.
Registration Fees
AED 2000 + 5% VAT (For properties with a value AED 500,000)
DLD Mortgage Registration Fees (Applicable Only for Properties Bought on Mortgage)
0.25% of the mortgage amount + a fixed fee of AED 290
Broker/Agent Fees
Securing the services of a real estate agent or broker to find a property will require you to pay a fee. The fee is usually a percentage of the price of the property bought. It is key to note that this fee must be paid only upon the successful completion of the deal. In addition to this, you may be required to pay conveyance fees if you have opted for assistance with the documentation and other formalities related to the transfer of ownership.
Service Fee of Real Estate Agent/Broker
2% of the property price + 5% VAT
Fee of the Conveyancer
Ranges from AED 6,000 TO AED 10,000
Mortgage Fees
Buying a house on mortgage in Dubai incurs an additional mortgage fee to be paid to the bank. In addition to this, a separate charge for valuation will be incurred as the bank appoints a professional to evaluate the property pricing before the mortgage is finalized.
Mortgage Fee of the Bank
1% of the mortgage amount + 5 % VAT
Property Valuation Fee
Ranges from AED 2,500 to 3,500 + 5 % VAT
Insurance Costs
Buying a life insurance policy is a must if you are looking to buy a home in Dubai on a mortgage. As a premium payment, a charge of around 0.4%-0.8% of the decreasing loan balance will be incurred on an annual basis. While a home insurance policy isn’t a mandatory requirement in Dubai, it is highly advisable to buy one. With house insurance, you can rest assured knowing that you’ll be covered in case of accidental damages, and theft of personal belongings. A yearly home insurance payment costs around AED 1,000. However, it is subject to the type of property it is covering, and the plan you choose.
Life Insurance Fees
Ranges from 0.4%-0.8% of the decreasing loan balance
Home Insurance Fees
Approximately AED 1,000 Per Annum
DLD Maintenance Charges
These maintenance charges must be paid to the DLD on an annual basis for the purpose of building and community maintenance. These charges vary from one community to another and are determined by the RERA Service Charge and Maintenance Index.
As can be seen, there are several factors influencing the additional costs required to be paid. It is imperative to take these additional charges into account, especially if you have set a strict budget for home purchase.
If you are keen to buy a home in Dubai and require professional assistance in finding a space, InZone Properties can assist you. With years of experience in the real estate industry, our team of experts can guide you to find and secure your dream space in Dubai.
