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Whether you’re looking for the perfect home or a lucrative real estate investment, the process of buying a property in Dubai, is reasonably straightforward and streamlined.
There are four basic legal steps of buying property in Dubai. In the next section we chronologically breakdown the legal aspects you need to be aware of when making a real estate purchase on cash:
ESTABLISHING A BUYER AND SELLER AGREEMENT
SIGNING THE AGREEMENT OF SALE
APPLYING FOR A NO OBJECTION CERTIFICATE (NOC)
EFFECTING THE TRANSFER OF OWNERSHIP WITH DUBAI LAND DEPARTMENT
Before buying you must request a copy of the property title deed and site plan from the dealer. It will not involve much time and cost to find the reality behind seller’s claims about title ship of the property by making an enquiry to Dubai Land Department.
It will also help the prospective buyer to find if the property is restricted from sale under a court’s order or already having a mortgage which prevents its sale. But Land department require a valid power of attorney to carry out any such investigation if the owner of property is not present in Dubai. Land department can also help in finding the actual value of property in question.
When purchasing property in Dubai, there are certain things that are very important to verify before going ahead with the deal.
Make sure that the seller owns the property and can legally sell it
You should ask to look over the title deed to check their name is on it and that it’s the same one on their passport.
Ensure that the property is free from any debts (mortgage, lien, tenancy rights, charges, etc)
This is verified through a No Objection Certificate (NOC).
Verify your broker’s card and confirm they’re registered with the Dubai Land Department
Every broker in Dubai needs to be individually registered through the Real Estate Regulatory Authority (RERA) and has a valid broker ID card on him. Keep a copy for your records.
Make sure your finances are covered
Expats are only entitled to borrow up to 75% of the property’s value for the first time if they are valued at less than Dhs5 million or up to 65% if more.
Your monthly salary will also be taken into account and monthly mortgage repayments can’t exceed 35% of your income.
On top of your deposit, which is normally at least 25% of the property price, you will need to pay:
Have the proper clauses in your Memorandum of Understanding (MOU)
The MOU document outlines the terms and conditions of a sale agreement between two parties. You would normally have to pay a small deposit at the time of signing (5%). It should at least include the following:
By virtue of the construction contract, the contractor is potentially liable to the developer for latent defects, and by virtue of the property sale contract, a developer is liable to a purchaser for the same latent defects.
A latent defect is one which cannot be observed by an external inspection of the goods
There are fees and taxes payable throughout the sales procedure. Once you have found a property that you want to purchase, both buyer and seller have to agree on the terms of the sale. For a resale, a Memorandum of Understanding (MOU) is drawn up and signed by both parties. At this point a deposit is due, usually around 10% of the purchase
There is a one-off land registry tax, which is 4% of the purchase price, plus an admin fee.
The legal aspects of how to buy property in Dubai are regulated by the Real Estate Law No. 7 of 2006: Land Registration Law in the Emirate.
Article (4) of Law No. 7 of 2006 outlines who can buy and own property in Dubai. According to the law, you can buy real estate anywhere in Dubai if you are:
Under the same law, non-residents have the option to buy properties on freehold or leasehold ownership in Dubai, but only in the areas designated for foreign property ownership.