Six Steps To Help You Climb The Property Ladder

The time is right to buy property in Dubai. Here is how you can do it.

With Expo 2020 Dubai just a year away, long-term visas now available and developers offering attractive payment plans, the time is right to buy property. Armed with the right information and guidance, even first-time buyers can buy their dream homes without a hassle.

1. Know your needs

First of all, be clear on your purpose: do you want to live in the property or to lease out? There are two types of property buyers: end users and investors. Knowing the type of buyer you are will help find the right asset easier, says Saleem Karsaz, CEO of Aeon and Trisl Real Estate Brokers. “Property requirements can also vary based on the number of bedrooms, preferred location or building, whether you want vacant or rented units, your budget, time frame, and return on investment of the property,” says Karsaz. “These are the basic information that a buyer should know.”

2. Decide on the type

Dubai allows any foreigner, whether a UAE resident or based abroad, to buy freehold or leasehold property. Leasehold areas like Silicon Oasis and Dubai Investments Park give buyers the right to live in or occupy the property for up to 99 years, says Qurat Ul Ain, founder of Drehomes. “It grants the buyer ownership rights to the unit, not the land,” says Ul Ain.

Freehold property gives absolute ownership over the unit and the land. “The Dubai Land Department [DLD] registers the buyer’s name as a landowner and grants a title deed,” says Ul Ain. “Freehold property can be freely sold, leased or occupied at the will of the freeholder.” Some freehold areas in Dubai are the Palm Jumeirah, Downtown Dubai, Burj Khalifa, Dubai Marina, Emirates Hills, Jumeirah Lakes Towers, Jumeirah Beach Residence and Dubai Sports City.

Buyers can also choose between off-plan and ready property. Off-plan pertains to property that is not yet built and thus gives the buyer a price advantage. “It can be up to 30 per cent cheaper than ready property with incentivised payment plans available,” says Ul Ain.

3. Search the right unit

The best investment property is one with the right combination of high rental yield and low vacancy risk. Studios and one-bedroom apartments generally have higher yields than three-bedroom apartments and large villas, says Ul Ain. Location is an important factor as some areas appreciate faster than others. For end users, work within budget and identify locations based on essential requirements such as unit size or distance to the workplace, schools, retail and public transport. For off-plan, check the developer’s reputation, particularly concerning quality, timely delivery of units and past projects.

4. Ready the paperwork

UAE residents need a valid passport, residence visa and Emirates ID to start the process. Overseas buyers are only required a valid passport. “The buyer must have the financial capacity, mortgage approval and the amount for the down payment ready through cheque or bank transfer — if a finance buyer,” says Karsaz.

A UAE resident will need these documents to apply for a mortgage: copy of passport, visa and Emirates ID, salary certificate or evidence of regular income, six months’ payslips and bank statements, latest credit card statements, proof of current address and a copy of the Dewa bill or tenancy agreement (Ejari). Ready property buyers will also need to present an MOU for the sale of the property, title deed of the property, seller’s passport copy and no-objection certificate (NOC) from the developer.

5. Visa requirements

Visa is not required to purchase property in Dubai. “You get an investor’s visa upon buying a ready property,” says Ul Ain. “Property investors can either apply for a residence permit, renewable every two years and applicable to Dubai properties, or a residence visa, renewable every six months, for homes bought in any emirate.”

6. Set provision for costs

“Off-plan is normally paid over a series of installments with a reservation deposit ranging from Dh 5,000 to 10 per cent of the purchase price, then a payment plan over the period between booking and handover,” says Helen Tatham, associate director, prime residential sales and leasing, Savills Dubai. “The advantage of off-plan is that one can manage payments over time, and sometimes even after handover. Sometimes there will be a fixed administration fee plus the Oqood registration of 4 per cent of the purchase price. There are generally no agency fees for off-plan purchases.”

For ready property, there is a 4 per cent transfer fee. An NOC is also required from the developer, and costs vary from Dh 1,500 to Dh5,000, says Emad Haq, vice chairman of Haqsons Group, which owns the property firm H&S Real Estate Dubai. Transfer office fees are also payable, ranging from Dh 2,000 to Dh 4,000. “The agency commission is 2 per cent of the sales value, which is mostly paid by the buyer,” says Haq. “The developer also requires annual maintenance charges.”

For mortgage buyers, Haq says processing fees are generally 0.5-1 per cent of the loan value and profit rates vary from 3.99 per cent to 5 per cent. “But when dealing with banks, one should be extremely careful and only sign a contract whereby the fixed profit rate for the entire tenure of the mortgage is there. If one goes for variable rates, the banks within two years will increase your rate to 7 per cent, and there is nothing one can do about it.”

Insurance is required in a mortgage and usually costs 0.25 per cent of the property value. It is not required for cash buyers, adds Haq.