In Dubai, buying a property whether to live in or as an investment is a multi-faceted process, since there are many ways one can buy a home in Dubai. In this article, we will give you a brief yet informative guide about the types of property and how to buy a house in Dubai.
Off Plan Properties
Off-plan property is a property before a structure has been constructed on it. Real estate developers usually buy these types of properties and market them to early adopters for further development. Buying off-plan properties is the easiest way to buy property in Dubai; however, it also takes the longest time compared to other methods.
- First, the buyer needs to submit an application form to the developer; this can be done online. One can also do this via a registered agency.
- Once the application is approved, the buyer will need to go to the developer’s sales center on an allotted day to select the unit and pay the initial deposit.
- Then, depending on the level of completion, the buyers go through a waiting period of 2-3 years before they receive the property, receiving time is subject to the schedule of that particular development.
Buying from Secondary Markets
This is a much faster way to acquire property; however, the process requires more steps and is dependent on the financial capacity of both the buyer and the seller.
We will now explain the procedure for all the possibilities
Cash buyer and mortgage-free property
- The buyer has decided to purchase a property, now the buyer and seller must negotiate the terms and sign a property sales contract, also known as a form F, which is required by the Dubai Land Department (DLD). Any additional terms and conditions need to be attached in an addendum.
- The buyer hands a deposit cheque in the name of the seller. As of the time that this article is written, the deposit is 10 percent of the purchase price.
- The seller’s broker or a neutral third party will hold the deposit.
- The cheque will only be cashed if the buyer defaults on the agreement; else, the cheque is returned to the buyer at transfer.
- A no-objection certificate (NOC) must be obtained from the developer, stating that the seller has paid charges and fees and that the developer has no objection to the sale.
- Most developers require both the buyer and seller to attend the NOC application procedure.
- At this time, the seller settles any unpaid fees and the buyer may be required to arrange for future payments.
- The buyer may also have to give the developer a deposit, which is refunded after the transfer takes place.
- The buyer presents a copy of the new title deed to the developer.
- Note that each developer has different NOC deposit and fee requirements, as well as processing times. Be sure to confirm these policies with the developer before applying for a NOC.
- A NOC usually takes five to seven working days to be issued. Once it is done, the parties are free to transfer ownership of the property.
- Either parties or their legal representatives, through a valid power of attorney, must attend the transfer.
- Fees are payable in cash and paid by the parties as agreed.
- The buyer must bring the following cheques:
- The full purchase price payable to the seller
- The buyer’s portion of the transfer fee as agreed between parties plus DLD registration charges.
- The broker’s commission.
- When all payments have been made and the trustee verifies all the documents, the information is sent to DLD for approval.
- Once approved, the trustee has the parties sign the official transfer documents.
- At last, the original title deed is issued and given to the buyer, along with keys and access cards for the property.
Cash buyer and mortgaged property
- In the case of there being an existing mortgage on the property, the loan must be settled prior to the transfer to the buyer.
- The seller must request a liability letter from the lender (bank).
- The liability letter generally has a validity period ranging from 7-15 days; therefore it is important to time the request so that the letter does not expire prior to the transfer date.
- If the seller cannot settle the mortgage, then the buyer must do it.
- A cash buyer needs protection against the seller transferring property to another person or changing the terms of the agreement after the buyer pays off the seller’s loan. It is therefore important to “block” the property.
- Once the liability letter is received, the parties must go to the RT office to “block” the property.
- The parties must bring the following documents and cheques:
- Signed form F
- Liability letter
- Copy of title deed
- A cheque for liability letter amount payable to the lender by the buyer
- A cheque for a 4 percent transfer fee as agreed, plus registration charges payable to the DLD
- A cheque for the blocking fee payable by the buyer to the DLD
- A cheque for the seller
- A cheque for the broker’s commission
- After the property is blocked, the seller delivers the cheque to the lender (some banks require the buyer to be present as well)
- After the mortgage is settled, the clearance letter and original title deed are provided to the seller.
- Once this is done the NOC process starts.
- Once the NOC is received the parties proceed to the relevant office to transfer the property.
- Finally, once the cheques are disbursed the buyer takes the original deed.
Mortgage buyer and mortgage-free property
In the case of a buyer needing financing for a property, a pre-approval letter needs to be obtained to determine the maximum amount the bank is willing to lend (keep in mind that pre-approval letters have an expiration date).
- The following are required to receive a pre-approval letter:
- A salary letter from your employer
- Any salary slips you might have received
- Bank statements for the last six months
- Passport copy with both a photo and visa page
- Copy of your Emirates ID
- Copy of current credit card statements
- Proof of address
- Once the parties have signed the contract and the deposit is handed over, the lender will conduct a valuation or appraisal of the property’s value. The valuation fee is generally paid by the buyer.
- If the property is valued for at least the purchase price, the bank issues the final offer letter (FOL) to the buyer.
- The buyer must arrange with the lender to sign the FOL and issues security cheques to the bank, as required.
- The parties then apply for the NOC.
- Once it is obtained, the lender schedules the transfer at its preferred RT office.
- The buyer must bring the following cheques:
- Contribution of at least 25 percent of the purchase price, as required by the lender and UAE Central Bank regulations, payable to the seller
- The mortgage registration fee is equivalent to 0.25 percent of the loan amount, plus charges payable to the DLD
- A cheque for the 4 percent transfer fee as agreed, plus charges payable to the DLD
- Broker’s commission, if applicable
- At transfer, the bank brings a cheque payable to the seller for the remaining balance of the purchase price.
- The mortgage is then registered with the DLD.
- If it is a conventional loan, the title deed is issued in the name of the buyer. If it is an Islamic (Sharia) loan, the lender is listed as the landlord and the buyer as the tenant.
- The original title deed will be given to the bank to hold until it is paid in full.
Mortgage buyer and mortgaged property
In this case, the timing of the application of documents must be kept at the forefront as all documents have varying processing times and expiration dates.
- Once the buyer and seller sign the agreement, the buyer’s bank conducts the valuation of the property and the FOL is signed.
- The seller requests a liability letter from the lender.
- After the issuance of the liability letter, it is sent to the buyer’s bank, which settles the mortgage with the seller’s bank.
- Once the mortgage is settled and the clearance letter and original title deed have been received, the parties apply for the NOC.
- When the NOC is ready, the buyer’s lender arranges the transfer.
- At the transfer, the seller’s existing mortgage is released. The seller must pay a fee for the release.
- The property transfer documents are signed.
- The buyer provides the necessary cheques and the buyer’s lender issues a cheque to the seller for the remaining balance of the purchase price.
- The buyer’s mortgage is registered and the buyer’s lender retains the original title deed until the mortgage is paid in full.
For some, buying a property in Dubai may seem like an intimidating procedure considering the number of steps involved. However, you need not feel that way. The DLD and other legislating bodies involved make sure that the process is relatively smooth and fast. Having a trustworthy and efficient agent will remove a lot of the stress for you as well. We hope that you found this article useful and that you are now better prepared to decide how you will be purchasing your Dubai property.
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