We have summarized our Dubai real estate experience and answered the most commonly asked by our clients property related questions. Use the search line to find the appropriate. If you do not see what you are looking for, you can always contact our Dubai realty specialists to get a professional advice.
The United Arab Emirates is a tax-less country so there are no taxes on property or on any income generated off it. However, the property owner is responsible for the annual maintenance fee and service charge payments, which need to be made to the management company hired by the owner’s association. Payments are made from between one to four times a year at an average price of AED10-AED30 per sq.ft, depending on the project and services included.
In most instances, the transaction process goes as follows:
- Buyer chooses the property.
- Buyer and seller sign the sales and purchase agreement, where all the terms and conditions of the deal are mentioned: the purchase price, additional expenses (agency fee, transfer fee at the DLD, developer’s fee, service charge refund, etc), the transfer date of the deal at the DLD, terms of payment and clearly-defined responsibilities and penalties for both parties in case they fail to uphold the conditions set out in the agreement.
- On signing the agreement, the buyer pays the deposit. This is usually 10% of the purchase price.
- The seller applies for a no-objection certificate (NOC) from the developer in order to sell the property. The NOC is required for the transfer process at the DLD.
- Once the NOC is ready, the buyer and seller can transfer the property and register it on the buyer’s name. Usually, payments need to be made at the time of registration.
The regulations, governing the relationship between the landlord and the tenant, are defined in Law No. 26 of 2007. As per the law, any property owner in Dubai can rent out their unit. Usually, the rental period is one year (extensions are possible).
A property owner can appoint a licensed management company to manage his/her property, in which case the firm bears all responsibility of communicating with the tenant.
The average net income (after paying the service charge) is 5%-10% per year, depending on the type of property, geographical location or service charge price. The more exclusive and expensive properties usually bring in less rental income in percentage even though the rent is higher.
For the most part, real estate deals are made through agencies in Dubai (like everywhere else in the world). Realty agents are market experts and have up-to-date information on the industry and can help both property owners and buyers or tenants find a deal that suits them best. That being said, it is possible to negotiate a deal without an agency.
As per Law No. 85 of 2006 regarding the regulation of real estate brokers, these are some of the requirements for brokerages in the emirate:
- Have an appropriate trade license from the Dubai Department of Economic Development;
- The brokerage company and all its brokers must be registered with the RERA. Upon registration, agency is given an Office Registration Number (ORN) and its agents are given a Broker Registration Numbers (BRN);
- In order to be registered with the RERA, all agents of a brokerage company need a certificate from the Dubai Real Estate Institute (DREI) and have to pass a professional test, administered by the RERA.
- Brokers are required to comply with a Code of Ethics, published by the RERA.
The Dubai market is a melting pot of cultures and it can be a daunting task to those new to the country. It is difficult to trace down who is responsible in the event that something goes wrong in a property deal. Real estate agencies act as intermediaries between buyers and sellers and as such, there is a clear account of who is responsible and both buyer and seller knows where to turn when something goes wrong. Not all agents in the market are registered and it is essential that homeowners and tenants make sure that they are dealing with a registered agent to safeguard their own assets.
As intermediaries, agencies are ethically obliged to work out a deal that is in the best interest of both parties. For example, the agency is responsible for collecting a deposit from the buyer and holding on to it until final payments are made to the seller. The buyer can be assured that he/she will receive the deposit back if something goes wrong with the deal on the part of the seller. Meanwhile, the seller is assured that they will be compensated if the deal is cancelled on the buyer’s part.
Once a property has been handed over to the purchaser, it must be registered in the name of the purchaser at the Dubai Land Department (DLD). The property owner can appoint someone with a notarised Power of Attorney to register their property and receive a title deed if they are unable to do it themselves.
Off-plan property needs to be registered in the interim register through the Oqood system on receiving the initial sale contract. When the property is ready, a title deed will be issued in the name of the homeowner.
A registration fee of 4% of the property value needs to be paid along with a fixed amount for document preparation.
Earlier, ownership of property in Dubai was restricted to citizens of the UAE. However, in 2006, the government passed Regulation No. 3, determining designated areas where non-citizens can own property. In these areas, foreigners are permitted to buy property on freehold ownership. Major freehold properties are available in most parts of ‘new Dubai,’ such as in Dubai Marina, Palm Jumeirah, Jumeirah Lakes Towers and Emirates Hills.