Cost of Buying a House in Dubai – There are just countless reasons for one to buy a house in Dubai. Great rental incomes, positive long term profit prospectus, amazing facilities, luxurious lifestyle and well built houses sure are pretty convincing. In addition to these factors, the ease of buying and selling property in Dubai and the tax concessions draw investors and property seekers in like bees to garden.
Considering several aspects and from most point of views, buying a property in Dubai is a profitable matter, if carefully done. In fact, in context of Dubai, it is largely believed that it is better to buy a property than living on rent there. While planning to buy a house in Dubai, price you actually have to pay is certainly higher than the base or purchase agreement price.
There are a bunch of factors that add to the cost of buying a house in Dubai which are extra or additional to the purchase price. These costs come out as surprise for many buyers. It is very crucial for buyers and property seekers to know these overhead costs, since these are mostly immediately payable and could considerably shake budget. In most cases, buyers remain unaware of these costs in advance and as these expenses incur, the purchaser’s budgets are thrown off-guard.
So, while setting up the budget towards the cost of buying a house in Dubai, the buyer should essentially know and include additional costs to be paid in the course so that he or she can figure out the amount they can actually spend on the property. Read on to know some of the basic additional costs of buying a house in Dubai that the buyers can expect.
The actual costs of buying a house in Dubai
While there can be a variety of overhead cost that a property seeker may be made to pay- the costs in addition to the actual purchase price- there are some of the basic (but obvious) additional costs of purchasing that a buyer can expect. Simply, the actual and total costs of buying a house in Dubai would include the following:
The purchase price:
The obvious thing. This is the price that the buyer is supposed to pay the seller. This amount is the consideration payable to seller of the property against the purchase of the property. The rate is discussed, negotiated and finally agreed upon by both the parties and is included in the agreement formed and signed by the parties. This is, so, one obvious item in the cost of buying a house in Dubai.
The real estate agent commission:
Hiring a reliable agent is quite very helpful in finding an appropriate property in a city like Dubai. They might be capable of guiding buyers in a better manner and can present them with more suitable alternatives. In case the buyer had hired a real estate agent or if the deal was done through a real estate agent, then a certain amount is payable to the broker for the services and assistance rendered in the course of property purchase or sale. It is a pre-agreed sum. Generally, the commission chargeable by the real estate agent comes around 2 to 4 per cent of the purchase value of the house of property. So, in case you have dealt through a real estate agent, his commission is another obvious item constituting the cost of buying a house in Dubai.
Dubai Land department transfer fee:
The transfer of property is finalized and the transfer deeds are executed by the Dubai Land Department. 4% of the purchase amount is payable to DLD as a transfer fee.
Mortgage registration fee:
If mortgage loan is taken for purchasing a property, the mortgage is to be informed and registered with the Dubai Land Department while carrying out the property transfer. 0.25% of loan amount plus some additional amount is payable as the mortgage registration fee to the Dubai Land Department in this respect.
It is a general criteria to buy houses against mortgage loan. In such cases compound interest is chargeable on the principle amount. These amount are pretty huge and gets bigger with the number of years for which loan is taken- but often the interest are not recognised in budgets since these go as small amounts in monthly instalments. Anyway, if the buyer is calculating the exact cost of buying a house, it is recommended to include this amount as well.
Where the buyer and seller agrees on all the terms and are ready for the exchange of property, both the parties are required to apply for a No Objection certificate, abbreviated as NOC, from the developer. For obtaining a No Objection Certificate, a nominal amount is to be paid to developer as NOC fee. The amount can vary from developer to developer and can be anywhere between AED 500 and AED 5000. It is advisable to discuss these fees in advance so buyers can include it in the budget for the costs of buying house in Dubai.
Refundable security deposit:
This is yet another additional charge that is payable to the developer by the buyer. Such security is not necessarily payable in all cases. But generally in case of apartments and societies, a security amount is payable in various forms and vary from developer to developer. Security deposit for electricity and water connection is included in most cases as well. Though this amount is refundable when the property is sold, it is to be paid for once, and thus, it should be included in the cost of buying a house in Dubai.
In addition to these expenses, a property registration fee is also payable. The amount payable is as given below:
- For the properties that are priced below AED 500,000, AED 2,000 is payable.
- For the properties that are priced above AED 500,000, AED 4,000 is payable.
So these are some of the basic additional expenses that constitute to the total cost of buying a house in Dubai.
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