How to Buy Property in Dubai

Dubai has made the process of purchasing property one of the easiest and most efficient in the world. I cannot think of another place that gives you the ease, speed and reliability like Dubai does. Thanks to the Dubai Land Department (DLD) streamlining procedures and introducing Registration Trustee offices the transfer of a can be property can be done in a couple of weeks (depending on the situation, however even the more complicated situations are still rectified quickly). While the core steps remain the same throughout the process, there are a few differences depending on if the buyer is paying in cash or using a mortgage, and if the property has a existing mortgage in place.

I'm going to run you through an overview of the processes, and as always, if you have any questions don't hesitate to contact me.

Once a buyer has decided to purchase a property, the buyer and seller negotiate the terms (through their RERA licensed agents). Once all terms have been agreed, a Form F (the property sales contract), will be drafted and sent to both the buyer and seller. This is legally required by the Dubai Land Department to facilitate the property sale and includes crucial details such as the property description, agreed-upon price, payment schedule, and responsibilities of both parties. Any additional terms and conditions should be attached in an addendum.

The buyer will then give a deposit cheque made out in the name of the seller. The current practice is for the deposit to be 10% of the purchase price. This deposit is to be held by the seller’s broker and is then returned to the buyer at transfer and is only cashed if the buyer defaults on the agreement.

The next step is to request a no-objection certificate (NOC) from the developer. The NOC states that the seller has no outstanding payments on the property such as service charges, and that the developer has no objection to the sale. The charge for an NOC is usually between Dh500-Dh5,000 depending on the developer, and is usually paid by the seller. Most developers require that both seller and buyer attend the NOC application appointment. At that time, the seller will settle any unpaid amounts, and the buyer will likely be required to arrange for future service charge payments. The NOC usually takes 3 to 5 working days to be issued. However, this can vary depending on the specific case and any potential issues with the application or property. Once the NOC has been received, the parties are free to start the transfer ownership of the property.

Cash buyer and mortgage-free property

The easiest and quickest transfer. Both parties or their power of attorney, must attend the transfer. The fee in the registration trustee offices is AED 4,200 for Title Deed Issuance and AED 5,250 for Oqood Registration (off-plan only). Fees are paid in cash, paid by the parties as agreed. The buyer must bring the following manager’s cheques:

• the full purchase price payable to the seller

• the buyer’s portion of the transfer fee (4% of the purchase price as agreed between parties but usually fully covered by the buyer) plus Dh540 in DLD registration charges.

• the broker’s commission cheque

When all payments have been given and documents are verified by the trustee, the information is sent through the online system to DLD for approval. Once approved, the trustee has the parties sign the official transfer documents. Finally, the new title deed is issued and given to the buyer, along with keys and access cards for the property.

Cash buyer and mortgaged property

When there is an existing mortgage on the property, the mortgage must be settled prior to the transfer to the buyer. To do so, the seller must first request a liability letter from the bank. This letter states the balance of the loan, as well as any fees and penalties. The liability letter can take up to 14 days to be issued and usually has a validity period of 15 days, depending on the bank. Due to this, it is important to time the request for the letter so that it does not expire prior to the transfer date, otherwise a new letter will need to be requested.

As usually the seller does not have the funds to settle the mortgage, the buyer does it. As a cash buyer needs protection against the seller transferring a property to another person, or changing the terms of the agreement after the buyer pays off the seller’s loan, the property is 'blocked' on the system. Once the liability letter has been received, the parties will go to the registration trustee office to block it. The parties must bring the following documents and manager’s cheques:

• liability letter

• copy of title deed

• cheque for liability letter amount payable to the lender by the buyer

• the buyer’s portion of the transfer fee (4% of the purchase price as agreed between parties but usually fully covered by the buyer) plus Dh540 in DLD registration charges.

• cheque for blocking fee (Dh1,520) payable by buyer to DLD

• cheque for the seller (purchase price minus liability amount, held by the trustees office until the transfer is completed)

After the property is blocked, the seller delivers the cheque to the bank, although some banks might 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. When received, the parties proceed to the registration trustee office to transfer the property. The cheques are distributed and the buyer takes the new title deed.

Mortgage buyer and mortgage-free property

If a buyer is purchasing through a mortgage, a pre-approval letter should be obtained to determine the maximum amount the bank is willing to lend the buyer before the search for the property begins. The benefit of pre-approval allows both the buyer and agent to know the price range when searching for a property, and sellers will take the offer seriously, some sellers refuse to deal with any buyer without a pre-approval. The pre-approval has an expiration date (usually 60 days after issuance), so ideally the buyer will not delay once its received.

Once the cheques are handed over, the bank will conduct a valuation of the property’s value. The valuation fee usually ranges from Dh2,000 –Dh5,000 and is paid by the buyer. If the property is valued for at least the purchase price, the bank issues the final offer letter to the buyer. The final offer letter includes all the terms and conditions of the loan and mortgage. The buyer arranges with the bank to sign the final offer letter 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 registration trustee office. The buyer must bring the following manager’s cheques:

• one with at least 25% of the purchase price, as required by the lender and UAE Central Bank regulations, payable to seller

• mortgage registration fee equivalent to 0.25% of the loan amount, plus Dh290 payable to the DLD

• cheque for the 4% transfer fee, plus Dh580 payable to DLD

• broker’s commission cheque

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 DLD and the title deed is given to the bank to hold, until it is paid in full.

Mortgage buyer and mortgaged property

After the buyer and seller sign the form F, the buyer’s bank conducts the valuation of the property and the final offer letter is signed. The seller then requests a liability letter from their bank. Once the liability letter is issued, it is sent to the buyer’s bank, which settles the mortgage with the seller’s bank. After the mortgage is cleared 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 bank arranges the transfer.

At the transfer, the seller’s existing mortgage is released. The fee for the release is Dh1,290, which is paid by the seller. The property transfer documents are then signed and the buyer provides the cheques. The buyer must bring the following manager’s cheques:

• one with at least 25% of the purchase price, as required by the lender and UAE Central Bank regulations, payable to seller

• mortgage registration fee equivalent to 0.25% of the loan amount, plus Dh290 payable to the DLD

• cheque for the 4% transfer fee, plus Dh580 payable to DLD

• broker’s commission cheque

The buyer’s bank then issues a cheque to the seller for the remaining balance of the purchase price.The buyer’s mortgage is then registered and the buyer’s bank retains the original title deed until the mortgage is paid in full.

Final points

Although Dubai has made the process of buying a property extremely efficient and quick, a few things are still recommended. Firstly, work with RERA licenced agents only and do your due diligence when selecting your agent, for more information on how to select an agent, check my article here. Secondly, it is advised to opt for a conveyancer to assist with the transfer process, this service allows you to work with someone who is specialist in transferring property, helps you to meet all the required deadlines and enable a smooth transfer.

If you have any questions or are looking to buy or sell a property, please feel free to contact me.