Guide to Buying property

What you need to know about buying property in Dubai

Dubai is a glamorous, headline grabbing city that has become globally associated for having year-round sunshine, an open and progressive society, and a standard of living that most places could only dream of.

Over the past decade the emirate has attracted buyers from all over the world due to its safe haven status, amazing investment opportunities, and unparalleled luxury.

However, if you are new to the region buying a property in Dubai might seem a bit daunting. Although the government has done a fantastic job making the process of owning real estate more straightforward, there is still red tape and regulations that require a guiding hand from a professional brokerage like Appello Real Estate.

The most important thing to know is that when you buy a home in Dubai the type of purchase dictates how long things take and often the type of paperwork needed. However, the key to getting a great deal and having a positive experience is the real estate agency you choose.

Here is our complete guide to the different property buying scenarios.

Cash Seller to Cash Buyer

Expected completion time: A week to one month

  • Find the property you want and make an offer
  • Once that offer is accepted, make sure you check through the ownership documents
  • A cheque for the security deposit (10 per cent of the agreed purchase price) should be issued. Important: only make the cheque out in the name at the title deed holder. The real estate agency will then hold on to the until date of transfer – it is then exchanged for a manager’s cheque made out to the seller. It will be handed over on completion of the whole process
  • While the agent prepares the contract – known as a Form F – the property is taken off the market
  • After the contract has been signed by all concerned, a No Objection Certificate (NOC) is sought by the seller. Note: the NOC process and fee may differ slightly from one developer to another. The NOC has to be written in Arabic and addressed to the Dubai Land Department (DLD)
  • Once the NOC comes through, the manager’s cheque is prepared by the buyer for the seller. The buyer also takes care of the DLD’s 4% transfer fee, the administration and title deed fee, the agency fee, plus the trustee’s fee in cash
  • At this point your property agent should calculate the balance of the service charges to be refunded back to the seller from the day of transfer on a pro rata basis. If the property is rented, the seller must refund the security deposit and the balance of the rent, also on a pro rata basis, from the day of transfer back the buyer
  • Once the DLD issues a new title deed, the DEWA and chiller accounts (utilities) must be closed by the seller, as well as settling all outstanding bills. Tip: This can also be done before the transfer; it depends on what the parties agree to in the contract

Cash Seller to Mortgage Buyer

Expected completion time: Around 45 working days (usually less)

  • Before you look for a property, as a buyer you should apply for mortgage pre-approval. This brings peace of mind and allows you to know your exact budget and purchasing capacity
  • If you are a first-time buyer, UAE banks will provide finance of up to 75 per cent of the purchase price – meaning you must have a 25 per cent deposit available, as well as associated fees
  • Once a bank pre-approval is obtained, begin viewing properties you like in your budget range. Once an offer is accepted, a cheque for a 10% deposit issued, plus the Form F is signed, the contract and ownership documents are submitted to the bank for checking. A property valuation should now be undertaken by an independent company – this might take a few days
  • After a valuation report is finished, it will then be submitted to the bank which will confirm the contract price correlates to the current market value. Note: if the valuation falls short of the contract price, the bank will only lend based on the figure of the valuation
  • If the sale price and valuation match up, the bank will move forward to get final approval for the loan. At this point the buyer will be required to undergo a health assessment for insurance purposes, before signing the final mortgage agreement
  • When final approval comes through the seller or both parties – along with their real estate agent – visit the developer’s office to apply for the NOC. Once that comes through, the bank proceeds with the last steps of preparing the offer letter for the buyer so it can prepare the manager’s cheques in the name of the seller. Appello Real Estate has guided many clients successfully through this step. Note: not every bank includes the agency and transfer fee in their mortgage; some will include up to 75 per cent of the fees. If your chosen bank doesn’t make a provision for fees, a manager’s cheque needs to be made out for the shortfall
  • Once all the cheques and bank documents are finalised, the bank sets a date for the transfer at the trustee’s office. At that point the property is transferred to the new buyer’s name. Any service charges that are supposed to be refunded to the seller are calculated and paid on the day of the transfer on a pro rata basis. If the property is rented, the same applies

Mortgage Seller to Cash Buyer

Expected completion time: Around 45 working days

  • Find the property you want and make an offer
  • Once that offer is accepted, thoroughly check the ownership documents
  • A security deposit is now required and then a ‘form F’ is signed. At this point the seller will apply for a liability letter from their bank to know the exact outstanding amount on the property
  • The buyer will now have to pay the outstanding amount to the seller’s bank. To protect the buyer the Dubai Land Department (DLD) created a special procedure whereby prior to the buyer clearing the mortgage for the seller all parties must go to the trustee’s office with the required paperwork to do the pre-registration (blocking) of the sale (reserving the property under the new buyer’s name). When the mortgage is cleared and the property is free of any liability, this means the seller cannot sell it to anyone apart from the registered buyer
  • Once this process is completed, the buyer pays the seller’s bank the outstanding amount and clears the mortgage
  • Next, the seller’s bank issues a clearance letter and releases the original title deed of the property to the seller
  • Finally, an application of a No Objection Certificate (NOC) is required from the developer, then there is one more trip to the trustee’s office to finalise the transfer process

Mortgage Seller to Mortgage Buyer

Expected completion time: Around 60 days

This scenario is often more complicated and lengthier. The above processes still take place: pre-approval, valuation, final approval, liability letter, and clearance letter. It excludes the blocking part as the buyer’s bank will clear the outstanding mortgage on the property – they will only release the title deed to the buyer’s bank. The purpose of a long paper trail is that the seller can’t sell the property to anyone other than the buyer in question

Buying an Off-plan Property from the Developer

Expected completion time: Varies

Appello Real Estate is a specialist in off-plan sales, and it is essential you only go through this process with a respected, professional company.

  • Once a property is selected, a token must be paid to the developer. Usually, developers will give the buyer a few days to pay the booking fee and ‘Oqood’ fee. Oqood is a service created for developers by the Dubai Land Department (DLD) to ease the registration of contracts between off-plan properties, developers and buyers
  • The developer prepares the sales and purchase agreement which needs to be signed by both the buyer and the developer
  • A payment plan will follow which details the necessary payments required until property completion and handover
  • Once the project is finished, the Oqood then converts to a title deed