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Understanding the Legal Steps for Purchasing Real Estate in Dubai

Understanding the Legal Steps for Purchasing Real Estate in Dubai

Buying real estate in Dubai is a complex process that requires careful consideration and understanding of the legal steps. If you want to purchase a property in Dubai, you must follow specific regulations for a successful and smooth purchase. The real estate sector in Dubai is governed by the Real Estate Regulatory Authority (RERA). RERA is responsible for protecting investors and ensuring fair practices within the real estate market. It regulates all the activities related to buying, selling, leasing, and mortgaging of a property. In this blog post, we provide an overview of the legal steps involved in purchasing a property in Dubai. 

Laws For Buying Property

The Real Estate Law No. 7 of 2006: Land Registration Law regulates the legal aspects of buying properties in Dubai. Article (7) of this law narrates who can buy and own the property in Dubai. It states that you can purchase a property anywhere in Dubai if you are 

- A UAE Citizen

- A GCC Citizen

According to this law, those who are not a UAE or GCC Citizen can also purchase real estate in Dubai, but only in certain areas that are designated for foreign ownership. The Ruler of the Emirate of Dubai determines the designated areas by way of decrees and regulations issued from time to time. The Dubai Land Department (DLD) enforces this law in the Emirate. 

 

Designated Areas For Foreign Ownership Of Real Estate

The Dubai Land Authority publishes a list of areas where expats are allowed to purchase properties. They can purchase properties located in the designated freehold areas. It is important to check the local authorities and Dubai Land Department before signing any contract for a real estate purchase. Here is a list of some of the popular designated areas where a foreigner can buy a property:

- Dubai Marina

- Jumeirah Lake Towers (JLT)

- Business Bay

- Downtown Dubai

- Emirates Hills

- DAMAC Hills

- Jumeirah Village Circle (JVC)

 

The Legal Steps To Buy a Property in Dubai

There are 4 legal steps involved in buying a property in Dubai. You should follow these steps for a successful real estate purchase. 

1 - Agree The Terms Of Sale

Once you have found your ideal property in Dubai, it is time to begin negotiations with the seller to agree the terms of the sale. It is strongly recommended that you use a qualified real estate agent because they will negotiate on your behalf to ensure that you get the best deal. At this stage you should agree on the purchase price, payment method (whether it will be a cash purchase or using a mortgage) and other important details like whether any furniture is included in the sale, to avoid any problems further down the line. 

2 - Sign The Memorandum of Understanding

With all the key terms agreed, it's time to sign a Form F, which is also known as the Memorandum Of Understanding. This document can be obtained from the official website of the Dubai Land Department (DLD). This document will be used as the basis of the contract, but it can be amended to include the buyer and/or seller's own terms. If you are new to the Dubai real estate market, or there are complexities to the sale, then using a conveyancer can be a good idea to ensure that the agreement is legally compliant and has your best interests in mind. 

Once the Form F is finalised, it should be signed by both the buyer and seller in front of a witness. This is usually done at the Registration Trustee’s office. At the time of signing, you should pay a standard 10% security deposit on the property, which is returned to you once the property transfer is complete. 

3 - Applying For NOC From the Developer

After signing the MOU, it is necessary to apply for a No Objection Certificate (NOC) from the developer. The buyer, seller, and real estate agent need to meet at the developer's office. This document will confirm that there are no outstanding service charge payments due on the property.

4 - Transferring Ownership At DLD Office

Now, both parties need to go to the Dubai Land Department office to transfer the ownership of the property. Before visiting the DLD office, make sure you have the following documents ready:

- A cheque for the property price, payable to the seller

- The original identification documents of the buyer and seller (Emirates ID, passport)

- The original NOC issued by the developer

- Signed Form F (MOU)

 

The transfer of the property is done is a few short steps:

- Submission of the above documents

- The data is verified

- Payment of the necessary fees (outlined below)

- Confirmation received by email and new title deed issued

- The transfer can take place in a single day, with a confirmation email sent to the buyer as well as the issuance of a new title deed in their name to confirm that they are the new owner. 

 

Fees & Costs Associated with Buying A Property in Dubai

The costs and additional fees associated with the purchase of the property in Dubai are given below:

- DLD Fees

- When buying a property, there is a DLD fee to be paid, which is usually paid by the buyer. This fee is 4% of the purchase price plus AED 580. 

- Registration Fees

- For properties under AED 500,000, there is a registration fee of AED 2000 + 5% VAT. For properties where the purchase price is over 500,000, the registration fee is AED 4000 + 5% VAT.

- Mortgage Registration Fees

- If you are purchasing the property using a mortgage then there is a mortgage registration fee of 0.25% of the loan amount + AED 290.

Agent Fees

A qualified real estate agent will typically charge a fee of 2% of the purchase price + 5% VAT.

Conveyancing Fees

Using a conveyancer is recommended to ensure a smooth and legally compliant transaction. Conveyancing fees range from AED 6000-10,000. 

NOC fees

NOC fees vary depending on the developer but typically cost from AED 500 to AED 5000. 

 

Buyers must ensure that they clearly understand the rules and regulations of buying a property in Dubai. But, the legal steps involved in the buying process can be followed easily with the guidance of a qualified real estate agent and a conveyancer.  If you are considering buying a property in Dubai, it is advisable to research thoroughly before committing to a purchase. 

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