List of Top Checklist Before Buying a Property in Dubai

Dubai's growing reputation in global real estate consistently attracts homeowners and investors, thanks to its opulent lifestyle, impressive infrastructure, high returns on investments, and tax exemptions. Despite the dynamism and promised potential returns, investors are still required to be cautious, diligent, and well-planned when buying a property in Dubai.

Buying property in Dubai is certainly a rewarding journey, yet careful planning is needed to strengthen investment potential and avoid pitfalls. This comprehensive blog will explore the key checklist before buying a property in Dubai. A prioritized checklist can help you navigate the transaction journey smoothly and also ensure the investment is secure by covering every aspect ahead of time. In a growing and dynamic market like Dubai, one is required to dedicate an extended period to careful and in-depth research on the below-mentioned steps.

Checklist Before Buying a Property in Dubai

Understanding Property Ownership Types in Dubai

It is recommended to understand property ownership types available in Dubai before investing in the real estate market which would confirm your eligibility for certain investment types.

Here's a breakdown of property ownership types for your ease;

• Leasehold Ownership: Owners can invest in this type of property; however, it excludes the ownership of the plot beneath the property. The time period is also limited, usually for 10 to 99 years, and such ownership is common in areas like Karama and Deira.
• Freehold Ownership: Besides locals, this kind of property can be purchased by foreigners and expats as well. It also grants the right to sell, own, and buy property; however, the specific areas are designated for freehold ownership, such as Downtown Dubai, Palm Jumeirah, and Dubai Marina, etc.
• Off-Plan Property Ownership: Such ownerships are linked to properties still under construction. Due to the minor likelihood of risks, the owners and buyers are advised to ensure the developers' registration with the Dubai Land Department (DLD). Another advantage of buying off-plan properties is their lower prices in contrast to ready-to-occupy developments.

Verify Eligibility for Property Ownership

1. Visa and Residency Requirements

Freehold areas allow foreign buyers to own or invest in the property without residency status. However, property investments worth AED 2 million or above may qualify you for a ten-year Golden Visa. Moreover, buyers may be granted a 2-year property visa on investments equal to or exceeding AED 750,000 at a lower degree.

2. Financial Capacity of Expats

Expatriates expecting to apply for a mortgage are required to check if they meet certain criteria, which include an age limit, a stable income, and residency requirements. It is also essential to acquire mortgage pre-approval to verify loan eligibility before exploring the properties for purchase. Also, make sure that you are entitled to financing via Dubai-registered banks.

Financial Planning – Evaluate Expenses and Budget

To avoid financial distress, it is necessary to set a realistic budget. Here are the key points to hold on to before you look for a property;

• Property Price: Driven by versatile options, Dubai's market witnesses a significant change in property prices from area to area. Determining the property type (ready or off-plan) and location is the primary consideration.
• Down Payment: Down payment is one of the fundamental points to consider when budgeting for a property purchase. As per the formalities, a minimum of 15% is required from UAE locals, whereas the down payment can go as high as 20% to 25% of the total property price for expatriates.
• Mortgage Fees: The initial property ownership financing also includes the bank's fee if you're applying for a loan. This typically ranges from 0.525% to 1.5%, depending on the bank.
• Real Estate Agent Fees: Hiring a professional agent to streamline the property search and purchase process is crucial in Dubai. Their commission, driven by their pivotal duties, amounts to 2% of the total property price.
• DLD Registration Fees: A 4% of the property price is required as the Dubai Land Department fee, mandatory for investors and buyers.
• Service Charges: To maintain luxury and living standards, service charges are a crucial component to include in the budget before buying a property. Understanding Service Charges in Dubai is necessary to avoid unexpected financial stress.
  Value Added Tax (VAT): Although Dubai has a tax benefit system, recent regulations have applied 5% VAT to certain services, including real estate agent fees.

Settle for a Mortgage Pre-Approval

In case you require funds for property ownership, the acquisition of mortgage pre-approval from a bank is of immense importance. The document delineates the terms and loan limits that differ based on specific conditions.

• Interest Rates: Research interest rates according to current trends for both variable and fixed loan options. Few banks feature promotional rates; thus, a detailed assessment is vital before opting for a bank.
• Loan Reimbursement Period: The period of loan tenure differs based on the borrowers' profile; however, it usually lasts up to 25 years.

A Thorough Research for the Right Location

As mentioned earlier, Dubai's diverse property options undergo a change in rental yields and property appreciation. Hence, selecting an appropriate location serves as a key element and varies with the purpose of buying a property. Here is a classification of key areas to consider for a simplified choice;

• Luxury Properties: Areas like Jumeirah Golf Estates, Emirates Hills, and Palm Jumeirah are designed to cater to investors seeking luxurious investment options.
• High ROI Areas: For those looking to buy a property purely for investment or leasing out, areas like Business Bay, Dubai Marina, and Downtown Dubai are highly considerable due to excellent rental returns and high tenant demand.
• Off-Plan Investment Locations: Recently discovered locations like Dubai Creek Harbor boast attractive off-plan options with convenient payment plans and guaranteed returns.
• Family-Friendly Neighborhoods: Buyers planning to shift with families can opt for areas like Jumeirah Village Circle (JVC), Dubai Hills Estate, and Arabian Ranches. These areas are popular among families because of myriad amenities, including schools, parks, and medical centers. With the plethora of advantages and communal facilities, these neighborhoods are the best to live and invest in.

Legal Compliance Checks

1. Conformity of Developer Credentials and RERA Registration

Buying an off-plan property may include some risks, which is why it's essential to verify the developer's credentials and registration with the RERA (Real Estate Regulatory Authority). For promised returns and reliable investment projects, research thoroughly for top developers in Dubai to mitigate risks and maximize outcomes. RERA guarantees that developers align with legal obligations and safeguard buyer rights.

2. Verify Existing Liabilities

Before buying a property in Dubai, it is essential to check for outstanding liabilities, including any disputes, mortgages, or service charges. To make the transaction process smooth, acquire the updated No Objection Certificate (NOC) from the developers. The NOC is a conformity, showcasing that all the financial obligations are cleared by the seller.

3. Title Deed Verification

Conformation of title deeds is crucial for ready properties. Buyers can check if the title deed is registered with the DLD (Dubai Land Department) to ensure the expulsion of any liabilities or legal disputes. Investors can also ask for a copy of the title deed from the real estate agent or the seller.

Navigate Payment Plans

With diversity in property and off-plan projects, the developers in Dubai come with flexible payment procedures to robust the investment appeal while simplifying it for investors and buyers. Some common payment plan options include;

• 50/50 Payment Plan: This demands a 50% payment during construction, while the remaining 50% is due upon the handover of the particular property.
• Post-Handover Plan: One of the growing trends in Dubai's property purchase is post-handover options. These require a specific payment percentage during construction and the remainder after handover within a defined time period.
• Additionally, it is critical to ensure that the developers align with escrow regulations. As per the law, buyer payments are required to be transferred to an escrow account, which is supervised by RERA.

Opt for a Licensed Real Estate Agent

Although it is not mandatory to consider this in the checklist before buying property in Dubai, one can portray potential results. Working with an RERA-licensed agent can simplify the transaction process, and their valuable insights can greatly benefit you. A qualified agent will assist buyers in the following;

• Legalities: This includes legal documentation like SPA (Sales and Purchase Agreement) and Memorandum of Understanding (MoU).
• Property Searches: One of the elementary responsibilities is exploring properties based on your needs, criteria, and preferences.
• Negotiation: RERA-registered agents are also trained to negotiate with sellers on your behalf to reach favorable conditions and fair prices.

SPA and MoU

Before signing a sales and purchase agreement (SPA), the buyers are required to approve and sign a Memorandum of Understanding (MoU), one of the top checklists before buying a property in Dubai. The agreement outlines certain terms and conditions consented to by both parties, which typically involve handover timelines, prices, and payment procedures.

• SPA Registration: The Sales and Purchase Agreement must be registered with the Dubai Land Department to verify the ownership transfer.
• MoU Fees: When signing a Memorandum of Understanding (MoU), the buyer is required to pay a minimum 10% deposit.

Carry Out Property Snagging and Inspection

The construction of property snagging in Dubai is a crucial player, especially for ready properties. This discovers any minor or major defects or maintenance flaws, which helps in comprehending further details before finalizing the purchase.

For off-plan developments, developers require a "snagging period," during which buyers are guaranteed the right to report any defects or construction flaws that need renovation.

• Inspection Reports: Hire a qualified property snagging company to identify electrical, structural, and plumbing issues.
• Handover Inspection Report: Request a detailed handover checklist from the seller or developer to ensure the service manuals and warranties are documented legally and comprehensively.

Estimate Annual Maintenance and Service Charges

Service Charges differ with the type and location of the property. Buyers can also utilize the DLD Service Charge Index to calculate the annual service fees of a particular property.

• Maintenance Contracts: Many residential neighborhoods in Dubai feature optional maintenance contracts for individual residences.
• Service Fee Payment: These charges are annually paid for the continued access to development's amenities and facilities.

Settle the Transfer Process at the Dubai Land Department Office

The DLD holds the responsibility of transferring the property proprietorship, which necessarily involves the presence of both the seller and the buyer. The parties are also required to bring their legal representatives.

• Transfer Charges: The standard rate applied for the property transfer fee is 4% of the property value, required from the buyer.
• Documentation: Both parties must bring their Emirates ID, original passport, NOC, title deed, and Memorandum of Understanding.

Post-Purchase Tasks - Register for Utilities

Now comes the final and utmost task: registering for utilities. This is one of the crucial steps once the property is transferred to the buyer's name.

• Ejari Registration: Buyers who plan to lease out their properties must register on the Ejari System to legalize the rental.
• DEWA Registrations: Buyers must register their properties with the Dubai Electricity and Water Authority to activate the essential services.
• Home Insurance is not obligatory, yet it is pivotal for protecting properties from liabilities or damages.

Closing In

Property purchase in Dubai seems a simple process, yet it involves intricacies to protect the state and parties involved in the process. However, The Dubai government has streamlined the transaction process via certain laws and regulations, thanks to the efficient system and administration, ensuring rewarding gains. Still, a clear knowledge of financial obligations, comprehensive planning, and legal due diligence are required from both buyers and investors before finalizing the deal.

Investors can mitigate risks by following the top checklist before buying a property in Dubai. Each step, including financing options, eligibility checks, types of ownership, and inspections, constitutes a fundamental aspect of ensuring a successful real estate journey. Buyers can enjoy the endless advantages of property proprietorship. The aforementioned steps contribute well to securing the best deals and making informed decisions.