Hidden Costs of Buying House in Dubai

Hidden cost of buying house in Dubai

As the market trends are in favor of buyers, presently, it is the best time to invest in Dubai.

Besides the purchasing price, there are other costs incurred that can increase the price up to 10- 15%. From upfront cost to other hidden costs, here we have listed all the costs of buying house in dubai:

1. Transfer and registration fee

When you purchase a property in Dubai, you need to pay one time tax to the government, known as Dubai Land Department fees.The DLD fee is 4% of the total price of property. Technically, DLD fee is divided equally between buyer and seller but in practice, the fee is entirely paid by buyer. DLD fee should be paid within 60 days else the purchase will be cancelled.

Apart from DLD fees, buyers also needed to pay registration fees. Also,if a buyer has purchased a property via bank loan, the buyer also needs to pay Dubai land department mortgage registration fees.

Department Land Department fees4% of the total selling price
Property registration feesFor property value less than AED 50,000
Fees=  AED 2,000+ 5% VAT
For property value more than AED 50,000
Fees= AED 4,000+5%  VAT
Dubai Land Department Mortgage Registration Fees0.25% of the total loan amount

2. Real estate Agency Fees

If you have selected an real estate agent for buying a house, then the cost of buying a house will increase. Different agents have their own commision rate, according to the market rate of commission in that particular area as well as experience of the agent. Generally, real estate fees can be estimated as 2% of the selling price.

To make your buying experience smoother, buyers also need to hire conveyancer. The licensed conveyancer will ensure that all your documentation and contracts are available according to the laws of UAE. Conveyancing fee ranges from AED 6,000 to AED 10,000.

Real Estate Agent Fees2% if the selling price
Conveyance FeeAED 6,000 to AED 10,000

3. Mortgage Fees

If you want to purchase a home via bank loan, then you need to pay mortgage fees as well. To lower the burden of purchasing a house, few banks add it to their monthly mortgage.

Mortgage fees include mortgage arrangement fees, mortgage processing fees and valuation fees. The cost with mortgage can rise upto 5-7% of the selling price of the property.

Also, note that If the seller has a mortgage registered, then the buyer needs to have No objection certificate(NOC). NOC fee can range from AED 500- AED 5000.

Bank mortgage arrangement fees1% of the loan amount + 5% CAT
Valuation feesAED 2,500- AED 3,500 + 5% VAT

Calculate the mortgage with the following link: https://www.mortgagefinder.ae/en/calculator

4. Insurance Fees

Although insurance is not compulsory, it is always recommended. The home insurance will protect the home from damages due to accidents,fires, theft etc.

If you choose a mortgage to purchase a home, life insurance is compulsory.The insurance fees per year approximately according to the table:

Home InsuranceAround AED 1,000/ annually
Life insurance0.4 – 0.8% of the decreasing loan

For best insurance deal, check the below link: https://m.edarabia.com/insurance/uae/

5. Security Deposits

To  secure the purchase deal, the buyer needs to pay a security deposit, till the property is transferred. The initial security deposit is about 10% of the total selling price. The amount is collected by a RERA registered broker.

6. Maintenance and service charges

Once the property is transferred,  there are additional annual maintenance expenses known as service charges.The charges are paid to maintain the common amenities of the building like swimming pool , elevator etc. These charges are paid to the Dubai Land Department. The maintenance charge is based on RERA service and maintenance index, as per the square foot.

Here’s, the link of the largest independent home services company in the UAE: https://www.fixperts.ae/