sign in sign up
<<
Home , Jebel Ali, Jebel Ali Free Zone, Palm Jebel Ali

Guide to buying property in Dubai Dubai

Le Reserve, Al Barari, Dubai UAE

CONTENTS THE RESIDENTIAL Legal Framework 4 PROPERTY PURCHASE Procedures 5

Costs 6 PROCEDURE IN DUBAI

Financing 6 Buying property in Dubai should be relatively straightforward,

Tax and Structuring 8 but we would always recommend that you instruct the services of a reputable agent, (surveyor) and notary. Inheritance 8 This document has been compiled as a guide for potential purchasers of property in Dubai. It does not seek to provide or replace legal advice which you should obtain, nor is it intended to have any contractual effect.

2 Guide to buying property in Dubai Guide to buying property in Dubai 3 Dubai Dubai

PROCEDURES The procedures for purchasing real estate complicated as the buyer will be required Documents Required in Dubai are straightforward for the to settle the seller’s mortgage in full prior Individual seller and buyer most part. to the NOC application. As such, the risk for the buyer increases significantly and Original Title Deed In a nutshell, the procedure to transfer there are more steps involved in order to ownership of real property purchased Original passport complete the transaction. with cash is as follows: Corporate seller and buyer wwBuyer and Seller agree terms. This can Powers of Attorney be done with or without the assistance If the seller or buyer is represented under Original Title Deed Original Certificate of a real estate broker or solicitor. Power of Attorney then it is a requirement of Incorporation / Trade License that such Power of Attorney is either wwAn Agreement of Sale or MOU Original Memorandum and Articles signed before a Notary Public in the (Memorandum of Understanding) of Association United Arab , or notarized in is signed and a deposit (usually 10%) the country in which it was signed and Legal Translation of the Memorandum is paid. then legalized up to the UAE Embassy and Articles of Association wwThe parties meet at the offices of the in that country. When the document Original Certificate of Good Standing developer to apply for a No Objection reaches Dubai it should then be attested (not more than 6 months old) Certificate (“NOC”) to transfer. at the Ministry of Foreign Affairs and, if The developer will usually issue the not prepared in Arabic, it will have to be Original Certificate of Incumbency NOC against payment of a fee once legally translated into Arabic before it (not more than 6 months old) the developer is satisfied that any will be acceptable to the Dubai Copy of shareholder(s) passport(s) amounts due to the developer in the Land Department. form of service charges have been Original Resolution approving the sale Currently, the Dubai Land Department is settled in full. or purchase (as the case may be) insisting that Powers of Attorney are no Original Power of Attorney wwOnce the NOC is issued, the parties more than two years old. It should also Al Barari, Dubai UAE are free to attend at the offices of be noted that the Dubai Land Department Attorney’s original passport the Dubai Land Department to effect will only allow an attorney to accept transfer of ownership. The Dubai Land proceed funds if the POA expressly states The above list of corporate documents Department will insist on payment of that this is allowed and also only if the is not exhaustive and the requirements the purchase price being made in the attorney presents an undertaking to the will vary depending on the corporate form of a manager’s cheque made Dubai Land Department on the date of entity in question. It is therefore advisable LEGAL FRAMEWORK payable to the seller on the date of transfer confirming that the funds will be when dealing with a corporate entity to Ownership of real property in Dubai is restricted to citizens of the United Arab transfer. Once the formalities are paid to the seller upon clearing. approach the Dubai Land Department Emirates and GCC nationals, as well as companies wholly owned by them and completed, a new title deed will be Time Frame prior to the completion date to have the public joint stock companies. issued in the name of the buyer. documents pre-approved. From start to finish the average property If the buyer is purchasing with the aid of Other foreign nationals - and companies wholly or partly owned by them - have sale and purchase in Dubai takes about Apart from presenting original a mortgage then the bank’s involvement the right to own real property in Dubai but only in certain areas designated by 30 days to complete from the date on documentation to the Dubai Land will of course be required. Likewise, if the His Highness the Ruler of the (“Designated Areas”). which the Agreement for Sale is signed. Department and the developer, the seller/ seller has an existing mortgage over the buyer will also need to ensure that they The Designated Areas include both residential and commercial areas in and around However, it could take longer if there is a property then there will be more steps have prepared copies of the same in Dubai. The purchasing party is not required to hold any type of residency or similar mortgage, particularly on the seller’s side. involved and the procedure is more order that the original documents may permits in order to purchase real property. be returned. Any documents presented to the Dubai Land Department which are not in Arabic are required to be translated into Arabic by a certified legal translator.

4 Guide to buying property in Dubai Guide to buying property in Dubai 5 Dubai Dubai

COSTS FINANCING Palm , Dubai The following fees will generally apply Although a large proportion of real to the sale and purchase of real estate property in Dubai is transferred on the in Dubai: basis of cash, financial institutions in Dubai do offer mortgages. For the most wwNOC fees – these can range between part however these are only available to AED 500 and AED 5,000 and are UAE nationals and those foreign nationals payable to the developer, usually by resident in Dubai. the seller but this is subject to mutual agreement. Certain developers also Restrictions on mortgages have been levy a refundable deposit upon the placed upon banks and lenders by the buyer which is only refunded when the UAE Central Bank. buyer presents the new title deed at These Central Bank Regulations currently the developer’s office and their records restrict lending to foreign nationals are updated. purchasing real property where wwReal Estate Agent’s Commission - this construction is completed to the following: commission is for the most part paid by the buyer and is usually 2% of the First Property purchase price. Often, the seller will wwUp to a maximum of 75% of the value also be responsible for the payment of the property for property valued at of agent’s commission if the seller less than AED 5 million; retains an agent. wwUp to a maximum of 65% of the value wwTransfer fees – these are calculated of the property for property valued at at 4% of the purchase price with an more than AED 5 million. additional amount paid towards Admin fees which currently does not exceed Second and Subsequent Properties AED 5,000 and paid to the Dubai Up to a maximum of 60% of the value of Land Department. the property irrespective of the value of the property. wwMortgage registration fees (if applicable) are calculated at a A separate set of loan to value ratios rate of 0.25% of the registered loan apply to UAE nationals. amount and paid to the Dubai Land Department. For properties under construction, the restrictions are: wwDevelopers ask for their annual Up to 50% of the value of the property services charges to be paid in advance irrespective of the purpose for which the and buyer’s should therefore account property is being purchased or the value for their pro rata share upfront. of the property. Additional fees will apply at the offices The same loan to value ratio applies of the developer and the Dubai Land to UAE nationals in this instance Department in order to discharge a seller’s mortgage. Certain other restrictions have also been imposed by the Regulations, including but not limited to:

wwmaximum term of the mortgage should be 25 years;

wwmaximum age at the time of the last installment payment should be 65 years for foreign nationals (or 70 years if self-employed);

wwthe ratio of debt to income shall not exceed 50%;

wwthe maximum financing amount allowed for foreign nationals shall not exceed 7 years annual income.

6 Guide to buying property in the UAE Guide to buying property in Dubai 7 Dubai Dubai

Nurai Island, , UAE

TAX AND STRUCTURING INHERITENCE The Dubai law currently places no either companies registered within As a general rule in Dubai, the principles There are however no guarantees in this restrictions on the number of properties the or offshore of Sharia’a apply to issues of inheritance. area and foreign nationals should note a foreign national can own and there are companies incorporated in the that issues of inheritance in the UAE However, as a foreign national, issues no tax implications in Dubai itself on real Free Zone. The Dubai Land Department are not straightforward. Obtaining a of inheritance have to be divided into property ownership. Foreign nationals does not apply any restrictions however Succession Certificate can take months, whether the foreign national is a muslim are encouraged to seek independent on the structure of the corporate offshore if not years in some cases. or a non-muslim. tax advice from experts in their home entity and these can therefore be Of late, the option of a foreign national countries as to how their ownership of owned either by individuals or foreign In the case of muslim foreign nationals, signing a “Dubai Will” before the Dubai real property in Dubai might affect them companies. As at the date of this note the principles of Sharia’a law applies Notary Public has been popular and the for the purposes of tax elsewhere. the Dubai Land Department has blocked automatically to their real property and route chosen by many. These Dubai Wills offshore companies the Succession Courts will on application If a foreign national wishes to acquire should ideally supplement the home will from buying real property. We await issue a Succession Certificate to this effect. property in the name of a corporate entity and be restricted to UAE assets. Note confirmation of whether there is a then the only corporate entities permitted In the case of non-muslim foreign however that Dubai Wills are largely temporary or permanent block. to purchase real property in Dubai are nationals, the laws of succession in his/her untested and expert legal advice should country in which he/she is a citizen should be sought where inheritance issues apply. be upheld by the UAE Courts and his/her N.B. The regulations fees etc applicable real property should devolve, upon death, to real property in Dubai change on a in accordance with his/her Will that is regular basis. The information is this note accepted to be valid in that country. is valid as at November 2013.

8 Guide to buying property in the UAE Guide to buying property in Dubai 9 Dubai

Knight Frank’s Network of Agents in the UAE From our strategically positioned offices the most comprehensive service that wwPrepare a purchase contract to pass to in Abu Dhabi and Dubai, we provide we can. Through our growing network the legal teams outlining the terms of integrated residential and commercial of regional offices and working closely the deal and the professionals involved. real estate transaction, consultancy with our global residential offices, we will At all times during the purchase and management services across the endeavour to find you the right property. process, we are available to assist with United Arab Emirates, the Middle East effective communication between the We will also help with the following: and globally. parties involved. wwPut you in touch with possible legal, Through industry-leading technology N.B. This publication is meant to give survey, planning and tax advisory firms and global market research, our goal a very basic indication of the purchasing that can assist you with due diligence, is to create wealth for our clients by process. No liability is assumed as each general advice and completing the improving operations, maximising interested person should seek local transaction. None of our agents are returns on investment and adding value, professional advice qualified to give you legal, survey, making us an invaluable partner across planning or tax advice, although they regional commercial and residential are happy to share with you their years property markets. Within our Middle of experience. East Network we try to offer our clients

N

0 10KM Map is for indicative purposes only Approximate scale

THE TO ABU DHABI Dubai Maritime Shiekh Zayed Road – E11 City Port Rashid Jebel Dubai Ali Port M M Marina M

M M M M M M M M M M M M M M M Shiekh Zayed Road – E11 M M M M M M TO SHARJAH M M M M M M M M M M M M M Burj Emirate Khalifa Towers M M M M M Emirates Road – E311 Downtown M Dubai M M M

M M M M

DUBAI M INTERNATIONAL M

AL MAKTOUM Al Ain Road – E66 AIRPORT Sheikh Mohammed Road – E44 (under construction) bin Zayed Road – E311 Emirates Road – E611 TO HATTA Golf Homes, , Dubai UAE TO AL AIN Lebab Road – E77

TO RAS AL KHAYMAH KnightFrank.com UAE contacts name ofKnight Frank(including KnightFrankLLP) isliableforthe acts oromissionsof anyotherMember. independent entities or practices which provide services internationally. No Memberhasanyauthority to bindor represent any other Member. No Memberoperating under the Frank Global Network. Those Members are Knight Frank LLP and its direct subsidiaries which provide services in the UK and an international network of separate, distinct and Emaar Park, Business Dubai, UAE, PO Box127999. 5. Members of the Knight Frank Global Network: References to Knight Frank may be to, or include, any Member of the Knight 3520. Knight Frank UAE Limited - Dubai: “PSIREB” RERAORN: 11964 trading as Knight Frank with registration number 653414. Our registered office is: Unit 611 Building4, a foreignbranch Frank UAELimited-AbuDhabi,is with registration number 1189910.Our registered office is:PlotC210,East 4/2,AlMuroor Street, Abu Dhabi,UAE,POBox rights reserved. Copying, modification or reproduction of this review in whole or in part is not permitted without the prior written approval of Knight Frank. 4. General: Knight relationship. Wedonothaveany relevant authorisation from theFinancialServicesAuthority to undertake regulated activities. 3.Intellectualproperty: © KnightFrank2014.All advice: You must take specific independent advice from your professional advisers inallcases.Inpreparing this guide, we do not imply or establish any advisory or professional contents. As a general overview prepared using information from UAE lawyers, this guide does not necessarily represent the view of Knight Frank in any respect. 2. Independent So far as applicable laws allow, no responsibility or liability whatsoever will beaccepted for any errors or for any or damage loss resulting fromany use ofor reference to the 1. Norelianceoncontents: This isonlyaguidetothe buying process inTheUAE. It isnot definitive and is not intended to giveadvice. It mustnot be reliedupon in any way. Important Notice

@KFInternational E [email protected] T +97144512000 Associate of Director Residential Sales,UAE GarrettVictoria

3551MAR14