Guide to buying property in Dubai 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 Emirates, 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 Emirate of Dubai (“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 Jumeirah, 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, Abu Dhabi, 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 United Arab Emirates 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 Jebel Ali 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.