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Planning to Buy a Property in Dubai? Read This Guide
Buy Property Dubai
To buy property in Dubai is to make a lifetime investment that will definitely come in handy one day. Whether you are planning on buying a property in Dubai to live in, to build a home in, or for other reasons such as business reasons, buying property in Dubai is indeed one of the wisest decisions one can ever make.
However, many believe that the process of buying a property in Dubai is complicated and overwhelming, which is not at all true. Buying a property in Dubai is straightforward; all you need is to have the required documents on you and to know where to start and what to do. It is not as exhausting as many believe to be true, but on the contrary, it is pretty simple.
Though it might be different for first-timers, it is still not as complex as it seems. That is why it is better to refer to legal bodies to make sure they are on the right track.
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The Law to Buy Property in Dubai
Real Estate Law No. 7 of 2006: Land Registration Law is the law that regulates the legal aspects of buying a real estate property in Dubai.
It is outlined and explained in Article 4 of Law No. 7 of 2006 about who can own and buy property in Dubai. That being said, according to the law, you are able to purchase real estate anywhere in Dubai only if you are:
1. A UAE citizen
2. A GCC citizen
However, under this same law, foreigners are indeed able to buy property in Dubai. But this is only applicable in the areas that are called “freehold”, which are designated for foreign property ownership. Moreover, it is important to mention that there is more than one type of property ownership for foreigners in the emirate of Dubai, such as leasehold and freehold. What distinguishes these two is buyer rights.
In other words, when a foreigner buys a house on a leasehold basis, he/she will have property rights for a specific period of time. On the other hand, when a foreigner buys a property on a freehold basis, he/she will have complete ownership of both the property and the land on which the property is built.
Where to Start: Legal Steps
In Dubai, the process of buying a property is straightforward. Basically, there are 4 primary legal steps one must be aware of.
Here are the 4 steps to buy property in Dubai:
1. Contract Between the Buyer and the Seller
First things first, when you agree on buying a property in Dubai, you must aim at negotiating and outlining the terms of sale with the respective seller. In the United Arab Emirates, you have 2 basic options when it comes to purchasing a property; you can either pay cash or you can apply for a mortgage. One of the major benefits of buying a property on cash is the ability to negotiate, since cash buyers usually set a specific budget and they can further haggle to be able to agree on lower prices. The contract between the buyer and the seller must be finalized only after agreeing on the price and the mode of payment to be on the same page.
This step is usually doable without the help of a lawyer or even a real estate agent, as it is between the buyer and the seller. However, some buyers might need professional help from experts in the real estate field to help them in negotiating with the seller.
2. Signing of the Sale Agreement
The second legal step after agreeing on the price is signing the sale agreement, or what some call a Memorandum of Understanding (MOU). The MOU, or Form F, is considered to be one of the RERA Real Estate Forms in Dubai. Form F, or Contract F, is usually available on the official website of the Dubai Land Department. The real estate agent you hired is the one who usually gets the contract ready for you.
Then, once ready, the buyer and the seller will have to sign the contract before a witness at the Registration Trustee Office. The witness is usually the real estate agent that you are working with. In addition to that, the buyer is called to pay a standard 10% security deposit on the real estate property to the Registration Trustee. Once the property transfer is finalized, the money will be returned.
3. Application for a NOC
After that, you, the seller, and the real estate agent will have to meet at the developer’s office. This meeting aims at applying and paying for a NOC (No Object Certificate) to be able to transfer the ownership. However, the NOC will only be issued by the developer if there are no outstanding service charges on the real estate property.
4. Ownership Transfer with Dubai Land Department
After obtaining the NOC, you are only left with one legal step, which is meeting the seller at the Dubai Land Department office to make the transfer effective.
Furthermore, the property transfer must take effect, which means that you will have to have the following documents on you before visiting the DLD office:
1. Signed contract F (or MOU)
2. Original NOC issued by the developer
3. Manager’s cheque for the property price
4. Original identification documents of buyer and seller (passport, visa, and Emirates ID)
Once these formalities are completed, a new Title Deed will be then issued in your name. This means that you will officially become the owner of real estate property.
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Purchasing a Property with the Aid of a Mortgage
If you are a buyer purchasing the property with the aid of a mortgage, you will definitely need the bank’s involvement. The buyer will have to get pre-approval on the mortgage before even signing the Sale Agreement. Also, approval on the mortgage from the DLD is required to apply for the NOC.
There also are extra fees such as the Bank Mortgage Agreement fee, which is mainly 1% of the loaned amount. Plus, there is a Property Valuation fee that ranges between AED2,500 and 3,500 + 5% (VAT).
Likewise, if the seller already has an existing mortgage over this property, more steps will be involved in this process and the procedure will be more complicated. The reason is that the buyer will have to fully settle the seller’s mortgage prior to the NOC application. Therefore, more steps will be required to be able to successfully complete the transaction.
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How Long Do the Legal Steps Take?
From start to finish, the process could take around 30 days to be completed, from the date on which the Agreement for Sale is successfully signed. Nevertheless, the process can indeed take much longer in the case of an existing mortgage on the property.
Powers of Attorney
In case the seller or the buyer is represented under the Power of Attorney, there are additional requirements. The Power of Attorney must be either signed before a Notary Public in the UAE or notarized in the country in which it was originally signed and then legalized up to the United Arab Emirates Embassy in the same country.
Once the document reaches Dubai, it must be attested at the Ministry of Foreign Affairs and it will have to be legally translated into Arabic if it is not originally prepared in Arabic.
Recently, the Dubai Land Department is insisting on the Powers of Attorney, as they have to be 2 years old maximum.
Documents Required to Buy Property in Dubai
Based on the situation, one might need many documents to be able to buy property in Dubai.
These documents basically include the following:
A. Individual Seller and Buyer
1. Original passport
2. Original Title Deed
B. Corporate Seller and Buyer
1. Original Title Deed
2. Original Certificate of Incorporation/Trade License
3. Original Certificate of Good Standing that is not more than 6 months old
4. Original Memorandum and Articles of Association
5. Legal translation of the Memorandum and Articles of Association
6. Copy of shareholder(s)’ passport(s)
7. Original Resolution approving the sale or purchase
8. Original power of attorney
9. Attorney’s original passport
On an important note, the abovementioned list of corporate documents is not exhaustive as the requirements are likely to vary based on the corporate entity that is in question. You are highly advised to approach the Dubai Land Department before the completion date to be able to have the documents pre-approved.
In addition to that, the seller/buyer has to ensure that the prepared copies are the same as the required documents. Plus, all documents that are presented to the Dubai Land Department must be in Arabic or translated into Arabic by a certified legal translator, as all documents must be in Arabic.
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Buy Property in Dubai with Existing Mortgage
Buying property in Dubai that the seller already has a mortgage on is kind of more difficult and complicated. The reason is that the buyer has to fully settle the original mortgage on the property before even applying for the No Object Certificate. That being said, there are more legal steps for the buyer and the whole process might be risky.
Are Non-Residents/Foreigners Allowed to Buy Property in Dubai?
Foreigners or non-residents are indeed allowed to buy property in Dubai, under certain conditions, in the areas designated for them. These areas are usually referred to as “freehold”. This means that they cannot buy any property in Dubai but the one that is in that specific area. Some of these freehold areas include Downtown Dubai, Arabian Ranches, Dubai Marina, and Palm Jumeirah.
However, there indeed are many other rules that foreigners and non-residents must adhere to if they wish to buy property in Dubai.
On a side note, foreigners who buy property in Dubai or foreigners who own property in Dubai cannot easily get UAE citizenship. There are specific conditions under which a foreigner might be able to become a UAE citizen. Nevertheless, they might be able to get a UAE residence visa if they own a property in the UAE.
The legal procedure of buying a property in Dubai is not as complicated as many believe. However, it might be a bit more complicated in the cases of an existing mortgage on the property.
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