Buyer Guide

LYD Buyer Guide

Home. It’s the most important purchase you’ll ever make. Learning the process of how to buy a house can be challenging. Let LYD Real Estate show you how to make the process of buying a house go smoothly and trouble-free.

LYD Real Estate

LYD Real Estate can confidently guide you to deal with developers, mortgage advisors and government entities. Our team can assist you in handling all the paperwork, procedures, and policies, so you can enjoy the property-buying process without any headache or hassle.

Freehold Property

Freehold properties are designated areas for expatriates to own a property, whereas non-freehold properties are limited to UAE and GCC Nationals. A title deed is issued by the Dubai Land Department confirming ownership of the property.

Eligibility

Individuals of any nationality, 21 years and above can buy properties in Dubai freehold areas.

RERA - Real Estate Regulatory Agency

RERA is a government agency that’s part of the Dubai Land Department which licenses real estate agents, brokers and developers and regulates all real estate activities in Dubai. Although there are interesting developments across the UAE from Abu Dhabi to Ras Al Khaimah, more than 95 per cent of market activity is concentrated in the Dubai market. Each emirate has its own legal and judicial systems, Land Registry departments, and rules and regulations as to who can buy, and on what basis.

You need to get professional advice from a real estate broker, a finance broker or a developer when considering a purchase. Whilst there is a federal law underpinning real estate transactions in the UAE, practically, at present, it has been left to the discretion of the individual emirate to decide upon its own framework and proposition to the market.

Purchasing an Off-Plan or Ready Property Direct from a Developer in Dubai

Investors Protection Laws

“Off–plan” or under-construction developments in Dubai should be registered with RERA. The payments will be made to an escrow account managed by RERA to ensure that all the funds collected are only used for the project’s development.

Process of Buying from a developer

Buyers have to issue a check with the downpayment, admin fees and registration cost (normally 4%).
Buyers will need to sign a reservation form with a copy of their passport. The reservation form summarizes the basic terms and conditions of the sales agreement, the details of the payment plan, and the buyer and the Developer’s / seller’s details.
Buyers will have to sign a Sales & Purchase Agreement that entails the completion date and the compensation awarded if the property is not completed by that time period. Furthermore, if the property is to be furnished, ensure the details of the furniture package are attached with the sales agreement.
Developers will obtain Oqoodi for the Buyer (pre-registration issued By DLD)
When the property is completed, the Developer will notify the buyer with the handover date when the buyer will snag the property and give any feedback/comments before taking the handover.
The buyer will get the unit handover after connecting the DEWA / utilities under his name and after paying annual service charges.
Dubai Land Department will issue the title deed in the buyer’s name after handover and the full amount of the property is paid.
In case of finance buyers, The title deed is issued & kept by the bank, and the buyer will have a copy.

When the mortgage is paid in full, a letter of release and a NOC is given by the Bank and the buyer gets a new title deed under his name issued by DLD.

Process of Buying a "RESALE" Property

Finance buyers should have a preapproval in hand before starting the process. After shortlisting a property that satisfies buyer needs, the buyer should make an offer.
A deposit is made by the buyer in the name of the seller, which will be held by the agency till the transfer date.
A formal sales contract is drafted and agreed upon between the buyer and seller. The seller ensures that the property is not encumbered by anything that goes against what has been stipulated.
In case of finance buyer, valuation will be made by third party assigned by the bank for ready units. The bank will issue a manager check with the outstanding buying price in the name of the seller.
The seller applies for NOC from the Developer under the new buyer name. The NOC states that the developer has no objection that the property can be transferred, and if there are any liabilities against the apartment, the developer will advise.
Final payment is made by way of a bank draft or cash in the land department, and the title deed is transferred to the new owner.
For rented properties and the rent is collected in advance the seller should refund tenant deposit and any collected rent payment in advance from the transfer date on prorata basis.
Buyer should refund the seller any service charges paid in advance from the transfer date on pro-rata

Charges

Several charges may apply, for example, clearance of a mortgage, a new mortgage, and an administration fee, so always be sure to have extra cash in case of unforeseen circumstances. Normally mortgage registration charge is 0.25% of the mortgage amount plus bank processing and admin fees.

List Price, Sales Price, CMA Value and Appraised Value

List Price

The list price is the asking price of the property; this is negotiable. Normally see in online property portals.

Sale price

The sale price is what the owner will settle at. Data available from DLD

CMA Value

The real estate agent is able to provide a comparative market analysis for free to give the buyer a sound idea of what is sold and at what rate, and what is available in the market for a comparable property. The list price is at the discretion of the Seller.

Appraised Value

This is the price provided by specially appointed agencies by the banks to approve mortgage amount. There is a fee of about AED 3,000-5,000 charged by the banks for this service.

Property Inspection

It is recommended that you get the property inspected. However, in the case of freehold property, if the property is newly built, and it falls under the guarantee of the contractor for structural defects.

Maintenance is guaranteed for up to 1 year of the development. It is then up to the owner to ensure that he/she has a preventive maintenance contract on the property. The structure has a guarantee for 10 years from the developer.

VISA

A 2-year residency visa is granted for freehold property owners who have invested at least AED 1,000,000 subject to approval from UAE immigration. Property to be ready and fully paid and free of mortgage. New laws are expected very soon to be implemented.

5 years visa for investors above 55 years
10 years visa for special skill employees and big investors

Home Insurance

This is advisable especially when taking a mortgage on a property. There are a lot of insurance companies in the market that provides customized packages. It is always advisable to have insurance.

Mortgage Application Process

Many of the Banks that offer mortgages also offer the option of “pre–approved financing”, which allows you to have your loan approved prior to choosing which property in Dubai you would like to purchase. This expedites the overall process and satisfies those sellers that require financing before agreeing to sign a Sale and Purchase Agreement. The validity of the pre-approval is usually 60 days with most banks.

You can get up to 75% Loan to Value on the ready property and 50% LTV on off-plan property.

Properties without title deeds may not obtain a Mortgage. Such properties can be only brought by cash buyers on Oqood (pre-registration title). However, each bank has its own policies and procedures with the respective developers.

Buying Mortgage Property

If you are buying a mortgaged property, the mortgage must be paid off to the bank to obtain clearance.

If you are a financed buyer, your mortgage provider will buy out the seller’s mortgage. If you are a cash buyer, the property can be blocked in the registration trustee’s office to safeguard buyer interest. The terms and conditions will vary from bank to bank.

The Registration Cost of the title Deed

The registration cost of Title Deed should be shared between the buyer and the seller, but in practice today, it is paid by the buyer.

Standard fees are 4% and is shared equally between both parties, subject to negotiation between them.

TAXES

There is no VAT on residential properties for buying, selling or renting. You will be required to pay VAT (Value added tax) on commercial property transactions and income. For details you can refer to the UAE Federal Tax Authority.

Cost Associated with Property Purchase

Deposits as per Agreement of sale and purchase between Buyer & Seller
Transfer fees to the Land department – 4% of property value
Connection fees for the Electricity and Water Authorities/District Cooling – approximately AED 5,000 to 10,000
Community service fees for full year
Mortgage associated costs if applicable by your Bank.
admin fees to land department/Registration Trustees Fees – approximately AED 5,000
Commission – the standard is 2% of the sale price from the buyer

AGENCY FEE

The agency fee can be paid by both parties, and this is agreed upon beforehand. The commission is always paid to a company, never to an individual. The commission is paid at the time of transfer.

Documents required for buying a property

If Buyer is an Individual:

Valid Passport
Valid Emirates ID
Form B signed
10% deposit cheque on Seller’s name
Form F along with MOU
Final Offer letter copy
Valid visa page (for UAE Residents)
Emirates ID copy (for UAE Residents)
Valid visit visa (for non-residents)
If funds are to be transferred to the agency, undertaking letter with payment instructions (for non-residents)
Power of Attorney document (if applicable). If POA is issued outside UAE, it must be attested by the UAE Foreign Affairs Ministry locally in UAE
Passport copy of POA holder (if applicable)
POA on behalf of the joint Seller, attested by the UAE Foreign Affairs Ministry locally in UAE (if applicable)
If outside broker is involved, Agent to Agent agreement (Form I) stamped and signed with complete client details (to be prepared before MOU is signed)

If Buyer is a Company:

Trade license copy
Passport copy of Signatory
O.A. copy
Form B signed
Power of Attorney document (if applicable). If POA is issued outside UAE, it must be attested by the UAE Foreign Affairs Ministry locally in UAE.
Passport copy of POA holder (if applicable)

If Seller is a Company:

Trade license copy
M.O.A. copy
Title deed or Oqood developers’ contract + Original SPA
Passport copy of Signatory.
Form A signed.
Dewa and Service charge payment
Power of Attorney document (if applicable). If POA is issued outside UAE, it must be attested by the UAE Foreign Affairs Ministry locally in UAE.
Passport copy of POA holder (if applicable)

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