How to buy a property in the UAE in 2021

If you are looking for a property to buy in the UAE, you are probably interested in how you can do this and if the real estate purchase procedure in the UAE in 2021 differs from the procedure that buyers had to go through earlier, for example, a few years ago?

Ax Capital have prepared a detailed guide on how to buy a property in the UAE, including all stages of a property transaction and the required documents.

Can a foreigner buy a property remotely?

The purchase can be made remotely. To do this, you need to appoint a power of attorney as your representative, for example, an agent of the real estate agency you work with.

It is necessary to certify the document with the seal and signature of a notary. After that, your representative can proceed with the transaction.

How can a foreigner buy a property in the UAE?

Today, foreign buyers have the same property ownership rights as residents of the Emirates. In addition, after buying property, a foreigner can obtain a resident visa and continue to renew it.

Since 2006, an owner who is not a resident of the UAE can resell his/her property, rent it out, gift or inherit it.

While before the adoption of the law in 2006, foreigners could only rent housing for 99 years, now after registering a property transaction, the buyer gets full ownership.

When purchasing a secondary housing, the land department charges 2% of the villa or apartment cost from the buyer for its property registration.

Property investors may consider buying off-plan housing. This is a great option if you want to buy an apartment at its best price and have the opportunity to wait for one or two years until it is ready to move in. There is no need to worry that the construction company will delay the delivery of the project since the government monitors their compliance with construction terms. Therefore, all projects are completed on time.

Legal aspects of buying a property if you are a foreigner

Residents of the United Arab Emirates can acquire real estate anywhere in the country, but foreigners can only own housing in certain territories – in specially designated investment zones or freehold zones. After the transaction is concluded, they become owners of the property. However, they cannot own the land where their property was constructed even if they buy a detached house. To get permission to register this land plot as a property, you need to write an application to the Executive Council of the locality where the house and the land plot are located. Freehold zones in Abu Dhabi include the following areas:

  • Al Reem Island,
  • Al Raha Beach,
  • Saadiyat Island,
  • Lulu Island and others.

In Dubai, these are the following neighborhoods:

  • Dubai Marina,
  • Palm Islands,
  • Archipelago of the World,
  • Jumeirah Beach Residence
  • Greens, and so on.

What should a foreigner do before buying a property?

Today, only licensed organisations can sell apartments or land plots. Local authorities provide construction companies with land and allow them to sell properties in the pre-approved construction projects to foreigners. Before concluding a transaction, you should check whether the company has a license that gives them the right to sell property.

When buying a secondary housing, you should check the agreement with the previous seller. This document always contains information about them, as well as the primary cost of the property.

Purchase stages

Buying a property in the UAE includes the following steps:
  • Signing the contract.
  • Transferring an advance payment to the seller (10% of the property’s value).
  • Signing an agreement between the construction company and the buyer for the maintenance of the acquired housing.
  • Registering property, getting a certificate of ownership and the keys.

Procedure for buying housing in the UAE

The procedure for buying a home in the UAE includes the following steps:
  • Firstly, the parties sign a contract of a certain form. The annex of the contract may include additional terms. Our advice is to use the services of an experienced lawyer to avoid any legal problems in the future.
  • Next, the buyer transfers the seller an advance payment, which is usually 10% of the purchase value (may be more). A money certificate is kept by a third party, for example, an agent. If no one decides to cancel the deal, the investor gets their deposit back. If the buyer has changed their mind, they cannot retrieve the advance payment. If the seller changes their mind, they give back the deposit in double amount (for example, not 10%, but 20% of the property value).
  • After making a deposit, the seller requests a document from the developer, which states that the seller does not have a debt to the construction company that serves the house. All the transaction parties must be present at the issuing of the certificate, and the buyer can immediately conclude a contract with the developer for the maintenance of the property they are buying.
  • Then the property transaction is registered. Both parties, or their legal representatives, must be present at the registration. The buyer and the seller pay the registration fee (4% of the property cost) and provide the agency registering the property with the documents required for verification.
  • The final stage is getting the certificate of ownership

Property registration procedure in the UAE

The procedure for registering property in each emirate is different. For example, in Dubai, participants meet at the Land Department to transfer ownership. Instead of the participants, their legal representatives can take part on their behalf. You must take the originals of the following documents with you to the Land Department:
  • No objection certificate from the construction company (provided by the seller);
  • Real estate purchase and sale agreement;
  • Passports, visas (or “Emirates ID”) of parties (for individuals) or company documents, if a legal entity buys the object.
Participants sign documents for the transferal of ownership. Then the buyer gives or transfers the money to the seller. After that, the parties pay all the fees, and the buyer receives a certificate of ownership (“title deed”).

Property taxes for foreigners

The buyer and the seller pay:
  • Registration fee (shared by the seller and the new owner).
  • State fee for registration of the certificate of ownership (paid only by the buyer).
  • Fees for agents and lawyers (only the seller, or both parties if this is specified in the contract).
  • Federal property sales tax (paid by the seller only).
Since 2013, the registration fee is 4% of the property price. This fee for the apartments with a mortgage is 0.25% of the loan and AED 290. In addition, the buyer must pay $70 for the registration of the document of ownership. A certificate is issued in the district court where the property is located. You need to apply for the certificate, and it is issued within three days after the application. Agents are usually paid 2% of the property value in the Emirates. By the way, realtors must take part in the conclusion of the transaction. If you buy a new villa or apartment, the seller pays the agent’s fee. If you buy a house on a secondary market, both participants pay for it. If you buy a villa or apartment with a mortgage, the bank will take a commission fee of 1% of the loan. The federal sales and rental tax is paid by the selling party, but only if the property is commercial. All other real estate transactions in the UAE are not subject to this fee.

Mortgages and instalments

Foreigners can get a mortgage when buying an apartment or a villa in the UAE. Mortgage rates here are relatively low) – 5.5-6% per annum, although the rates depend on the bank and the premises you are buying. When signing a contract with the bank, the acquired property or the initial payment is your pledge. Individuals who meet the following requirements can apply for a loan:
  • have a foreign passport,
  • be of legal age,
  • have a regular income (the minimum level is set by the bank).
If the applicant has a resident visa (residence permit), the size of the loan can be up to 80% of the housing cost. If there is no residence permit, the loan is usually up to 60%. The application for a mortgage is considered within several months. Sometimes banks may request additional documents and certificates. A foreigner can also use the installment payment option provided by some construction companies. To attract new customers, developers offer profitable payment options (interest-free payments, which are applied to both ready-made and under-construction apartments).

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