To buy a house in Dubai, you do not need to be a citizen of the UAE or have the status of a resident of the country. In the future, the purchased type of property can be used for commercial and private purposes. Consider the process of buying real estate in the UAE for Russians.
Why it is profitable to buy real estate in the UAE
Advantages of buying:
- brings dividends;
- allows you to enjoy benefits;
- exempts the buyer from paying most taxes;
- allows you to get a resident visa;
- the investor’s property right falls under the protection of the law.
Types of property for foreigners
In the UAE, you can buy real estate or rent it. The new rights and obligations of the future owner depend on the choice.
Many people often have a question: is it possible to buy real estate in the UAE with a mortgage? Answer: yes, you can get a mortgage loan for certain objects.
The Freehold type means that the owner has rights to the land – he can donate it or pass it on by inheritance. The owner may, at will, transfer the ownership right to another person and after his death it will pass to the heirs by law.
The operation and construction of the purchased plot are regulated by certain requirements. The owner must obtain permission for the construction and use of the object from the relevant authorities. In cases where its activities violate established standards, it may be restricted or suspended.
The lease can be permanently extended if you, as the owner, have no violations. The term can be long – 99 years, and then the same amount.
The tenant must not only maintain order, but also comply with the intended purpose of the contract. For example, the document may indicate a ban on the redevelopment of the object, the expansion of the area. Any work to change it should be discussed with the owner.
What do I need to know before buying?
Before you purchase an object, ask the realtor what type it belongs to. The market includes:
- Off-plan or an object from the developer. It is under construction. You can purchase it for future use. More often it is sold by a developer or a trusted realtor.
- Primary housing – new buildings. In addition to the above-mentioned persons, the executive branch is engaged in primary sales.
- Secondary market – residential properties of private owners. These can be houses, apartments or rooms. They are sold by the owner.
Before proceeding to the search, decide why you are buying. If you invest, it is worth discussing the issue with an expert. It will help you choose a favorable area in terms of capital growth rates per year and other important indicators. If the goal is to buy to live in Dubai, then for your convenience, look for places near hospitals, schools, shopping centers.
What documents will be needed
The list of documents depends on the status of the buyer.
For an individual:
- address verification;
For a legal entity:
- Certificate confirming the company’s registration or license.
- Memorandum and Articles of Association of the organization (their legal translation is required).
- A certificate confirming the activity for three months.
- Confirmation of purchase.
All these papers must be provided in the original. Additionally, make photocopies of the shareholders’ passports. The list may change, so it is better to consult with DLD beforehand.
In 2018, a new rule was introduced, which began to take effect only in February 2019. It says that investors with a minimum investment (millions of dirhams) can get a residence visa for 2 years. In this situation, real estate is blocked in the DLD system – the right to sell will be unavailable, but the visa will not be canceled.
The buyer, whose object costs five million dirhams, receives a five–year visa, more than ten million dirhams – for ten years. At the same time, sixty percent of the investment funds from these amounts must be invested in assets. The latter should not be related to the purchased object in any way. For example, you can invest them in a startup and buy shares with them.
Important legal factors
The best option before buying is to hire a lawyer who knows the local legislation and will be able to observe the transaction.
For authorized persons, the power of attorney must be notarized in the country in which it was signed. After that, go through the procedure of its legalization at the Embassy of the Emirates, assure the Foreign Ministry and translate it into Arabic.
For those who live in the Emirates, a notary must be present at the time of signing document a. The current period of the paper is a maximum of two years.
All documents that you submit to DLD must be translated by a legal translator into Arabic and English. If this is not done, the documents will be considered invalid.
The purchase process
To buy a home, you need to go through 4 main stages.
Sign a preparatory agreement
Such a document does not have to be notarized. Additional conditions will be prescribed in the application, so you will need the help of an experienced lawyer. He will tell you what you need to specify specifically in your case.
In the contract you need to register:
- The address of the object.
- The value of the transaction.
- Responsibility of both parties.
- Deadlines for making mandatory payments and their distribution.
If you decide to buy a new building, make sure that the document specifies the end date of the project and the amount of compensation from the developer in case of late completion of work.
Sign the contract of sale
It is called “Contract F”. There is a form to fill out on the official DLD website.
Under the contract, the seller receives an advance from the buyer – more often ten percent of the amount, but sometimes more. The certificate of this process is kept by the realtor. With a favorable transaction, the buyer will be refunded the deposit. But if he changes his mind, the money will remain with the seller, but if the seller changes his mind, he will have to return the amount twice as much.
The agreement is valid for 30 days if you are dealing with secondary housing.
Apply for a NOC
Together with the seller, you need to apply for a NOC. We are talking about a confirmation document that the seller does not owe anything to the developer.
The data is processed for about five working days. If the certificate is issued, you can safely transfer ownership.
Together with the seller, you need to visit the Dubai Department to make a real estate transfer. You need to pay the entire amount when you have received a receipt for payment. After payment, you receive a Title Deed, or, in another way, the title of ownership. This means that the property officially passes to you.
If you are buying an object that is under construction, then the procedure will be much simpler: NOC and contract F are not needed – it remains only to sign the primary contract and reissue it after completion of construction. Such a transaction will be registered in the temporary register.
On average, the entire purchase procedure takes one month.
List of mandatory taxes:
- The commission from the purchase to the agent is 2-5%.
- The registration fee is 4%. More often it is already included in the price of the property. Each of the parties pays in half.
- Payment for transport (if necessary) – 6-10 thousand dirhams.
- The fee for a mortgage in DLD is 0.25% of the price for registration (for those who have a mortgage on the property).
The purchase from the primary market is registered in each DLD office. The amount is four thousand dirhams if the transaction is more than 500 thousand AED and two thousand dirhams if below this amount. Payment is made in cash by agreement of both parties.
If you purchase housing from the secondary market, taxes are as follows:
- the total commission is 2% for the agent as a reward;
- NOC – 5 thousand dirhams;
- for the transfer – 4 thousand dirhams.
There is no property tax in Dubai, but the owner has to pay for maintenance every year. The return on investment depends on this fee.
What happens if you don’t pay
In addition to termination of the contract and in case of non-completion of payment, the developer can:
- Keep the funds for yourself and sell the object if the construction process is completed by 80%. Or deduct more than 40% of the total price.
- Take forty percent when the construction is completed by 60%.
- Pick up twenty-five percent when the construction reaches less than 60%.
- Withhold thirty percent if circumstances beyond his control interfere with the completion of construction.
What kind of financing is there?
There are four housing loan options:
- For the citizens of the country. You can get up to 85 percent LTV for the first purchase of a land object. As a result, you will first need to deposit 15% of the amount.
- For residents of the Emirates. As a foreigner, you are entitled to receive up to 75% LTV for the first purchased property. The main condition is an initial payment of 25%.
- For non-residents. Mortgages are available to such people. The maximum percentage from banks is 50% LTV. The condition is that you need to make half of the initial payment. If you already have an object in Dubai, then the income from its rent can cover the payment of the second mortgage. Banks will charge from three to five percent for a mortgage.
- Installments from the developer. Gives you the opportunity to purchase off-plan property and pay in monthly installments. You can also become the owner and continue to pay the balance 2-5 years after the completion of construction.
To buy with a mortgage, the participation of the bank is mandatory. If the seller has a mortgage on the property, the buyer will have to repay it before applying for a NOC. They check the financial ability to repay debts on the minimum wage, work experience and other factors. When the contract is concluded, the seller will request a mortgage statement from the bank.
In addition to the main ones, there are additional expenses:
- Cash payment for the realtor’s work: according to the standard – 2% of the purchase price. The conditions may be different, so consult with your broker beforehand. Sometimes the agent’s work can be paid by the developer or the seller, or the fee is divided equally between the two parties.
- One-time fee. The tax in DLD is 4%. More often, the amount is divided in half between the parties. Sometimes, when buying, the fee may be included in the price.
- Mortgage tax. In the case of a loan, you need to pay 0.25% of the amount and $ 79 in DLD.
- Administrative Commission. Upon completion of the transaction, you need to apply to the district court and request a document of ownership. The price is approximately $ 70, the registration period is 3 days.
- For a secondary object, you will need to pay a state registration fee of $ 85 and a NOC fee of $ 140 to $ 1,360 (depending on the selected object).
When the object was purchased:
- Visit any Dubai office. There you will be able to register the agreement in your name. You will be required to provide a proof of ownership and a photocopy of your passport. As well as a deposit of $ 570.
- Register with Chiller. The organization will help with air conditioning issues if you do not have a central system in the complex.
What is RERA?
RERA is an agency that regulates all real estate transactions in Dubai and is part of DLD. The main purpose of the organization is to provide conditions for a profitable partnership of both parties, which is related to real estate. She also has other tasks:
- Monitor escrow accounts of developers.
- Inform the population about their rights.
- Develop policies to balance supply and demand in the real estate category.
Now you know how the procedure for buying real estate in the UAE goes for Russians. If you decide to buy a house, get professional advice from an experienced agent or financial broker. This will allow you to choose the most profitable option.