Extra Costs to Consider When Buying a House in Dubai

The attractive lifestyle and tax-haven status of Dubai make it a popular place to buy a home. The quality of new homes and developments also makes Dubai a highly desirable place to relocate for expats. However, while the cost of buying a house in Dubai may seem tempting, it's essential to understand that numerous costs and fees can increase the price. That's fine if you're prepared for them, but if you're not, it can come as quite a financial shock.

 As part of our Ghaf Woods property tips series, we're examining the hidden costs of buying property in Dubai in more detail and exploring how to plan for those extra expenses. From registration and transfer fees to insurance, let's take a closer look at buying a house in Dubai and how much it will really cost you.

 

Property Registration and Transfer Fees

A significant chunk of the fees you'll have to pay is Dubai property registration fees. At the top of the pile, and a fee that everyone who buys a property in Dubai has to pay, are the Dubai Land Department fees. This is 4% of the property's purchase price, along with administration fees of between AED 580-4200, depending on your property type. So if you're paying AED 1million for a luxury apartment or villa, you'll have to add at least AED 40,000 plus admin fees on top of the price.

Mortgage-Related Expenses

If you're taking out a mortgage, you'll need to factor in additional charges from your lender. These include:

• Valuation fees of between AED 2500 – 3500 plus 5% VAT
• Mortgage arrangement fees of between 0.5-1% of the loan amount
• Mortgage registration fees payable to the DLD of 0.25% of the loan amount, plus AED 290 for admin fees
• A fee of between AED 500 to 5000 for a No Objection Certificate if you’re buying a property with an existing mortgage.

Conveyancing fees

To ensure your sale complies with all UAE legal requirements, you must cover legal transfers and conveyancing services. This will set you back between AED 5000 to AED 10,000, depending on the property value and the complexity of the transaction.

 

Maintenance, Service Charges, and Utilities

Every Dubai property owner has to pay annual service charges calculated on the square footage of the property. The cost per square foot is determined by the RERA Service Charge and Maintenance Index, which varies by location. Properties in more desirable areas tend to be more expensive than those in more affordable areas. This bill, which can run into tens of thousands, is usually paid quarterly, so expect a hefty maintenance bill to be a part of your moving-in process.

The Dubai Electricity and Water Authority will also charge you for setting up electricity and water connections that can range from AED 2,000 to AED 4,000, depending on the size of the property.

 

Insurance and Other Hidden Costs

Insurance often gets overlooked when you’re buying a house in Dubai, but you’ll need to factor in property insurance into your budget. The cost of not having insurance can seriously outweigh the initial outlay, as repairs and maintenance on your property in Dubai are not cheap. Home and contents insurance will add another AED 1,000 to your bill. You'll also need to consider life insurance, as it's a mandatory requirement to ensure the mortgage is covered in the event of the applicant's death. That's an extra 0.4-0.8% per year on the balance of the loan.

 

Ghaf Woods Property Tips for Budgeting When Buying a Home in Dubai

When buying a house in Dubai, it's essential to budget carefully. Whether you're a cash buyer or applying for a mortgage, plan your finances carefully to ensure you have a cushion for any additional costs.

Our top tip: Buying off-plan could save you a considerable amount of money. With lower upfront costs and flexible payment plans, it can be a great way to get a foot on the property ladder, especially if you’re watching every penny.

Don’t forget those other expenses, including broker fees, legal costs, moving costs and service charges.

And our last Ghaf Woods property tip for today: work with a broker you can trust. Their experience and advice can save you thousands and ensure your purchase goes through smoothly.

You can find out more about the bespoke properties on offer at the exclusive Ghaf Wood developments by downloading our brochures. Or come and see for yourself what Ghaf Woods living is all about. Contact us for more details today.