How to buy a property in the UAE

If you are looking to purchase property in the United Arab Emirates, it is essential to understand all the nuances beforehand. For instance,  is registering real estate in the UAE in 2023 different from the process a few years ago? Are there new regulations or incentives for foreign buyers? What are the current trends and forecasts for the market?

Read on to discover how to navigate the process of buying housing in the UAE, the legal requirements, and the key factors foreigners should consider when purchasing a home in the Emirates.

Contents:

• Can You Buy Property Remotely?
• How Can a Foreigner Buy Property in the UAE?
• Legal Aspects of Buying Real Estate as a Foreigner
• Procedure for Purchasing Real Estate in the UAE
• Real Estate and Title Registration in the UAE
• Property Taxes for Foreigners in the UAE
• Mortgages and Installments

Can you buy a property remotely?

Yes, you can purchase residential or commercial property remotely, without travelling to the United Arab Emirates. All stages of the real estate purchase procedure will comply with the local laws. To do this, you need to appoint a power of attorney as your representative, such as a realtor from the agency that assists you with the deal. This document must be stamped and signed by a notary. Once this is done, your representative can complete the transaction on your behalf.

Suggestions for buying real estate remotely:

• Ensure you choose a reputable and experienced real estate agency to act on your behalf.
• Keep in regular contact with your representative to stay updated on the progress of your purchase.
• Consider using video calls for virtual tours and meetings to get a better understanding of the property and process.

How can a foreigner buy a property in the UAE?

Foreign buyers are allowed to purchase properties in the UAE, making it an attractive destination for international investors. They are also eligible for a 3 to 10-year residence visa, which is renewable an unlimited number of times upon buying real estate. Previously, nationals of other countries could only rent housing for 99 years, but now they can have full ownership and can resell, lease, gift, or bequeath the property. This change became possible with the creation of freehold areas, where foreigners' property ownership rights are unrestricted.

To purchase property in the UAE, foreigners should first research the different freehold areas to find the best locations that match their investment goals. Popular freehold areas include Dubai Marina, Downtown Dubai, and Palm Jumeirah. Engaging with a local real estate expert can provide valuable insights into market trends, property values, and the credibility of developers. It is important to verify the track record and reputation of the developer, especially when considering off-plan properties, which can be up to 20% cheaper than completed ones.

Legal aspects of buying real estate as a foreigner

Foreigners can own real estate in the UAE, but ownership is restricted to designated freehold zones. These zones are areas where foreign nationals are permitted to buy, sell, and lease property. However, owning property in a freehold zone does not automatically grant ownership of the land beneath the building. This rule applies even if a foreign buyer purchases a detached house. To register the land plot under your house as your property, you must apply for a permit from the Executive Council of the locality where your property is located.

Freehold Zones in Abu Dhabi

There are 17 freehold communities in Abu Dhabi, including:

• Al Reem Island: Known for its modern residential and commercial properties.
• Al Raha Beach: A waterfront development featuring luxury apartments and villas.
• Saadiyat Island: Home to cultural landmarks and upscale residences.
• Lulu Island: Offers exclusive residential options with scenic views.

And others: Each providing unique amenities and investment opportunities.

Freehold Zones in Dubai

In Dubai, there are 79 freehold areas. Some of them are:

• Dubai Marina: Famous for its vibrant waterfront lifestyle and high-rise apartments.
• Palm Jumeirah: An iconic man-made island with luxury villas and resorts.
• The World: A unique archipelago offering exclusive properties.
• Jumeirah Beach Residence (JBR): A popular area with beachfront apartments and extensive retail options.
• Greens: Known for its affordable, mid-rise apartments and family-friendly environment.
• And others: Each zone offers distinct features and advantages for investors.

Engaging with a local real estate expert can help navigate the legal requirements and provide valuable insights into the nuances of property ownership in these areas. Additionally, understanding the process of applying for land ownership permits and familiarizing oneself with local regulations will ensure a smooth and compliant property purchase experience in the UAE.

Procedure for purchasing real estate in the UAE

When purchasing real estate in the UAE, it’s essential to understand the specific procedures and regulations involved. Below we’ll provide A comprehensive guide to navigating the property buying process in the UAE:

• Verify the Developer's License: Before proceeding with a real estate transaction, ensure that the construction company or developer has a valid license to sell property. This verification can be done through the Dubai Land Department (DLD) or the relevant authority in other emirates.

• Choose the Property: Whether you are interested in off-plan properties (those still under construction) or completed properties, conduct thorough research to find a property that meets your needs and investment goals. Engage with a real estate expert to help navigate the market and provide valuable insights.
• Legal and Financial Due Diligence: When buying an existing property, review the agreement with the previous seller. This document should contain detailed information about the property, including its initial cost and any existing obligations. Ensure there are no outstanding debts or legal issues associated with the property.
• Sales Agreement: Once you have chosen a property, the next step is to sign a sales agreement with the developer or seller. This agreement outlines the terms and conditions of the sale, including payment schedules, property specifications, and completion dates for off-plan properties.
• Payment and Transfer: The payment process may involve an initial deposit followed by installments, particularly for off-plan properties. For completed properties, the payment is typically made in full or through mortgage financing. Ensure that all payments are documented and receipts are obtained.
• Registration with the Land Department: The final step is to register the property with the Dubai Land Department (DLD) or the relevant authority in other emirates. This registration legally transfers ownership of the property to the buyer. You will need to provide the sales agreement, proof of payment, and identification documents for this process.
• Title Deed Issuance: After the registration is complete, the Land Department will issue a title deed in your name, officially recognizing you as the property owner. This document is crucial for any future transactions involving the property.

Real Estate and Title Registration in the UAE

1. Property Registration

Once the advance payment is made and the necessary clearance certificates are obtained, the next crucial step is property registration. This involves the formal process of recording the property transaction with the relevant authorities. The registration ensures that the property is legally transferred from the seller to the buyer.

Procedure:

Presence: Both parties involved in the transaction, or their legal representatives, must be present at the registration authority.

Registration Fee: The buyer is responsible for paying a registration fee, which is typically 4% of the property's purchase price. In some cases, this fee can be shared with the seller.

Document Submission: The required documents must be submitted for verification. This includes the sales agreement, clearance certificate, and identification documents.

2. Title Registration

The title registration process officially finalizes the transfer of property ownership. This step results in the issuance of the title deed, a critical document that legally establishes the buyer as the new owner of the property.

Procedure:

Dubai: In Dubai, the title registration takes place at the Dubai Land Department (DLD). Both parties, or their legal representatives, must visit the DLD to complete the title transfer. The necessary documents are reviewed and processed by DLD officials.

Other Emirates: The procedure might differ slightly depending on the emirate. Buyers should check with the local land department or registration authority for specific requirements.

Required Documents for Title Registration:

No Objection Certificate: Issued by the seller’s construction company, confirming that there are no outstanding financial obligations related to the property.

Property Purchase and Sale Contract: The signed contract that details the terms of the property transaction.

Identification Documents: Passports, visas, or Emirates IDs for individual buyers, or corporate documents for legal entities.

Property taxes for foreigners in the UAE

While the UAE does not impose a specific property tax on foreign buyers, there are several costs associated with purchasing real estate in the country. These include:

• Registration Fee: A fee of 4% of the property's purchase value is charged for registration. This fee can be shared between the buyer and the seller or paid solely by the buyer.
• Title Deed Registration Fee: This fee is exclusively the buyer’s responsibility and is required for registering the title deed.
• Agent and Lawyer Fees: Buyers typically incur costs for real estate agents and legal services involved in the purchase process, especially in Dubai.
• Mortgage-Related Costs: If a mortgage is used for the purchase, the buyer must pay 0.25% of the loan amount for registration, plus an additional AED 290 (USD 80). Additionally, banks may charge up to 1.5% of the loan amount for contract documentation and processing.

Mortgages and installments

Foreigners can secure a mortgage for purchasing an apartment or villa in the UAE, with interest rates generally ranging from 3% to 6.5% per annum. The exact rate and loan amount will depend on the financial institution and the property being purchased.

Eligibility Requirements:

• The borrower must be between 21 and 65–70 years old by the time the loan matures.
• Regular income is required, with the minimum threshold determined by the lending institution.
• Banks may also request additional documents and certificates as part of the application process.

For those with a UAE residence permit, banks may offer loans of up to 80% of the property value. Non-residents, however, can typically obtain a loan covering 50% to 60% of the property value.

Additionally, many construction companies offer pay-in-installments plans to facilitate property purchases. These plans often come with attractive, interest-free terms, making them available for both completed and off-plan properties.