Buying property in any part of the world can be a big and stressful step, involving a lot of research. In the United Arab Emirates, expatriates from all over the world are not only welcome, they can also become homeowners. Dubai has always welcomed new residents and has a simple set of laws that make buying property an easy process. But you may be wondering: how do I go about buying a Dubai apartment? What laws need to be observed?

This article will provide you with comprehensive information on buying property in Dubai.

Apartment buying Dubai : United Arab Emirates (UAE) law

There is a specific set of laws for people wishing to buy an apartment in Dubai or other real estate in the Emirates. These laws differ from one emirate to another.

One of the most important laws for expatriates is article (4) of law no. 7 of 2006.

This article is the main reference and regulation for real estate ownership in Dubai. It specifies that residents of the United Arab Emirates (UAE) and the Gulf Cooperation Council (GCC) can own property anywhere in Dubai.

Foreigners, meanwhile, are allowed to buy property in designated areas on a freehold or leasehold basis.

Property types in Dubai

Before buying the house or apartment of your dreams in Dubai, it's important to understand the two types of property: freehold and leasehold.

Knowing the difference between the two allows you to make an informed decision.

Dubai was the first emirate in the United Arab Emirates to allow expatriates access to property in designated areas.

While the right to own property on a leasehold basis was granted in 2001, the right to own property on a freehold basis was adopted shortly afterwards, in 2002.

Freehold property

Freehold gives the buyer full ownership not only of the property, but also of the land, with no time restrictions.

The Dubai Land Department (DLD) will register the freehold buyer's name as "landowner" in the government registry and issue a title deed for the property.

This title and any related contract are applicable in perpetuity. This means that in the event of the owner's death, the heir inherits the property.

Expatriates and foreign nationals are allowed to buy freehold or off-plan property in designated areas of Dubai.

They must, however, respect government guidelines and only purchase property from government-approved developers or real estate agents.

Here are some important points about freehold properties:

• The owner is free to sell, rent or occupy the property at will.
• Owners can remodel/renovate their property as they see fit, within the guidelines set by the developer.
• The owner and his family can obtain renewable residence visas in the United Arab Emirates, provided certain conditions are met. These visas can be for five or ten years.
• The owner is responsible for the maintenance, upkeep and major repairs of his property.

Leasehold property

Rental property gives the buyer the right to occupy a property for a specified period.

The lease term is generally 99 years, but can be shorter in some cases.

Rental ownership only gives the buyer rights to the property, not to the land on which it is built.

When the lease expires, ownership is transferred to the leasehold owner.

Here are some important points about leasehold properties:

• The leaseholder can renew the contract at the end of the period and continue to occupy the property.
• The leaseholder has limited liability for repairs, as it is the freehold owner who is likely to be responsible for repairs.
• Rental properties are generally more affordable than freehold properties.
• Any modification to the structure of the property (e.g. renovation/remodeling) requires the approval of the freehold owner.

• Tenants may be subject to certain restrictions, such as subletting the property or owning pets.

Step-by-step guide to buying property in Dubai

While signing the contract and receiving the title deeds is a milestone for anyone wishing to buy an apartment in Dubai, there are a number of factors to consider before proceeding with the purchase of the property.

Calculate costs

Understanding your personal finances and the costs you can afford is the first step towards buying a Dubai apartment.

Buyers in Dubai should bear in mind that there will be a real estate agency fee of 2% of the purchase price and a transfer fee to the Dubai Land Department of 4%.

If you plan to finance your purchase with a mortgage, you'll need to pay a deposit equivalent to at least 20% to 25% of the purchase price, depending on your situation.

Drawing up a budget and understanding the costs involved in buying a Dubai apartment will help reduce financial obstacles in the future.

This planning can be done with the help of an experienced real estate agent.

To find out more about payment plans in Dubai, you can read our article : Investing in Dubai: All about payment plans

Pre-approval as a financial buyer

If a buyer wishes to obtain a loan, he will need to submit an application to a bank for pre-approval.

Being pre-approved as a buyer not only confirms that your budget is realistic, but also puts you in a better position to buy.

Once the loan amount has been approved, the bank will issue a pre-approval letter/email, which will be valid for 60 days.

Finding the right real estate agency

There are many real estate agencies in Dubai. The right agent who understands your criteria, requirements and budget, will make your property buying experience much simpler.

By identifying an experienced real estate agent who takes the time to understand all your needs and desires, you'll make a huge difference to your experience and maximize your chances of buying the ideal property.

Visiting real estate

Once you've chosen a real estate agent, it's time to start looking for the apartment of your dreams.

It can take several visits before a buyer finds an option close to or corresponding to his or her preferences.

Patience is essential throughout the process, and you should be sure to look at several properties before finding the one that's right for you.

Make an offer

Once the buyer has selected a property, we recommend that he or she makes an offer in writing, accompanied by a 10% deposit.

He must also present copies of his passport and UAE identity card, which are required of all persons who will appear on the title deed.

Sign memorandum of understanding/form F

Once the offer has been accepted by both parties, a Memorandum of Understanding (MOU) will be drawn up, also known as an F-form.

After reviewing Form F, both parties can sign the contracts.

Monitor the sales progression process

Buyers who acquire a property with a mortgage must call on the bank.

Here's how such a procedure is likely to work:

• The buyer must obtain a bank appraisal of the property and a final offer letter from the lender.
• If the seller has taken out a mortgage on the property, the buyer must pay the mortgage in full before applying for the certificate of conformity. In this case, the seller should ask his bank for a mortgage settlement statement, as this can take up to two weeks.

Request a compliance notice

Here's how the NOC process can work for both parties:

• The seller submits a request for a notice of compliance.
• The payment fee for a NOC is usually between AED 500 and AED 5,000, depending on the developer. Some developers may also ask the buyer for a refundable deposit, which is returned after title approval and updating of records (which takes around five working days).
• Once all amounts due have been paid in full, the promoter issues the certificate of conformity.

Transfer ownership

Once the certificate of conformity has been issued, all parties go to the DLD office to officially transfer ownership of the apartment. The buyer may be required to provide

• A cheque for payment of the purchase price made payable to the seller on the transfer date.
• A cheque from the manager for the 4% transfer fee due to DLD.
• A maximum handling fee of AED 4,000.

Once the formalities have been completed, the title deed is issued in the buyer's name.

Conclusion

Buying an apartment or villa in Dubai may seem complex, but authorities such as the DLD and the Real Estate Regulatory Authority (RERA) have procedures and guidelines in place to make the process as quick and stress-free as possible for buyers.

We hope this article has provided detailed and useful information for those looking to buy an apartment in Dubai.

For more information, contact an expert like GID and start looking for your dream home in Dubai.