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Buyer’s guide

Below is frequently asked questions related to the buying property in Dubai. If you have questions with more complex or specific details, please feel free to send us a request and we will be happy to assist you and answer to your questions via email or phone absolutely for free.

1. Are you buying property for investment or as a place to live in?

2. If you are buying property for investment prioritize – higher rental yield or higher return on a property value?

3. Understanding (SPA) Sales and Purchase Agreement and/or  (MOU) Memorandum of Understanding.

4. Buying property step by step general procedures (Cash).

5. Buying property steb by step general procedures (Mortgage).

6. Is it freehold or leasehold? Can I buy property in any part of Dubai?

7. Do I need residence visa to buy freehold property in Dubai?

8. Do I need to pay tax on my property?

9. How can I get mortgage or financing in Dubai?

10. Can I buy property with tenant?

11. What is BRN? What is ORN? POA?

12. Do I need professional advice to buy property in Dubai?

1. Are you buying property for investment or as a place to live in?

Buying property for investment can range in its types, locations, and appreciation values with emphasis on rental yield or a capital gain. Investor-buyer has to make good research or seek advice of an experienced real estate consultant to get professional breakdown of details of “Why I (investor) should invest in this property?”. One should understand that some properties have still good affordable price with good potential to grow in its value, while another property can be at its peak value with low prognosis of its appreciation of invested capital.

When it comes to buy property you plan to live in, you have to mainly understand developers, areas and your main needs for the next few years related to the property you would like to buy.

2. If you are buying property for investment prioritize – higher rental yield or higher return on a property value?

Identifying your priority is very important when you are buying property in Dubai. In most of the cases buyers, seek to find good opportunity where they combine both, good rental yield and high property appreciation value. For example buying a 3 bedroom apartment with fountain view in Residences, Downtown Dubai can go up to AED 9,5 Mln, yet maximum rental value of that property at the moment (2014) is AED 350,000 which is 3,2%. This type of properties are mostly bought to live in or to look further for a property appreciation.

There are still good projects where investors or end users can benefit from both good rental yield of 5-7% and confident growth of the property value which will bring great returns on a capital investment in the next few years. (you have to consider location, neighbouring projects, roads and communication).

3. Understanding (SPA) Sales and Purchase Agreement and (MOU) Memorandum of Understanding.

Sales and Purchase Agreement and Memorandum of Understanding are common names used for an agreement between seller and buyer to clarify responsibilities, values and time frame of the property transaction.  In SPA or MOU following should be mentioned:

a) property details (property number, plot number, name of the building, name of the project, size, parking )

b) name of the seller and buyer

c) selling price and expenses to be born by buyer

d) security deposit on the name of the seller -property owner

e) responsibilities if one of any parties want to withdraw from the deal

f) time frame and conditions of extension

4. Buying property step by step general procedures (Cash).

If property has title deed and buyer has cash for the agreed value of the property, the whole transaction can be done in just few days without any complications. Below is the general step by step process of buying ready freehold property.

a) choosing property according to your priorities (living in or investment)

b) placing an offer, negotiation, agreement – putting 10% security deposit cheque on the name of the owner (cheque is kept with your broker’s agency till date of successful transfer of the property to buyers name and than returned back to buyer)

c) understanding SPA and/or MOU before signing contract 1st by buyer and 2nd by seller (reading all clauses, if necessary corrections can be made)

d) applying for NOC from Developer (No Objection Certificate from developer to transfer property from one name to another) service charges settled and calculated as per pro rata.

e) property transfer at DLD Trusty Office (all manager cheques must be prepared in advance with required form from the agencies Forms –  A,B,F) 10% security deposit must be returned against managers cheque to the agreed property value and agency commission. Necessary payment to be done to DLD Trusty Office.

5. Buying property steb by step general procedures (Mortgage).

If you are buying property and looking to finance part of the amount to be paid towards value of the property, below are general step by step procedures to buy property with mortgage.

a) choosing property according to your priorities (living in or investment)

b) confirming with your bank about property you have chosen and getting pre approval which guarantees that you are eligible to get loan -mortgage-financing, for certain amount as per banks policies and conditions.

c) placing an offer, negotiation, agreement – putting 10% security deposit cheque on the name of the owner (cheque is kept with your broker’s agency till date of successful transfer of the property to buyers name and than returned back to buyer)

c) understanding SPA and/or MOU before signing contract 1st by buyer and 2nd by seller (reading all clauses, if necessary corrections can be made)

d) valuation of the property – valuation usually done by certified evaluation company whose procedures are accepted by the bank (it is organized by the bank for a fee paid by the buyer)

e) getting loan approval letter along with offer letter by the bank

f) applying for NOC from Developer (No Objection Certificate from developer to transfer property from one name to another) service charges settled and calculated as per pro rata.

g) property transfer at DLD Trusty Office (all manager cheques must be prepared in advance with required form from the agencies Forms –  A,B,F) 10% security deposit must be returned against managers cheque to the agreed property value and agency commission. 0,25% charged by DLD for mortgage registration. Necessary payment to be done to DLD Trusty Office.

6. Is it freehold or leasehold? Can I buy property in any part of Dubai?

In the previous years the leasehold (up to 99-year leases) for foreign purchase had been allowed but this was not a big success. It was the adoption of freehold tenure in general and foreign ownership in particular that sparked the great real estate boom in Dubai residential property. Freehold – you own the property and land forever. Leasehold – you can modify and inheritance is based on the remaining years of LH.

 

 

 
 

 

 

 

 

 

 

 

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