Until 2002 it was not possible for foreign nationals to own freehold title to Dubai property; however, in a bid to boost investment into Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum announced that he would change the laws back in 2002 and a property boom ensued.
Until 2006 however, the law change was not in effect and those who bought beforehand took a significant risk. They were also the ones to gain substantially from the huge rise in real estate prices that the emirate has enjoyed! Nowadays buying property in Dubai is incredibly straightforward and safe, and you can even get mortgages locally or internationally to assist your purchase. In this article we cover the Dubai property buying process.
If you’re buying a property off plan or during construction the process naturally differs a little to when you buy a completed or resale home. Off-plan or real estate in Dubai that is under construction is selected by a buyer and a reservation payment of up to GBP 2,000 is made whilst purchase contracts are drawn up. This reservation fee is non-refundable. Once a purchase contract has been drawn up and signed by the buyer and representative of the vendor, a deposit is required and then payments are made in stages during the construction process. Buyers who choose this method of property purchase should ensure that their stage payments relate to a stage in construction being met and not a time period having passed. This is because some developers encounter construction delays and a buyer should not have to pay anything until a certain amount of progress is made on their property.
It is usual for a buyer who selected a Dubai property off plan to hold back a small final percentage until completion to ensure the construction is completed properly. Once final inspection has been made, keys have been handed over and possession of the property has been taken over by the buyer, deeds will be transferred into the purchaser’s name.
One of the additional benefits of buying property in Dubai is that purchasers are given residency rights in the emirate. These rights apply whether you buy new or resale property. If you choose to go for the latter option then the buying process is slightly different to that covered above. For a start an offer has to be made to the vendor – this is usually only a verbal offer and, if accepted, both parties in the sale sign a preliminary sales contract and a deposit is paid…this can be up to 10% of the purchase price. This deposit is generally non-refundable unless the vendor withdraws from the sale which they can only do under exceptional circumstances.
If a buyer will require a mortgage in Dubai they must have this agreed in principle before signing any contract and parting with any money. This is because whilst mortgages are even available in Dubai from the likes of Barclays Bank nowadays, the lending criteria to be met are sometimes tough.
With a mortgage agreed in principle, a lawyer instructed to act on the buyer’s behalf, a verbal offer made and accepted and a preliminary sales contract signed and deposit paid, any conditions of that sale that have to be met such as successful searches being completed etc., a final contract is drafted and signed and all monies remaining are transferred. Finally, the property for sale is transferred into the name of the new owner.