You may be interested to know that the hidden costs of buying a house in Dubai are quite significant. Dubai’s home buying process is an important one that needs knowledge and expertise. Dubai, one of the wealthiest cities has long been a main attraction for people around the world. If you take the advantages and disadvantages of migrating to Dubai into account, the many advantages take precedence over the few disadvantages. The excellent infrastructure, an efficient law and order system, and the accessibility of almost all main brands in the local markets make it the ideal place to live. Many people are interested in purchasing a property in Dubai, which is a suitable option for real estate investments because of its accessible location and amazing amenities.

The hidden fees of purchasing a house

As more and more people and businesses become interested in Dubai’s home buying process, the hidden costs of purchasing property in Dubai should also be taken into account. Let’s carefully examine the hidden costs of purchasing a property in Dubai to help you manage your budget better.

The inclination to purchase Dubai real estate raises concerns about hidden prices or additional fees that buyers may not know. To decrease misunderstanding and complications in the Dubai property buying process, it is essential to correctly teach oneself before making an ultimate financial decision. There are several hidden costs with purchasing a house in Dubai you should be familiar with. These hidden costs include:

  • Service fees
  • Insurance for real estate
  • Maintenance  and service fees
  • Dubai electricity and water authority registration fees
  • Certificate of no objection
  • Mortgage charges
  • Fees for agency services 
  • Government charges
  • Initial deposit
The hidden costs of buying a house in Dubai

1.Service fees

Annual service fees, which are determined by the RERA maintenance index, are costlier for the United Arab Emirates real estate owners. These charges help neighborhood development and the financial practicality of the real estate market. Budgetary preparation and the easy purchasing procedure may be improved by considering these hidden fees. The constantly changing residential property market generates wonderful gains for both selling and renting properties. Think about flats, homes, and villas for sale if you wish to purchase a property in Dubai.

2. Insurance for real estate

Homeowner’s insurance is a necessary cost when buying a home in Dubai. It safeguards you if your property faces harm or destruction triggered by unpredictable events such as natural disasters or theft. Building insurance premiums are different based on the property’s value, but it is usually 0.5% to 1% of the property’s value annually.

3. Maintenance  and service fees

After the transfer of the property, there are extra yearly costs for maintenance known as service fees. The costs are repaid to maintain the building’s common amenities in wonderful operating order, like the lift and the aquatic center. The Dubai Land Department is responsible for collecting these payments. The RERA service and maintenance index is utilized to determine the per-square-foot maintenance price. House owners must take into consideration servicing fees in addition to initial charges when estimating the cost of house ownership in Dubai. These are consistent charges that homeowners must pay for the upkeep of their properties.

4. Dubai electricity and water authority registration fees

Dubai Electricity and Water Authority delivers utility services to Dubai inhabitants, who must produce accounts. Meter installation charges vary between AED 2,300 and AED 4,000, based on the number of meters installed.

The hidden costs of buying a house in Dubai

5. Certificate of no objection

If the owner of the house has a mortgage registered, the purchaser must receive a No Objection Certificate (NOC), which is around AED 500-AED 500, as a result, keep this into account that you could encounter a penalty later, it is best to take notice of everything.

6. Mortgage charges

If you purchase a property on a mortgage, the extra cost of doing so should be taken into account as well. There are various kinds of mortgages in Dubai which come with some extra costs. You must pay attention to these costs during the Dubai house buying process. Banks typically subtract 1% of the loan amount and 5% VAT as a mortgage organization charge. In addition, there is the property estimation charge which varies between AED 2500 to AED 3500 along with 5% VAT.

Besides, for a house where the existing owner has a mortgage registered, the purchaser must pay off the current mortgage. The purchaser receives the Non-Objection Certificate (NOC) once the current mortgage is paid. The NOC is obligatory in this case to get the property registered with the DLD.

7. Fees for agency services  

Agent commissions are also regarded as hidden costs of purchasing and owning real estate in Dubai. Whether you want to rent or buy a place to settle in the United Arab Emirates, the help of an agency can make the Dubai house buying process easier. Working with an agent to represent you has many advantages, but the services are not free. A real estate agent typically charges 2% of the purchase price, still this changes based on the region and type of property. There is also a transfer charge which is variable between AED 6,000 to AED 10,000. The fee is only demanded if conveyancer services are used during the transaction.

The hidden costs of buying a house in Dubai

8. Government charges

All kinds of properties bought in Dubai require payments to the Dubai Land Department (DLD). During the Dubai property buying process, you should register your property with the DLD. If you do not register your transactions with DLD within 60 days of the purchase, they are not enforceable.

The DLD charges add up to 4% of the total property price. In addition, for a property purchased via a bank loan, the purchaser must deliver 0.25% of the loan amount to the DLD. This charge does not apply to properties bought in cash. There is also an AED 290 charge if you buy a property on a mortgage.

9. Initial deposit

For all property transactions, the purchaser must offer an initial deposit amount to guarantee the deal. For prepared properties in secondary markets, the amount is typically 10% of the property price. The amount is kept by a RERA-empowered broker until the property transfer process is done.

Conclusion

Dubai’s house buying process includes hidden fees, so preparation and planning are necessary to ensure that every one of the costs is paid. After becoming familiar with the hidden costs of buying a home in Dubai, you may begin your financial selection and specify the most desirable property alternative.