Real Estate Acquisition in the United Arab Emirates

General Information

Since 2006, a real estate law has been passed in the United Arab Emirates, the „Dubai Real Estate Registration Law“, which has introduced many new rules. For example, any real estate purchase in Dubai must be registered with the Land Department, as it also keeps the land register.
In detail, however, all emirates have different laws, which are to be observed in individual cases. In general, buying a property in the UAE through an offshore company is often beneficial.
Buying a real estate in Dubai offers many advantages: The real estate contract, for example, does not require notarial certification and there is no need to pay a land transfer tax. In addition, after the full payment of a property a residence permit application (Residence Visa) can be made, which is not a work permit and is not required by law, but depends on the goodwill of the authorities.
An average transaction takes about 30 days (from the signing of the purchase contract) and the owner always keeps a so-called „title deed“, which serves as proof of ownership.

There are various types of property purchase in Dubai: the so-called Short-Term Lease Hold corresponds to a short-term rent with a limit of 20 years. In contrast, the Long-Term Lease Hold with a long-term lease of 90 to 99 years. Here, the rent is paid at the beginning of each rental period.
Another form of acquisition is the Free-Hold, which is the most comprehensive right. In this case the real estate purchaser is the unlimited owner. There are two further categories: the acquisition of planning objects (off-plan) and the second purchase (resale).
When acquiring planning objects, there is always a certain risk. However, this has been limited by the law introduced by which every developer who sells a planning object must be registered in the Real Estate Regulatory Agency (RERA) and is thus under state control. Even if legal assistance is not required, it is advisable to hire a local lawyer.
Concerning a second purchase, a property is sold by private sellers. A second purchase is usually much more expensive than a direct purchase, but has the advantage that the object has already been built.

During the acquisition of a free-hold object, the following steps must be taken:

Buyers and sellers agree on the framework and sign a letter of intent.
A deposit of 10% must be paid.
Thereafter, both parties apply for a declaration of non-objection for a fee.
Afterwards the official owner transfer takes place at the Dubai Land Department. In this case, a new „Title Deed“ is issued on the name of the new owner. If a mortgage is used, the responsible bank must be turned on. If the seller owns a mortgage on this property, the buyer must first repay them before issuing the declaration of non-objection.
In the case of the second purchase a letter of intent is also necessary, which sets the conditions and the transfer date. Non-locals must pay the full purchase price to receive the „Title of Deed“.
When renting, the lease must be registered with „Ejari“, the online portal of RERA, and a security of 5% of the rent be deposited.

For a property purchase in Dubai, the following fees apply:

Declaration of non-objection (maximum AED 5,000). Sometimes the Developer also demands a deposit, which must be deposited, and only after the buyer can present the „Title Deed“ this sum is paid back.
Brokerage fee is 2% of the purchase price.
Transfer fee is 4% of the purchase price.
Administration fees of AED 5,000, which are paid to the Dubai Land Department.
Mortgage registration fee of 0.25% of the loan amount (if a mortgage is needed)·
Developer fee is between 10 and 20% (depending on the Emirate)·
To register a long-term lease hold, 1% of the contract value is paid once.