Property Transactions
Property Sale & Purchase Process
Memorandum of Understanding (MOU)
Sale and Purchase Agreement (SPA)
As soon as both sides agree to the terms in the MOU, they move on to the Sale and Purchase Agreement (SPA), which is a legally binding contract. The SPA usually has all the important information about the property, like the exact price, how the money will be paid (like deposits and amounts), when it needs to be paid, and any other conditions that apply to the property transfer. This agreement looks out for both sides’ best interests and makes sure that everyone is legally responsible.
To make sure it follows UAE laws and rules, the SPA is usually written with the help of lawyers. The buyer needs this contract to protect their ownership rights and the seller needs it to protect their right to the agreed-upon payment.
Transfer of Title Deed
The process of moving the title record starts as soon as the SPA is signed. The title document is proof that the buyer legally owns the land, and transferring it is an important part of completing the sale. In the UAE, this requires to be registered with the right land body. For properties in Dubai, this is the Dubai Land Department (DLD), and for properties in Abu Dhabi, it is the Abu Dhabi Municipality (ADM).
In order to transfer a property, buyer will also pay licensing fees, which are usually a portion for the property’s value. Following the release of the title record, the buyer is officially the owner of the property and the deal is finished.
The last payment and handover
According to the terms in the SPA, the buyer must make the final payment once the title deed transfer is confirmed. The seller will give the property to the buyer after the last payment is made. This includes giving the new owner the keys to the property and any important documentation connected to it, like maintenance contracts, warranties, and user guides for any systems or appliances that are already there.
This is the last step in the property sale process. The buyer is now the official owner of the property.
Valuation & Inspections
Valuation and inspection of a property are important parts of the buying and selling process because they make sure buyers are well-informed and protected from possible risks. These steps help you figure out how much a house is worth in the open market as well as identify any problems that may lead you to spend more money than you anticipated.
Property Valuation
Valuation determines the property’s true worth, providing clarity on whether the asking price aligns with its value. Professionals typically use three main approaches:
- Market Comparison Approach: Compares the property to similar properties recently sold in the same area. This is the most common method for residential properties and ensures fair pricing.
- Income Approach: Evaluates the property’s potential to generate rental income. This approach considers net income, market rental rates, and operating costs, making it ideal for commercial and investment properties.
- Cost Approach: Assesses the cost of rebuilding the property, factoring in depreciation. This method is used for unique properties or those with limited market comparables.
Each approach serves a specific purpose, ensuring buyers and investors have a comprehensive understanding of the property’s value.
Property Inspections
To make sure a property is in good shape and free of structural or functional problems, property inspections are crucial. They usually look at things like the building’s structure, its plumbing and electrical systems, and whether or not it meets local building rules. Inspections of the structure look for flaws like foundation cracks that could be dangerous, and inspections of the pipes look for leaks, old systems, or blockages. Electrical checks make sure that the wiring is in order and that safety standards are followed. Compliance reviews make sure that the property follows all regulations and safety guidelines.
Building Condition Assessments (BCA) are very important for properties that are more complicated, like business spaces or high-rise buildings. BCAs provide a thorough look at the property’s general state, examining its mechanical and electrical systems as well as its maintenance requirements. These evaluations also check to see if the property follows local building and safety rules. This helps buyers find any risks or hidden costs.
Mortgage Facility
Foreign investors can secure mortgages through UAE-based banks, though the loan-to-value (LTV) ratio is typically lower than that for local buyers. Most foreign investors can borrow up to 10%-20% of the property’s value, meaning a down payment of at least 80%-90% is required.
To be eligible for a mortgage, foreign investors must usually have a stable income source in the UAE. This may include proof of employment, a UAE-based bank account, and a solid credit history. For non-resident investors, additional documentation may be required, and it is advisable to engage with a financial consultant or mortgage advisor to understand the specific requirements and terms.
Interest rates for mortgages in the UAE typically range from 3% to 5%, depending on whether you opt for a fixed-rate or variable-rate mortgage. Repayment terms can extend from 15 to 25 years, depending on the lender’s policies and the buyer’s financial situation.
Taxation and Fees
The UAE is the best destination to invest in real estate because there is no property tax, which means there are no yearly property taxes or capital gains taxes. The major cost of buying a property in Dubai is the 4% transfer fee that buyer pay to the Dubai Land Department (DLD). Real estate agent fees are usually around 2% of the property value.
The overall cost of ownership should take into account additional expenses like utilities, maintenance fees, and service charges, which will differ depending on the type and location of the property.
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FAQs
Yes, foreign nationals can purchase property in freehold zones across Dubai, Abu Dhabi, and other Emirates. Outside of these zones, foreign investors can lease properties on a long-term basis.
International investors are typically required to pay at least 10%-20% of the property’s value as a down payment, as foreign buyers are usually allowed to finance up to 80%-90% of the property’s value.
There are no property taxes in the UAE. However, property transfer fees (typically 4% of the purchase price) and real estate agent fees (around 2%) do apply.
Yes, foreign investors can obtain financing through UAE banks. The loan-to-value ratio for international buyers is typically around 50%-60%.
