Dubai Real Estate: A Legal Q&A For First-Time Property Buyers

If you’re new to Dubai’s real estate scene and considering buying property here, you might be feeling a bit intimidated by the legalities of it all. This is entirely natural, given the unfamiliar terrain and the likely sizable investment you’re about to make.
However, you’ll soon discover that the city’s real estate laws and procedures are just as clear and easy to navigate for first-time buyers as they are for seasoned investors, regardless of the types of properties for sale in Dubai, the areas they’re in, the amounts they cost, or the kind of ownership you’re looking at.
Read on to find the answers to some of the most common legal questions that might be on your mind as you take your first steps into Dubai’s dynamic property market.
What Is the Law for Property Ownership in Dubai?
Real Estate Law No. 7 of 2006, also referred to as the Land Registration Law, is the primary legislation that governs the process of buying and owning real estate in Dubai.
According to article (4) of this law, if you’re a UAE or GCC citizen, you can purchase property anywhere in the city. However, if you’re not a citizen of these countries, you’ll still be allowed to own real estate in certain areas designated as leasehold or freehold for foreign investors.
The Ruler of the Emirate of Dubai selects these neighborhoods through decrees and laws issued periodically, which are then enforced by the Dubai Land Department (DLD).
A few examples of freehold areas for apartments, villas and townhouses that are open to foreign buyers in the city include properties for sale in JVC, Damac Hills, Dubai Hills Estate, Motor City, Palm Jumeirah and many more.
What’s the Difference Between Leasehold and Freehold Ownership?
The main distinction between leasehold and freehold ownership revolves around the rights you have as a buyer.
- Leasehold: When you purchase property on a leasehold basis, you are granted ownership rights for a specific period, typically up to 99 years. However, you don’t own the land on which the property is built. The full ownership of the land remains with the freeholder.
- Freehold: If you buy a property on a freehold basis, you have complete ownership of both the estate and the land it stands on. As a result, you can sell, lease or live in the property as you wish.
What Are the Legal Steps to Purchasing Property in Dubai?
Whether you’re putting down roots in the city or looking for a solid investment opportunity, the legal process of buying property in Dubai involves the same steps, which are:
1. Preparing a Buyer and Seller Contract
Once you’ve located the property you want to buy, the first step is to negotiate and outline the agreement terms between you and the seller. This includes the selling price, payment method, any time restrictions on the purchase and other essential details.
As to the mode of payment, you can opt for one of two options: cash or mortgage. Cash buyers have more bargaining power and can secure a better deal since they don’t have to go through the bank approval process.
For this part, you usually don’t need a lawyer or real estate agent, but since there’s a contract involved whose terms must be precise and clear, it’s always better to have a professional look it over.
2. Signing the Memorandum of Understanding (MoU)
The MOU or Form F is one of the Real Estate Regulatory Agency’s (RERA) official forms; you can find it on the DLD’s website. It’s the purchase agreement, typically prepared by a real estate broker and signed by you and the seller at the Registration Trustee’s office in the presence of a witness.
At this stage, you’ll be asked to pay a security deposit of 10%, held by the Registration Trustee and given back to you once the property transfer is complete.
3. Filing for a No Objection Certificate (NOC)
Most real estate projects in Dubai are undertaken by leading developers such as Emaar, Damac, Nakheel, Aldar and Dubai Properties, to name a few. For ownership to be transferred from one buyer to another, both parties (and the real estate agents) need to meet at the developer’s office to apply for and settle the NOC.
Depending on whether or not there are any pending service charges for the upkeep and maintenance of the property, such as cleanings, security staff salaries, landscaping and other fees, the developer issues this certificate.
4. Finalizing the Purchase at the DLD
The last and final legal step of the property purchase process is effecting the transfer at the DLD office. Here, you’ll need to come with the seller and present all of the necessary documents, including:
- A cashier’s check for the property cost made out to the seller
- The original identification papers for you and the seller, such as Emirates ID or passport
- The NOC issued by the developer
- The Form F (MOU) signed by both parties
After this part is complete, the DLD will issue the new title deed in your name as the official owner of the property.
What Are the Administrative Costs of Buying Property in Dubai?
The administrative costs of Dubai real estate transactions usually include:
● DLD Charges
The following are the DLD’s fees for different property types:
- Land: 4% of the property price + AED 430
- Off-plan: 4% of the property price + AED 40
- Apartment/Office: 4% of the property price + AED 580
● Property Registration Fees
- For properties under AED 500,000: AED 2,000 plus 5% VAT
- For properties over AED 500,000: AED 4,000 plus 5% VAT
● Issuance of Title Deed
- Standard fee: AED 250
● Real Estate Agent’s Commission
- Typically calculated at 2% of the property value
● NOC Fees
- Range depending on developer: AED 500 – AED 5,000
● Mortgage Registration Fees
- Applicable only if the property is mortgaged: 0.25% of mortgage amount + AED 290
Investing With Confidence
As you can see, buying real estate in Dubai is not as complicated as you might have thought. As long as you know the legal steps and what to expect in terms of costs, investing in this city’s vibrant property market can be a rewarding and profitable experience.
To ensure you’re making the right decision for your investment goals, budget and lifestyle, it’s always best to consult a seasoned real estate broker who can guide you through the process and be your advocate every step of the way.