Additional Costs When Buying Property in Dubai as a UK Investor

Even if you’re familiar with current property prices, it can be harder to guess the extra costs involved in your real estate purchase. To help you understand the cost of buying property in Dubai, we have put together an introductory guide.

There are additional costs when buying property in Dubai, which can impact your initial budget at and net rental yield. However, the United Arab Emirates’ professional fees, registration fees and set-up costs may be unfamiliar to UK investors.

Read on to find out more about the associated costs of buying a property in Dubai.

What are the costs of buying property in Dubai?

We go on to outline an idea of the costs involved, but it’s crucial to seek specialist advice ahead of your own purchase. This includes everything, from government fees to agency costs, mortgage deposits, utilities connections and more.

1. Purchase & Government Fees

Various Dubai Land Department (DLD) fees are charged on all property transactions. Key DLD fees to pay when you buy a property in Dubai include:

• Dubai Land Department (DLD) Transfer Fee: 4% of property selling price
• DLD Admin Fee: around AED 580 (apartments)
• DLD Property Registration Fee: AED 2,000 + 5% VAT (properties AED 500,000 or less) or AED 4,000 + 5% VAT (properties over AED 500,000)

2. Agent & Professional Fees

Average Dubai real estate agent fees cost 2-3% of the selling price plus VAT, with conveyancing fees for buying a Dubai property often between AED 5,000 and AED 10,000. It’s essential your agent and conveyancer are well-versed specialists in Dubai property law, so choose carefully.

3. Mortgage Related Costs

UK buyers can take out a mortgage in Dubai, but you must budget for the associated DLD fees and bank fees. If the seller bought with a mortgage, the buyer effectively pays it off and applies for a No Objection Certificate (NOC). Dubai mortgage fees typically break down as follows:

• Property valuation fee: average of AED 2,500 to AED 3,500 + 5% VAT
• Mortgage arrangement fee: 1% of loan amount +5% VAT
• DLD Mortgage Registration Fees: AED 290 + 0.25% of total mortgage borrowing
• NOC: AED 500 to AED 5,000
• Mandatory Life Insurance: 0.4% to 0.8% per annum of loan balance

4. Developer & Building Fees

Burj Khalifa apartments can attract service charges of AED 60 to AED 70 per sq ft, while service charges on villas in Arabian Ranches, Emirates Hills or Dubai Hills Estate range from AED 1 to AED 4 per sq ft. Expect general fund, community fee and sinking fund charge components, plus additional off-plan property purchase costs.

• Oqood Registration: AED 2,000 (off-plan property purchases only)
• Trustee Office Fee: 2% of total property value (off-plan property purchases only)
• Service charges: AED 1 to AED 70 per sq ft

5. Utilities & Setup Costs

Utilities setup costs including district cooling where relevant, are payable to Dubai Electricity and Water Authority (DEWA). Electricity, water and EVA slab tariffs based on Dubai Supreme Council of Energy guidelines are billed on consumption per m3 or kWh per month.

• DEWA connections (apartment): AED 2,000 approx.
• DEWA connections (villa): AED 4,000 approx.

6. Ongoing Ownership Costs

As well as service charges and utility bills, budget for insurance premiums and further development fees. Research thoroughly before buying.

7. UK-Specific Cost Considerations

UK residents must pay tax on international rental income. Currency exchange costs can add 3-4%, plus transfer fees. Consult an experienced tax and financial advisor to ensure your profits are taxed efficiently.

8. Typical Total Up-Front Costs As A Cash Buyer

The total average initial costs of buying property in Dubai vary greatly, upwards of AED 15,000 to AED 20,000 plus at least 8% of the selling price.

Frequently Asked Questions

Are you considering buying property in Dubai? We are on hand to guide you through the Dubai real estate market – contact Intra-Capital Estates today to find out more.