The majority of the expats spending their livelihood in Dubai yearn to attain property of their own in Dubai. Initially, the property in Dubai was limited to renting only before the freehold properties were launched. Moreover, with the passage of time, the prices of property in Dubai have been declining, and purchasing property has become more convenient. The repayment of the property loan is also found to be less in some areas as compared to the rent along with the potential of growth in capital. However, there are certain hidden charges and fees that are allotted by the real estate agents/ developers, Dubai Land Department (DLD), and mortgage leaders, which have now become more convenient for many foreigners. 

Hidden Charges and Fees in Dubai for Property Buying 

Commonly, Dubai has always offered high prices for their property, which was the main reason for rare cases of purchase of property within Dubai. However, by following the cost-declining trend of the establishment of mid-market residences, the property has become much more affordable. In Dubai, the overall cost of buying a property changes from 7% to 10% of the value of the property, which consists of different kinds of costs too outlined below:

• Transfer Fee: administrative and government charges.
• Agency charges: agent fee and commission.
• Initial Deposit: cost of initial purchase.
• Mortgage Charges: bank cost associated.
• Developer Fee: fees for specific services.
• Insurance Charges: cost of property insurance. 
• Dubai Electricity and Water Authority (DEWA) Fees.
• Service Charges: Annual service fees

Transfer Fee

• All the purchases in the city of Dubai are bound to pay some charges to the Dubai Land Department (DLD).
• All the purchases from real estate also need registration with DLD.
• There is a time limit of 60 days for registration transactions.
• The DLD charges range up to 4% of the price of the property.
• Property Registration Charges: AED 4000 with a 5% VAT for the real estate, and its value is up to AED 500,000.
• Property Registration Charges: AED 2000 with a 5% VAT for the real estate and its value is less than AED 500,000.
• The loan value charged on the buying of a mortgage, 0.25% loan value has to be paid by the admin, with a fee of AED 290.

Agency Charges

The commission that has to be paid to the agency is considered another form of hidden cost for buying property in Dubai. Real estate agents play a significant role in buying property in the United Arab Emirates as they make the overall buying process convenient and easy, whether one is looking for a residential site or a place to rent. The agent fees range up to 2% of the entire value of the property, and this ratio varies as the property type changes.

• There are conveyance fee charges that are to be paid that differ between AED 6000 to AED 10,000. Moreover, the fees are not applied if the conveyance is not hired during the finalization of the deal.
• The developer or seller has to pay the commission to the brokerage or the real estate agent while selling off-plan property.
• A real estate agent has to be appointed so that multiple tasks can be updated on the negotiated commissions.

Initial Deposit

Dubai, being a dynamic as well as diverse market of property, is a prerequisite to safe the buying process. Moreover, the seller has to get an initial deposit from the buyer through a cheque. The basic elements of the initial deposit are: 

• The Dubai Government sustains a 10% initial deposit fee for the ready-to-use properties within the secondary market.
• There are also some charges that are to be paid for the acquisition of a No Objection Certificate while buying a mortgage. It is also necessary to shift property in the name of the buyer.

Mortgage Charges

This is critical to pay extra charges that are connected with the purchase of property of mortgage. There are some extra charges for the buying of a Mortgage. The mortgage charges are outlined below:

• A mortgage is implemented for 1% of the amount of the loan and 5% VAT is given to the bank.
• The Property Valuation Fee is calculated to be approximately AED 2500 to AED 3500, along with 5% VAT fees.

Developer Fee

The developer fees are sustained and implemented in rare cases for certain services or amenities which have been existing within the development. The hidden charges for the developer fees are implemented on the buying of property when:

• The developed fees have been implemented on luxury developments for the provision of high-end facilities/ services.
• Premium and exclusive services such as maintenance requests, concierge facility, etc.

Insurance Charges

The insurance fees are not compulsory; however, they provide safe potential protection from the damages that take place due to accidental fires, thefts, or natural disasters. In addition to this, insurance charges are mandatory when buying property in the mortgage. The key points to acknowledge for buying property in Dubai are:

• Property owners achieve a sense of protection and peace of mind.
• Many banks require payment of life insurance on a monthly basis with the amount of the loan.

Dubai Electricity and Water Authority (DEWA) Fees

Dubai Electricity and Water Authority (DEWA) offers utility to the residents of Dubai and they have to pay the charges for meter installation that differs between AED 2300 to AED 4000. Dubai Electricity and Water Authority (DEWA) Fees are:

• Compulsory for maintenance of property.
• Provides the functionality of the property.
• The fees also vary depending on the number of installed meters

Service Charges

The Service Charges are implemented on an annual basis and are implemented due to the following reasons:

• To extend the community.
• For sustaining the financial stability of the industry of the property within Dubai

Wrapping Up! 

There are plenty of hidden charges and fees while buying property in Dubai, and thus, strong planning is required before time to prepare for covering all the costs ahead. It is essential to know about the hidden charges while buying property in Dubai to make the final selection easier, along with the preparation of the entire cost of the purchased property. There are plenty of screened homes offered by the Dubai Housing Institution for producing potential income out of the purchases. Furthermore, their counseling and suggestions make sure that the utilization of time is improved while guaranteeing a valuable portfolio of property within the splendid city of Dubai. In such an innovative and evolving city like Dubai, it is beneficial to make informed decisions to be successful in the property market. Furthermore, it is significant to have complete knowledge about the freehold and leasehold properties as well for making a good choice by making ideal investments.