Buying property anywhere in the world is not a process you want to rush – buying property in Dubai is a process you must not rush. Zarah Evans, Managing Partner at Exclusive Links Real Estate Brokers, shares her advice on each step of the buying process.
It is extremely important to understand your buying position, the markets you are interested in and how your agent will work best for you. Knowledge is key and here are some tips on how the buying process can be orderly, smooth and ultimately minimize delays.
First you need to establish whether you are buying to save on rent; using the property as a savings policy or to enjoy the simple pleasure of living in your own home.
Step 1 – Research
Research the available properties through websites, property portals, newspapers and magazines. This will give you a sense of current availability and pricing, they will also introduce you to active agents in the market. Explore and evaluate the neighbourhoods you are considering for your future home or investment.
Step 2 – Affordability
Consider your budget and affordability. Do you require a mortgage to buy? Do you need to transfer funds into Dubai to support the purchase? Lenders generally will support mortgages that are seven times your annual income and the minimum down payment required is 20% for expats, 25% for non-residents, or 15% for UAE nationals.
Step 3 – Appointing a real estate broker
Real Estate agents play an important role when you are buying a home. They can professionally advise on areas, market prices and the costs associated with buying property in Dubai. They can assist with community knowledge, facilities and amenities in the area. More importantly they can negotiate and secure the best price on your behalf. Ensure that your chosen agency is registered with the Real Estate Regulatory Agency (RERA) and that your expectations are clear from the onset. A RERA registered broker will charge a buyer commission. A government approved Contract between Buyer and Broker (Form B) should be signed to complete the appointment of any agency.
Step 4 – Mortgage approvals
Before you start looking for a home you will need to know how much you can actually spend, and if this includes borrowing then you should look to get pre-approved for a mortgage. By working with a mortgage consultant – not only will they know which products suit your circumstances best, but their connections with the banks mean they will ensure you get the best rates available. Also, their familiarisation with the lending process will be invaluable when it comes to time frames and meeting deadlines.
Step 5 – Make an offer
You can now seriously shop for properties in your price range. With either cash or a mortgage pre-approval feel confident to make an offer. Make sure you fully understand the status of the property and the seller and ensure that you are achieving the best price through your appointed agent. Check ownership and title deed documents on your property of choice.
Step 6 – Understand all hidden costs
Understand all the costs associated with buying a property and also be aware of all service fees. Consider purchase price and other related fees such as title deed and mortgage registration fees, transfer fees and agency commissions. Consider set up fees of utility providers and annual municipality fees.
If any enhancements have been done to the property you are purchasing, ensure that the correct developer approvals have been obtained by the seller to avoid any possible hold-up or issues later.
Step 7 – Property valuation and paperwork
If you have chosen to purchase with a mortgage, then a home valuation will need to be done before final loan to value is determined and lending is approved. This confirms that you are paying a fair price for your property. As you can imagine, there is a lot of paperwork involved in buying a house especially if a mortgage is secured. Your agent and mortgage consultant can assist with documentation requirements and provide step by step instructions.
Step 8 – Close the sale
At closing, you will sign all of the paperwork required to complete the purchase, including your loan documents and a series of agreements. This will be the government approved Property Sale Contract between Seller and Buyer (Form F) and addendum provided by your agency in the form of a Sale & Purchase Agreement (SPA) or Memorandum of Understanding (MOU). Make sure that you are clear on the clauses and responsibilities of all parties in the agreement. Question the agreement and make changes if necessary. You will be required to put down a 10% deposit that will be held with your appointed agent and access to the property will not be given until successful transfer which can be 30-60 days after signing the contract.
Step 9 – Transfer of ownership
Once all the approvals have been acquired from developers, banks and utility providers you will be required to attend transfer of ownership with the seller and the appointed agents and banks/ mortgage consultants. Ensure you have confirmation of all documents and payments required. This step will take place at a trustee office, a transfer office approved by the Dubai Land Department. Cheques will be exchanged and all papers will be signed. Then a title deed will be produced in your name as the new owner of the property.
Take into consideration if you are buying a property with a sitting tenant you as the new owner will inherit the tenant and the terms and conditions of the tenancy agreement. A prorated rent back figure can be calculated as part of the contract of sale and ensure that all future rental cheques and security deposits are changed to your name as the new owner. These should all be handed over to you at transfer of ownership.
Step 10 – Make your investment work for you
If you have not bought the property to live in, consider the rental options and the best way to manage your investment. Understand the responsibility of a landlord and make your property work for you. Consider appointing a property management company to maximize your revenue potential, collect and disburse rental funds. A property management company can be a cost-effective solution in managing all maintenance issues and costs through the tenancy term.
If you are buying a property off-plan then it is vital to have full disclosure from the developer on the payment plan, completion date, default clauses and the location/ inclusions of your property. Whilst these can be negotiated directly with a developer my recommendation is again to work with an experienced agency who can ensure that the right questions are asked at the right time. You will be required to pay a registration fee on your off-plan purchase, but this is to ensure your property is registered with the Dubai Land Department and that you are issued with a Oqood pre-registration title deed. Ensure that you go through the Sale and Purchase Agreement with a fine-tooth comb as they can often be more favourable to the developer. Not all banks support all off plan projects, so if you are mortgaging an off-plan project understand your options. Most importantly ensure that the developer and development is registered with the DLD and that it is supported with a full escrow to protect your investment as it is being paid during construction.
Whilst these can be negotiated directly with a developer my recommendation is again to work with an experienced agency who can ensure that the right questions are asked at the right time. You will be required to pay a registration fee on your off-plan purchase, but this is to ensure your property is registered with the Dubai Land Department and that you are issued with a Oqood pre-registration title deed. Ensure that you go through the Sale and Purchase Agreement with a fine-tooth comb as they can often be more favourable to the developer. Not all banks support all off plan projects, so if you are mortgaging an off-plan project understand your options. Most importantly ensure that the developer and development is registered with the DLD and that it is supported with a full escrow to protect your investment as it is being paid during construction.
In saying all of this completion of a sale and transfer can be completed in as little as 2 weeks. Remember it is not all about the price and the property it is about the circumstances of the purchase. Invest in the right information, agency and mortgage broker, and the right property will be yours.
By Zarah Evans, Managing Partner at Exclusive Links Real Estate Brokers
