Law and Regulations to Consider Before Buying Property in Dubai

Dubai Real Estate

8 months ago

Are you planning to buy your luxurious dream home in Dubai or a property for investment purposes? The real estate in Dubai is vast. It's crucial to be aware of the legal and regulatory requirements as knowing these can ensure a smooth purchasing process. Whether you are a seasoned investor or a newbie, knowing and testing the water before you dive in is a must.

In this blog, we are going to discuss some key laws and rules:

Legal and Administrative Procedures

Deposit: In UAE, the law requires buyers to pay a deposit of at least 10% of the total property value to secure it.
Admin Costs: Buying property in Dubai comes with two types of administrative fees, one, Title of Deed (AED 580) and second admin fees to the Dubai Land Department (DLD), which usually are 4% of the property value.
Translated Documents: Documents written in foreign languages must be attested and submitted with certified translations into Arabic. This must be registered within 60 days from the date of signing the contract by both parties.
Freehold Zones: The government in Dubai encourages non-resident investors to buy properties in freehold zones, including Arabian Ranches, Palm Jumeirah, Dubai Marina, and Downtown Dubai to increase foreign investments in the city.
Legal Status: Verify the ownership and if the seller has the right to sell a particular property. It is essential to check approvals and permits, and the property’s legal status. Confirm that the property doesn’t have any ongoing legal disputes, and invest only in the most reliable and reputable real estate.
Duration of Property Ownership for Non-Nationals: Dubai’s growing and attractive real estate industry, attracts many foreigners. To take advantage of that, the UAE government allows non-nationals to own property on a freehold basis, where foreign investors can hold the property indefinitely or on a leasehold basis normally ranging between 10 to 99 years.
Downpayment: The downpayment on a standard house in Dubai is normally 25% of the total price and depending on property type and location, some developers sell off-plan properties that require a 100% upfront downpayment.
Ownership Restrictions: Seeing the constant expansion and new developments in Dubai, the government has made three types of property rights in UAE based on Law No. 7 of 2006, “freehold”, ”usufruct”, and “musataha”. Freehold listed properties offer full ownership and are for UAE and GCC citizens only, which enables them to buy property anywhere in Dubai. Whereas, usufruct and musataha are for foreigners and have limitations, as foreigners can only purchase properties in allocated areas.
Registration and Transfer: The transfer of ownership is done through the issuance of a title deed issued by the Dubai Land Department (DLD) or the respective land department of the emirate where the property is located. The issuance requires registration and transfer fees, which could range from 2% to 7% of the purchase price.
Taxes and Fees: There are no property taxes in Dubai, but buyers are required to pay a one-time tax for land registry, on the day of ownership transfer. This tax is 4% of the sale price, which has to be paid to the land department.
Interim Registration Law No. 13 of 2008: This law has been modified by Law No. 19 of 2020, and has updated the process for challenging decisions made by the Dubai Land Department regarding the revocation of sale and purchase agreements to protect your investment and minimize legal risks.
Property Registration Law: Every foreign investor needs to understand the legal framework for property ownership in Dubai as the law dictates the rights and obligations of property owners who are registered under freehold properties and long-term leases.
The regulatory bodies in Dubai: Dubai has two regulatory bodies, Dubai Land Department (DLD) which is the central regulatory body overseeing property affairs, and the Real Estate Regulatory Agency (RERA) which acts as the regulatory arm, enforcing the laws and ensuring fair and transparent real estate activities.
Residence Visa: The government in Dubai offers many attractive amenities for foreign investors creating a hospitable environment. Many Key legislations provide expatriates and international investors freehold ownership in designated areas, with specific investments in real estate potentially entitling investors to long-term residence visas.

In conclusion, sailing through the legal landscape when buying property in Dubai is essential for a hassle-free transaction. Understanding these legal and regulatory requirements regarding deposits, ownership restrictions, registration, and taxes ensures a secure investment and protects your interests in this thriving real estate market.