1. About Dubai Land Department
Dubai Land Department (DLD) falls under the Executive Council of Dubai, headed by HH Sheikh Hamdan Bin Mohamed Bin Rashid Al Maktoum, Crown Prince of Dubai. DLD provides a range of real estate related services of which the most prominent is documenting property sales and purchases, issuing real estate ownership, organizing and promoting investments. The department strives to provide the best services to its clients and to facilitate customer transactions, a culture inspired by the vision set by the Emirates’ 2021 plan.
For more info on the Dubai Land Department visit www.dubailand.gov.ae
2. What is RERA?
Real Estate Regulatory Authority (RERA) forms part of the Dubai Land Department and is a government authority which licenses agents, brokers and developers plus it regulates all real estate activities in Dubai.
3. What are the requirements that Dubai property agents need to meet?
As per Law no. 85 of 2006 regarding the regulation of real estate brokers, these are some of the requirements for brokerages in the emirate:
- Have a valid Trade License from the Dubai Department of Economic Development;
- The brokerage company and all its brokers must be registered with RERA. Upon registration, the agency is given an Office Registration Number (ORN) and its agents are given a Broker Registration Number (BRN);
- In order to be registered with RERA, all agents need a certificate from the Dubai Real Estate Institute (DREI) and have to pass an exam, administered by RERA;
- Brokers are required to comply with a Code of Ethics, published by RERA.
4. What is DEWA?
Dubai Electricity and Water Authority.
For more information on this government authority please visit www.dewa.gov.ae
5. What are housing fees?
A municipality fee in the amount of 5% of the rental price divided across the year and included as part of the DEWA bill.
6. What is district cooling / chiller fee?
District cooling means the centralized production and distribution of cooling energy. Chilled water is delivered via an underground insulated pipeline to residential buildings to cool the indoor air of the buildings within a district. Chiller fees are being charged with your water and electricity bills and will reflect on your DEWA bill.
7. What is freehold property?
The purchase of a property on a freehold ownership basis means that the property is registered in the owner’s name by way of a Title Deed registered in the Dubai Land Department. The owner has the right to sell or lease his/her property at his/her discretion.
BUYING A PROPERTY
1. Owning a property in the UAE as a foreigner
In order to purchase property in the UAE, you must be over 21 years of age. If you satisfy this requirement, the first step is to make an offer. A formal Sales and Purchase Agreement is drafted and agreed upon between two parties; a deposit is made; the buyer obtains financing – if needed; the seller ensures that the property is not encumbered by anything that goes against what has been stipulated; final payment is made by way of a bank draft or cash in the Land Department and the Title Deed is transferred to the new owner. There are several charges that may apply, such as: clearance of a mortgage, a new mortgage, administration fees etc. Always be sure to have extra cash in these unforeseen circumstances.
There are different sets of protocols depending on whether you purchase a completed property from a developer where you are the first time buyer, or buying a property that is not constructed yet, referred to as ‘off-plan’. If the purchase is from a developer, there is a payment plan, and at times mortgage and/or finance options in place.
If the buyer is obtaining financing, the seller will often require that an expat be pre-approved for home financing before signing of the Sales and Purchase Agreement.
2. What is the difference between list price, sales price and appraised value?
List price – is the asking price of the property, this is negotiable;
Sales price – is what the owner will settle at to sell the property;
Appraised value – is a comparative market analysis to give the buyer an idea of what is sold and at what rate plus what is available in the market for a comparable property.
3. Who pays the registration fees of the Title Deed?
The registration fees of the Title Deed is paid by the buyer. Standard fees are 4%.
4. Do I need a property inspection?
It is recommended to get the property inspected; however in the case of freehold property, if the property is newly built it falls under the guarantee of the contractor for structural defects. Maintenance is guaranteed for up to 1 year of the development. It is then up to the owner to ensure that he/she has a preventative maintenance contract in place for the property.
5. What type of home insurance should I get?
This is advisable when taking a mortgage on a property. There are a number of insurance companies in the market that can provide customized packages.
6. Do I have to pay taxes?
In addition to the lawyers’ fees and fees to be paid to the developer or broker, there may be land registration fees and maintenance fees. For new-built developments, expats can expect to pay approximately 4% on land registration fees. The maintenance fee is set by the Owner’s Association.
7. What other fees do I need to consider?
a) Seller’s Fees:
- Clearance of mortgage (cancellation fees);
- Clearance of service charges / maintenance fees;
- Settlement of DEWA / district cooling;
- Developer’s NOC, if required;
- Transfer fees with the Land Department;
b) Buyer’s Fees:
- Deposits as per the agreement between the buyer and seller;
- Transfer fees with the Land Department;
- Connection fees for DEWA;
- Community service fees;
- Mortgage application fees;
- Misc. administration fees to Land Department;
8. How do I apply for a mortgage?
Many institutions that offer mortgages also offer the option of ‘pre-approved financing’ which allows you to have your loan approved prior to choosing which property in Dubai you would like to purchase. This expedites the overall process and satisfies the sellers that require financing before agreeing to sign the Sales and Purchase Agreement. Validity of the pre-approval is usually 30 days with most banks.
Properties without Title Deeds may not obtain mortgage. Such properties can only be bought by cash buyers on Oqood (Pre-registration Title).
9. Can I resell my property if I have a mortgage on it?
Yes, you can resell your property if you have a mortgage on it. The mortgage must be paid off to the bank to obtain clearance. Terms and conditions vary from bank to bank.
10. Do I get a residency visa if I buy a property?
Yes, but your contract should state that you are entitled to one. Residency visas are subject to normal immigration regulations.
11. Documents required for purchasing a property
A valid passport.
12. Purchasing off-plan property in Dubai
The most important initial step is to make sure that the project has been registered with RERA and that the developer has obtained the registration documents and escrow account registration from the relevant authorities. When purchasing off-plan property directly from a developer expats will need to submit a completed Reservation Agreement with a copy of their passport. The Reservation Agreement typically summarizes the basic terms and conditions of the Sales and Purchase Agreement, the details of the payment plan and the buyer and seller’s personal details.
When purchasing off-plan property, ensure that the Sales and Purchase Agreement includes the completion date and compensation awarded if the property is not completed within the mentioned period. Furthermore, if the property is to be furnished, ensure the details of the furniture pack is attached to the Sales and Purchase Agreement. To complete the buying of property in Dubai, you must transfer the Title Deed. This is done by the developer’s office at the Dubai Land Department offices.
The Title Deed is issued in two originals, one is held with the bank until the mortgage has been settled, and the second original is held in the Land Department. A copy is retained by the buyer. When the mortgage is paid in full, a letter of release and No Objection Certificate (NOC) is given by the bank and the original is given to the buyer. An NOC must be given by the developer in order to process the Title Deed at DLD. The NOC states that the developer has no objection that the property be transferred, and if there are any liabilities against the property, the developer will advise.
LEASING A PROPERTY
1. What is a tenancy contract?
It’s a signed agreement between an individual/company and a landlord for a one year period or longer, as agreed upon between the landlord and tenant. It includes the tenant and landlord’s details, their responsibilities and agreed upon rental amounts.
2. What are the terms of leasing?
Although usually for a one year period, the contractual period can vary depending on the landlord and/or tenant’s requirements. The tenancy contract is renewable upon consent of both parties, and as per RERA’s rules and regulations.
3. What requirements does a tenant need to meet?
In cases of long-term rentals, the tenant needs to be either a resident of the UAE or if it is a company, it needs to be registered within the UAE. When it comes to individuals, the lease agreement can be drafted for both GCC nationals as well as UAE residents.
4. How does the tenant pay for the rent?
In the Dubai market, rent is paid in advance by means of post-dated cheques for the year as per the conditions mentioned in the tenancy contract. Although the rental price is always calculated annually, the payment terms vary from landlord to landlord. The tenant can be expected to give the landlord between 1 and 12 postdated cheques; however standard practice is 1 to 4 cheques, at the discretion of the landlord. All payments are to be made payable in the landlord’s name. Issuing a cheque with insufficient funds in the account is a criminal offence in the UAE.
5. What is the system being used to register tenancy contracts?
The lease agreement must be registered with EJARI. EJARI registration protects the landlord and tenant by confirming the landlord is the rightful owner of the property and to protect both parties in the event of a dispute. The registration is executed by the landlord and the registration fee of AED 195 is paid by the tenant.
6. Renewal of tenancy contract
This is purely based on the agreement between the landlord and the tenant which adheres to RERA rules and regulations.
7. Cancellation of the tenancy contract
Cancellation of the tenancy contract is based on the terms and conditions outlined in the tenancy contract and defined in the RERA rules and regulations, signed by the landlord and the tenant at the time of leasing a unit.
8. Who pays the utility bills for the rented property?
Utility bills such as DEWA, air-conditioning, internet, TV and housing fees are paid by the tenant. These services are usually registered in the tenant’s name. The landlord is responsible for major maintenance and service charges of the property.
9. What do I have to do before moving out from a rented property?
In Dubai, there as some specifics associated with moving in/out from a rented unit. Here are some tips on how to get your deposit back in full and to make moving out easy:
- All relations between the tenant and landlord are regulated by the registered tenancy contract. Thus, a tenant is officially informed in advance about when he/she should prepare to move out, and the first thing to do is to book a moving service in order to do everything in time;
- The other thing of high importance is transferring your internet and satellite TV accounts to the new place of residence. Schedule a visit to your provider’s office in advance in order to make a request to transfer your account to your new address, or cancel your current account;
- Another importance aspect is to arrange a timely disconnection of your DEWA account, which applies to water and electricity services. If you fail to notify DEWA that you’re moving out you could be faced with bills after you’ve moved out;
- Another practice in Dubai is to apply for moving permits for tenants who are moving in and out of buildings from the landlord;
- Under the terms and conditions of the tenancy contract, the tenant is obliged to vacate the premises leaving it in the same condition he found it when moving in. Few renovations and repairs, such as painting of the walls, filling the holes and taking care of other damages and marks, can be done by yourself. Alternatively the landlord may deduct the amount for the repairs from your security deposit.
10. What is RERA’s role should the landlord and/or tenant breach the contract?
RERA’s role is regulatory; it also provides basic services to safeguard the rights of the landlords and tenants and to regulate the leasing process by registering the tenancy contract. In the event of a violation or dispute between the parties, the case must be referred to the lease dispute committee at Dubai Municipality.
11. How do you know whether the property is liable for an increase in rent?
You can visit www.dubailand.gov.ae – access the e-services section of the site, choose the rent increase calculator. Enter the property and tenant contract details to see whether the property is eligible for an increase in rent or not, based on the rental value.
12. Are there any restriction in determining rental value in Dubai?
There are no strict limits on the conditions of the rental agreement between landlord and tenant (as well as on the rental price) on signing the tenancy contract; however at times of renewal, there are restrictions. The landlord needs to refer to the RERA rental index if he/she has plans on increasing the lease value. The index acts as a guiding tool to determine rentals for properties in the various areas of Dubai and is referred to in case of disputes between tenants and landlords, regarding rent increase gaps. RERA’s online rent calculator helps determine by how much the rent can be increased by.