When purchasing a property in Dubai without a mortgage, it's crucial to understand the various costs involved. Let's delve into the comprehensive breakdown of expenses.
Exploring the Expenses Involved in Property Purchase Without a Mortgage
Which Costs are Associated with Buying a Property in Dubai using Cash?
Buying a property is an exciting project, and even more if you have the capacity to buy using cash! However, you may worry about the costs involved. At Nomad Homes, we understand this, which is why we want to cover one of the first questions that buyers have when they start the process: How much do I have to pay to buy a house in Dubai if I purchase it with cash? Keep reading to find out all the costs involved.
Upfront Costs for Cash Buyers in Dubai
Upfront costs for cash buyers in Dubai include property purchase fees, transfer fees, conveyance fees, and broker fees, without the additional burden of mortgage-related expenses typically incurred when buying with a mortgage.
1. Property Payment when using Cash
When buying a property with cash, the initial and most significant payment is made by directly paying the full price of the property.
2. DLD Transfer Fee: Tax Implications of Property Transactions
This fee, payable to the Dubai Land Department, serves as a tax on the property purchase and amounts to 4% of the total property value.
3. DLD Property Fee: Registering Property Ownership
All property purchases in Dubai must be registered with the DLD to establish you as the new property owner. The cost for registration is 4,000 AED + 5% VAT.
4. Conveyance Fee: Legal Security and Agent Assistance
In the UAE, appointing a real estate agent provides assurance that all legal terms, contracts, and procedures comply with the current legislation. The fee, ranging from AED 6,000 to AED 10,000, is paid directly to the agent.
5. Title Deed: Documentation of Property Ownership
This payment covers the creation of the title deed for the purchased property and amounts to 580 AED.
6. Broker Fee: Commission for Property Assistance
This fee corresponds to the commission charged by the broker or agency assisting with the property purchase, amounting to 2% of the property price + 5% VAT.
Ongoing Costs for Cash Buyers in Dubai
Ongoing costs for cash buyers in Dubai encompass monthly maintenance fees and utility expenses for DEWA, gas, AC, and internet, while they enjoy the advantage of not having to make monthly mortgage payments as compared to buyers with a mortgage.
1. Maintenance Fee: Sustaining the Property and Community
This fee is paid on a monthly basis and covers the costs associated with maintaining the building or community where the property is located. The price varies depending on the facilities and amenities provided by the community. For instance, if you choose a property with a pool, the expenses are likely to be higher compared to a property without one.
2. Property Insurance for Added Protection
While not compulsory, you can safeguard your property with recommended insurance coverage, available at an approximate annual cost of 1,000 AED.
3. Utility Costs: DEWA, Gas, AC, Internet
These costs refer to water, electricity, air conditioning, and internet expenses. DEWA stands for Dubai Electricity and Water Authority, the company responsible for managing water and electricity supply in Dubai. Prices vary based on providers and the required quantity or capacity.
In conclusion, purchasing a property in Dubai with cash offers the advantage of avoiding monthly mortgage payments, while upfront costs and ongoing expenses should be carefully considered. Understanding the financial aspects involved will help cash buyers make informed decisions and navigate the real estate market in Dubai effectively.