Cost of Buying Property Dubai – Watch out for the Extra Fees (Oqood fee, DLD fees & Service Charges)
No income tax. No capital gain tax. No rental income tax. No inheritance tax. Dubai can easily be recognized as one of the best cities for buying properties. But here’s the truth. Cost of buying property in Dubai can get expensive. Between DLD fees, Oqood fee, and annual homeowner service charges, those fees can add up.
There are always associated costs that come with buying a property. Typically in Dubai, it includes a 4% transfer fee, a few one-time registration fees, and VAT taxes, so be prepared to set aside 7%-8% additional to your property value.
By considering these additional costs upfront, you can budget effectively and avoid any surprises during the property buying process in Dubai.
Here are the key fees to watch out for.
Cost of Buying Property Dubai – DLD Fee & Oqood Fees
For cash and mortgage buyers, here are the extra cost to add to your property purchase:
| Dubai Land Department Transfer Fee | 4% of purchase fee + AED 580 administrative fee for apartment/office/villa, AED 430 for land |
| Oqood Fee (for off-plan properties) | 4% of purchase price + AED 40 administrative fee + AED 5,250 for Oqood Certificate |
| Property Registration Fees | AED 2,000 + 5% VAT for property below AED 500,000 |
| Property Registration Fees (cont.) | AED 4,000 + 5% VAT for property above AED 500,000 |
| Agency Commission Fee | 2% of purchase fee + 5% VAT |
| Conveyancing Fees | AED 6,000 to AED 10,000 |
| Home Inspection Fee | AED 1 per sq. ft |
Cost of Buying Property Dubai – Mortgage Fees
If you are buying with a mortgage, here are the additional fees to add to your mortgage payments:
| Dubai Land Department Mortgage Fee | 0.25% of loan + AED 290 fee |
| Bank Mortgage Arrange Fee | Up to 1% of loan amount + 5% VAT |
| Valuation fee | AED 1,850 to AED 3,500 + 5% VAT |
| Home Insurance | 0.03% – 0.06% of property value + 5% VAT (annual) |
| Mortgage Life Insurance | 0.01167% – 0.0245% of loan amount (monthly) |
| Bank Fees | i.e. wire transfer & exchange rate fees |
Cost of Buying Property Dubai: Homeowner Annual Costs & Upfront Deposits
Beyond your mortgage payments (if any), here are other annual charges and deposits to factor in as a homeowner:
| DLD Service Charges | These are fees paid to cover the maintenance and upkeep of communal areas in your building or community. They can include expenses for landscaping, security, cleaning, and general maintenance. Can range from AED 2 to AED 30 per s.ft per month depending on the area. |
| Chiller Charge | Costs associated with cooling your property, especially during the hot Dubai summers. These charges can be part of your utility bills or separate maintenance fees. For owner-occupied, check if chiller charge is included: – If not, chiller charge will be billed separately – If they are, it’s known as “chiller free” |
| Sinking Fund Deposits | Some residential areas in Dubai may have additional deposits. Up to 6 months of monthly Service Charges |
| DEWA Security Deposits | AED 2,000 for apartment (Residential Premises) AED 4,000 for villa (Residential Premises) For non-residential premises, security deposit is calculated based on the premise’s consumption. |
| DEWA Activation Charges | AED 100 for connecting electricity and water (small meters) AED 300 for connecting Electricity and water meters (large meters) AED 10 for registration AED 10 for knowledge fee AED 10 for innovation fee |
| Home Insurance | While not mandatory in Dubai, home insurance is recommended to protect your home and belongings against unforeseen events like flood, fire, theft, or natural disasters. The cost can vary based on the coverage and value of your property. Starting from AED 450 + 5% VAT |
| Mortgage Life Insurance | Based on Individual Profile |
Have a Property in Mind?
Great! But before you start envisioning your dream home, it’s essential to determine whether you can afford it. We can do some simple calculations to see if it’s within your budget.
We really like this handy mortgage calculator: https://mortgagecalculator.ae/
It calculates all the costs we covered in this article, and estimates your monthly mortgage payment based on the property price, down payment amount, interest rate, and loan term. Remember to include all the extra upfront costs we talked about in your calculations.
It also customizes the service charge based on the size of your property, and also give you an estimate of how much home you can afford.
Once you have a rough estimate of your monthly mortgage payment and other housing-related expenses, compare this amount to your monthly income. Ideally, your total property expenses should not be more than 30% of your gross monthly income.
You also need to decide how much you can afford to put down as a down payment. Typically, for UAE residence expats on their first property, the minimum down payment is 20% of the property price for properties less than AED 5 million. Do you have enough funds to cover that?
If you to read more about mortgages and not buying ‘too much house’, check out:
Also, do you have enough funds to cover the closing costs, and any unexpected expenses that may arise during the home buying process or after moving into the property?
It’s always recommended to have an emergency fund to cover at least three to six months’ worth of living expenses.
Due Diligence is Key
When it comes to buying a property in Dubai, knowledge is power. That’s why it’s crucial to do your due diligence and research all the potential fees and charges associated with buying a property.
By factoring in these additional annual charges and deposits, you can better plan and budget for the overall costs of homeownership in Dubai beyond just your mortgage payments.
