The Real Cost of Buying a Home in Dubai

Most people who buy in Dubai for the first time are surprised by one number: the cheque they write on transfer day. The price you agree with the seller is the biggest figure, but it is not the only one, and the fees add up quickly. This guide walks through each of them so you can budget properly before you make an offer.

We use a AED 3,000,000 apartment bought with an 80% mortgage as the example throughout. Fees change from time to time, so treat these as a guide and confirm the current figures with your agent and bank.

The Dubai Land Department transfer fee

This is the big one. The Dubai Land Department charges 4% of the purchase price to register the transfer, plus a small admin fee. On our example that is AED 120,000. By convention the buyer pays it, although it can be negotiated in a slow market. It is due on transfer day, and it cannot be added to your mortgage.

Trustee and registration fees

Transfers happen at a registration trustee office, which charges a fixed fee: around AED 4,000 plus VAT for properties over AED 500,000. If you borrow, the mortgage itself is also registered with the Land Department at 0.25% of the loan amount. On a AED 2,400,000 loan that is AED 6,000.

Agency fee

The buyer's agency fee in Dubai is usually 2% of the price plus 5% VAT, so AED 63,000 on our example. Ask about it at the start, not at the end. A good agent will explain exactly what you get for it: market comparisons, negotiation, handling the Form F sale agreement and coordinating the trustee and bank.

Mortgage costs

Banks charge an arrangement fee of up to 1% of the loan, a valuation fee of roughly AED 2,500 to 3,500, and they will ask for life insurance and, usually, property insurance. Some lenders waive the arrangement fee in exchange for a slightly higher rate, so compare offers on total cost over the fixed period rather than on the headline rate alone.

• Arrangement fee: up to AED 24,000 on our example
• Valuation: around AED 3,000
• Mortgage registration: AED 6,000 plus a small fee
• Life and property insurance: monthly, priced on your age and the property

The No Objection Certificate

Before a resale can be transferred, the developer issues a No Objection Certificate confirming that service charges are paid up. The fee is normally AED 500 to 5,000 depending on the developer. The seller usually pays it, but check this is written into the Form F.

Adding it up

On a AED 3,000,000 purchase with a mortgage, total costs come to roughly AED 220,000, or a little over 7% of the price. With cash, and no mortgage costs, it is closer to 6%. Add that to your deposit: under UAE Central Bank rules, expatriate first-time buyers can usually borrow up to 80% on homes worth up to AED 5 million, so the minimum you need in the bank is the 20% deposit plus costs.

A simple rule: have 27% of the price available before you start viewing. Anything less and you are relying on a negotiation going your way.

Costs after you move in

Service charges are set per square foot each year and vary widely, from around AED 12 in older Marina towers to over AED 30 in some Downtown and Palm buildings. Ask for the last two years' service charge invoices and the building's reserve fund statement before you agree a price. DEWA, chiller (in buildings that use district cooling), home insurance and maintenance come on top.

None of this should put you off. It simply means the number to plan around is not the asking price. If you would like a costed breakdown for a specific home, ask the listing agent and they will put one together for you.

Written by James Carter

James covers Downtown, Business Bay and DIFC. He spent eight years in London residential sales before moving to Dubai, and he still prices a flat the London way: by comparing it with the three most similar sales in the same building, not with the asking prices next door.