The UAE was once regarded as an unfamiliar place for foreign investment because of its laws limiting foreign ownership. With the Freehold Decree introduction in 2002, foreign nationals can now buy, rent or sell property in Dubai and the Middle East. And with the increasing cost of rentals and healthy growth of the property market, buying houses for sale in Dubai is becoming an excellent option for both locals and expats.
As compared to other countries, the buying process in Dubai is simpler, but this can be both a benefit and a drawback to investors like you. The process is somewhat straightforward, but the city’s immaturity of its legal system makes it crucial for you to exercise extreme caution. A full understanding of the process is vital when it comes to reducing the risks related to this huge investment.
Here are the seven essential things you must do when making a property purchase.
1. Determine your reason for buying a house.
Your purpose for buying a house will have a significant impact on your choice of property to buy. Do you intend to live in it or put it up for lease or sale later on?
If you plan to sell or lease it, consider looking for properties with the highest rental yield. An apartment may seem to yield a higher rental income than a villa, even if the latter offers more luxury.
On the contrary, a villa is a better option if you are looking for a place to live as it offers more amenities than a flat or apartment, not to mention the luxurious offerings attached to most villa communities in Dubai.
2. Understand the buying process.
Properties in Dubai can be bought off-plan or by resale. When buying off-plan, expats must submit their passports and a reservation form outlining the deal’s terms and conditions. A 5%-15% reservation fee is often paid before drawing up an agreement that commits both parties.
If you choose to purchase properties that are still under construction, make sure that the agreement contains the date of completion and details about compensation should there be any delays with the completion.
But if you are buying property from a private seller, expect to receive a Memorandum of Understanding detailing the deal’s terms and conditions. You may also need to pay a 10% deposit to confirm your purchase, awaiting approved financing. Once approved, the transfer of deeds will take place.
3. Find out what you can about the seller.
When buying off-plan Dubai south properties, check who the developer is. Dig into their history, track record, and specialisation. You should also speak to their previous customers and ask about their experience with the developer. Do your homework so you won’t commit an expensive mistake. Make sure that the developer completes their projects well and on time. It would also be beneficial to visit their past projects so you’ll have an idea of what to expect.
For a secondary market purchase, ensure that the seller owns the property for sale and is legally bound to sell it. Moreover, check if the property has no legal impediments, such as any charges or claims, mortgage, tenancy rights, or other possible hindrances.
Regardless of what property you want to buy, it is crucial for you to ask the seller as many questions as possible to determine their credibility and reputation.
4. Seek professional legal advice.
Getting specialist advice is highly recommended, though it is not mandated by law. Still, professional legal advice can minimise any future risk. For instance, a legal representative will help ensure that you invest in a property that is free from debt or liabilities.
5. Be aware of any additional costs.
Aside from the property’s price, there are other fees associated with buying a house. These may include a land registration fee, maintenance fee, mortgage registration fee, loan processing fee, valuation fee, trustee, and home insurance. All these can add up to a massive amount, so it is crucial for you to work these into your budget.
6. Read and understand the purchase contract meticulously.
A property investment in Dubai is often accompanied by legal documents between the seller and buyer. These official papers summarise all the terms and conditions, along with the responsibilities of both parties in completing the transfer of the property’s ownership. Read and understand the agreement carefully and sign only if you agree to all the outlined terms and conditions.
7. Monitor the progress.
When buying off-plan properties, you must contact the developer every two months to monitor the progress. The same is true when buying from a private seller; make sure that the transfer of ownership is completed as fast as possible so you can finally move into the house you bought. Making a property investment in Dubai does not have to be stressful and disappointing. Doing your research and due diligence is the key to buying the right type of property that suits your needs and budget. Staying well-informed throughout the buying process will go a long way in ensuring that you are getting your money’s worth.
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