The two-year data counts 8,400,000
expatriates residing in the UAE for living for 1 to over 50 years. Most expatriates
treat the UAE as their second home. Tax-exempted income, savings, and standard
of life let them return to their home country after retirement.
However, residing in the UAE incurs
certain expenses and rent leads expenses, which can amount to 40% of the
per-month income.
Accommodation but fluctuating payment
rates, job and residence certainty, delay in possession, incomplete information,
and likewise discourage expatriates from buying properties here.
Apartment
Renting an apartment has its own
advantages, and the top of the list is the convenience of agreeing and
terminating contracts in even fewer than 12 months.
The following focuses on the advantages
and disadvantages of buying houses in the UAE, its process, and detailed
information from a UAE long-term resident’s perspective.
The Why Factor
Rent digests up to 40% income of
expatriates and there is no disagreement. One-bedroom apartment rent costs AED
50,000 to AED90,00 per annum. Mortgage instalments cost less than rents, and
don’t grow as the rent does.
Potential Buyer
Expatriates can buy any UAE
freehold property.
Cost
The type of accommodation, location,
development phase, and access to basic necessities and luxuries inflate the
price. The property price quoted on the media is exclusive of brokerage
commission, and bank and government fees.
The following linesbrief the UAE policy
of buying houses step by step.
How
to Buy a House?
The Method
Abu Dhabi
The buyer pays 2% of the cost to the
seller for a Memorandum of Understanding and another 2 percent to Abu Dhabi Municipality
for the ownership certificate. Afterward, the developer charges AED5,000
administrative fee.
Dubai
The buyer pays 2% of the property price
to property consultancy for its services. The purchaser shares half of the 4%
Dubai Land Department ownership transfer fee with the seller. The title deed
issuance costs AED250.A property valuing more than AED500,000incurs AED4,000 registration
fee while less than AED500,000 incurs AED2,000. Regarding a mortgaged property,
the Dubai Land Department levies mortgage registration @0.25 of the loan.
Bank Fees
Dubai demands 25% and 20% (in cash if
possible) downpayments from expatriates and nationals regarding mortgagesrespectively.
Banks charge interest from 2.99% to 5%. Property evaluation costs from AED2,500
to AED3,000 in addition to the Bank Mortgage Establishment fee.
Life Insurance
The bank requires life insurance for a
mortgage. Health condition, age, and insurance seller noticeably influence the
insurance cost.
Service Charge for Developer
After the mortgage and ownership
certificate, the buyer pays service charge to the developer for landscaping, electricity,
pest control, maintenance, and building insurance @ per square foot.
Purchasing
versus Renting
The standard of comparison here is
one-bedroom off-plan apartment located close to the Al Jafiliya carrying a
supposed annual rent of AED65,000 and a price tag of AED1,300,000.
In the case of 20-year rent:
Booking costs AED5,416, which equals one
month’s rent.
Estate broker fee costs AED3,250, up to
5% of the yearly rent.
Furnishing costs AED20,000
Total initial costs AED28,666
Annual Ejari costs AED3,900, excluding a
rise in the charge.
These figures total to AED2,170,000
approximately.
In the case of purchasing that supposed
apartment:
The down payment costs AED325,000
Dubai Land Department charges AED26,000,
the 2% of the property price.
Agency charges AED26,000. Buying from
the developer directly can save your AED26,000.
Registration costs AED4,000
Property evaluation for mortgage costs
AED2,000
Oqood levies AED52,000 on off-plan
properties @4% of the price.
Mortgage establishment costs AED13,000,
@1%.
Dubai Land Department registration costs
AED3,540
Furnishing costs AED20,000
The Total Initial costs AED446,040
The twenty-year maintenance costs AED300,000
These figures amount to AED1,760,000.
However, this cost excludes miscellaneous
expenses. In the buying situation, every payment results in ownership. Whereas,
renting brings you services on the one hand, and undeniable stability and
flexibility on the other hand.
Now,
Would You Buy Or Rent?
Arguments Favouring Purchase
The end of 20 years will see you paying
less for accommodation in case you prefer buying to leasing. Besides, your monthly
residence cost stabilizes @AED4,166 a month. Furthermore, you are a strutting
landlord and able of extracting cost by selling it or earning by renting it. You
can spend the said 40% on what may please you. The loan doesn’t require any
further collateral except your apartment.
Argument
Favoring Renting
The buyer needs residing and earning in
the UAE until you own the property, contrary to situation in supposed
landlord’s home country. Even after owning a UAE based property, you cannot
liquidate it instantly to leave quickly. If you fail in paying, the bank will
forfeit it.
