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Are you considering taking the leap from tenant to homeowner? It goes without saying that you are about to make one of the biggest commitments of your life – both financially and emotionally. To ensure the process is as rewarding and as smooth as possible, we outline the most important factors to consider so you can kick-start your journey.

What to consider

Upfront fees

Dubai Land Department (DLD) Fees 4% of the purchase price + AED 580 admin fee
Property Registration FeeFor properties valued below AED 500,000: AED 2,000 + 5% VAT

For properties valued above AED 500,000: AED 4,000 + 5% VAT
Real Estate Agent Fees2% of the purchase price + 5% VAT
Bank Mortgage Arrangement Fee1% of the loan amount + 5% VAT
Dubai Land Department Mortgage Registration Fees 0.25% of the loan amount + AED 290
Property Valuation FeeBetween AED 2,500 – AED 3,500 + 5% VAT

Maintenance costs:
Annual maintenance charges on your property are payable to the Dubai Land Department based on the RERA Service Charge and Maintenance Index. This index determines a specific charge per square foot and varies by community. Up to date fees can be sourced directly from the DLD’s website.

Additional things to consider…

Doing your due diligence is an important aspect of buying a home to ensure the property will keep you and your family happy for the long term.

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Costs of long-term renting versus buying your own home

To rent or buy? The age old question. The answer is often highly personal and depends on your individual financial situation.

Consider the below example.

Example: Renting Vs Buying : A 1 bedroom apartment in Downtown Dubai

The average rent for a 1-bedroom apartment in Downtown Dubai is AED 90,000 per annum, while the average sales price is AED 1,200,000 – let’s look at the numbers for both over the same 5-year time period.

Buying a 1-bedroom apartment in Downtown Dubai

Purchase PriceAED 1,200,000
Down payment of 25%AED 300,00
Principal amountAED 900,000
Buying feesAED 92,840
Agent feesAED 25,200
Land department feesAED 48,580
Registration trustee feeAED 4,200
Mortgage valuation feeAED 3,150
Mortgage processing feeAED 9,450
Mortgage registration feeAED 2,260
Knowledge feeAED 10
Monthly mortgage paymentAED 4,628
Total buying costs over 5 yearsAED 370,560

Renting a 1-bedroom apartment in Downtown Dubai

Monthly rentAED 7,500
Agent commissionAED 4,725
Ejari feeAED 195
Total rental cost over 5 yearsAED 455,700

The above calculations reveal that buying is 19% cheaper than renting longer-term.

Survey says: 50% believe buying is financially smarter than renting

Building equity, building wealth

Sure, the upfront costs of buying exceed the amount of your first 12 months’ rent cheque. However over time, this gap flattens. The main difference? With each monthly mortgage repayment you are moving closer to owning your own home. Whereas, with each monthly rental payment, the harsh reality is, you are effectively paying someone else’s mortgage. 

In addition to reducing your mortgage over time, long-term retention of your property should see you witness capital appreciation. Capital appreciation is the increase in the market value of your property against the purchase price. The longer you hold the property, the greater the chances of it increasing in value, boosting your overall equity.

Becoming a homeowner is a huge milestone which requires thinking beyond simply just your down-payment. When considering investing in the real estate market, it is important to assess your long-term commitment to Dubai, analyse your rent vs buy costs inclusive of all hidden fees and charges, and do your due diligence.

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