Investors Guide to Dubai

The Purchasing Process

Buying a property in Dubai follows a very similar process to purchasing in other overseas investment markets. The familiar process has assisted in making the location increasingly popular over recent years.

Once the property to be purchased has been found, a holding deposit will be required to take the property off the market. The deposit is usually paid to either a lawyer or the development company. Payments are usually made in the local Dirham currency (AED), and are approximately the equivalent of 3,000 GBP. While it is not a legal requirement to use a lawyer for purchasing property in Dubai, it is highly recommended.

After the deposit is paid, the Private Purchase Contract (PPC) will be issued, outlining the payment structure and obligations of both parties. The payment structure will vary depending on the development company and the time frame for completion of the project. Payments are generally between 10% and 20% of the purchase price, to be paid at intervals of approximately 3 to 6 months.

Lawyers fees will be included in the completion costs and part of the fees may be required at the PPC stage. Legal fees vary between companies, yet they are usually 1% or 2% of the purchase price. The remaining legal fees will be paid at completion, along with the final staged payment and the fee for registering the property.

Fees & Taxes

The absence of capital gains taxes in Dubai creates an advantageous position for buyers. Although there is no income tax in Dubai, there is a tax related to leasing property, charged at 10% of the rental income.

Although Dubai does not charge taxes on property purchases, it is possible that the buyer may be required to pay tax on earnings in their home country. It is advisable to speak with a qualified financial advisor to ensure complete awareness of these issues.

The approximate fees and taxes relating to a Dubai property purchase include:

• Land Registry fee: 1.5%
• Legal fees: 1%

Financing the Property

If financial assistance is required when purchasing a property in Dubai, the recent opening of the mortgage market will be of great assistance. Previously, property purchases were made in cash, requiring investors to look into options such as re-mortgaging, equity release or Islamic loans. However the increase in demand on the banks to provide mortgages to foreign buyers has created the recent opening of a mortgage market

Mortgages can be obtained from several large international banks operating in the region, including the HSBC Middle East Bank. The increase in mortgage clients and banks competing within the market, could in the future lead to further growth, longer terms and lower interest rates. More about overseas property finance

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