Hidden Costs When Purchasing an Apartment in Dubai

If you are looking for a dream home or profitable investment, buying an apartment for sale in Dubai is a great opportunity. Dubai has a luxurious lifestyle, tax free benefits and high rental yields, making it attractive to the buyers all around the world, and hence the real estate market of Dubai is attractive for the buyers from all around the world. Nevertheless, many first-time buyers neglect the fact that there are costs aside from the initial purchase price when it comes to property ownership. Fees that you don’t know are expensive, but there are some ways of avoiding some of them (the hidden fees) but these fees are very expensive and you have to plan your budget and make wise plans in order not to incur unnecessary edge.

Apart from the price mentioned for your sale property in Dubai, there are other expenses like government fees, agent commissions and maintenance costs. Knowing these charges in advance will let you know a better decision and prevent you from being hit with some unexpected financial strain. In this guide, we’ll take a look at the key hidden costs the case should be considered once your property purchase has been finalized.

Some of the points know about the Hidden Costs When Purchasing an Apartment in Dubai

1. Dubai Land Department (DLD) Fees

If you are buying an apartment in Dubai, you need to pay a 4% of the total property value to the Dubai Land Department (DLD). It is a government-imposed charge which is charged on all property transactions. In addition, an AED 580 administration fee is applicable on registering an apartment. These are non-negotiable costs and you should factor them in early on. This fee is overlooked by many buyers, and it can come as a surprise at the final stage of the transaction. The importance of these charges in advance so as not to be financially strained and make the property purchase smooth.

2. Real Estate Agent Commission

If you are buying a property with the help of a real estate agent, you will be expected to pay a 2% commission fee on the property’s purchase price. Despite the fact that this fee may seem excessive, it guarantees that you get their help, at the market, and to handle the transaction. First time buyers have a lot of paperwork, including negotiations and legal formalities which can be hard for a first timer, and the real estate agent helps with property searches, paperwork and legal formalities. Nevertheless, because this cost is added on to the property price, it is important to include it in your financial planning. This fee structure will help you budget effectively and not be in for a surprise at the last minute.

3. Mortgage Registration and Processing Fees

If you are financing your property purchase with a mortgage, you have to include mortgage related costs. The Mortgage Registration Fee is 0.25% of the loan amount and AED 290 admin fee. The processing fee that banks charge is around 0.5 to 1% of the loan amount can be a very big expense. Mortgage applicants are required to pay these fees upfront and they are mandatory. Processing fees for mortgage approvals are non-refundable even if the loan is not finalized since the process is thorough and requires documentation. Buyers who are going to finance their property through a home loan need to factor in these charges.

4. Property Valuation Fee

Banks will also require the property to be professionally valued before approving a mortgage to make sure the property is worth what you are asking for it. There’s a fee of AED 2,500 to AED 3,500 for the process depending on the property and valuation firm. Unfortunately, this cost is not refundable even if the bank does not approve the loan. The loan to value (LTV) ratio and the risk assessment for the lenders are very important and are determined by valuation report. Buyers who are applying for a mortgage should be prepared to pay this expense.

5. Service Charges and Maintenance Fees

After you get an apartment, you have to pay service charge for property maintenance. Maintenance, security, landscaping, cleaning, common area management, these are all fees that are covered by these fees. The charges vary depending on the size and type of property and location, and are charged per square foot. Service charges in luxury apartments with high end amenities may be more than in standard residential buildings. The Dubai Land Department offers an online service charge calculator for buyers to estimate these costs before buying. As these charges are actually recurring expenses, it is necessary to include them in your annual budget and continue to keep your property in good order.

6. DEWA and Ejari Registration

It is important to have utility and legal registrations when you move into your new home. The Dubai Electricity & Water Authority (DEWA) asks for a refundable security deposit of AED 2,000 to AED 5,000 according to the property type. Furthermore, all rental and ownership contracts, including Ejari, an online tenancy registration system, must be registered for AED 220. These are mandatory charges and they are to ensure that your property is legally recognized. When you move out or sell your property utility deposits are refunded but you have to pay the upfront. They enable you to avoid any delays during the moving in process.

7. Moving and Furnishing Costs

Once you’ve bought your apartment then obviously you will have to move in and set up the space. The moving costs vary based on the property size, distance and moving company rates, normally between AED 1,000 and AED 5,000. Additional costs of furniture, appliances, and home decor are an added cost if your apartment does not have furniture, décor and appliances. You may find yourself willing to spend a lot if you frequent high end furniture store or interior designer. Curtains, lighting, all the kitchenware will add up to the overall cost.

Conclusion

An investment in an apartment for sale in Dubai is a good investment, but learning about the hidden costs will make the process easy. In addition, there are other mortgage related expenses, service charges and fees, government commission and agent commission charges. If you plan well and structure your financial budget well, you will make a right decision without any sudden surprises. Whether you are a first time buyer or an experienced investor, you should know about these charges so that you can mentally calculate how much you are going to spend on property in Dubai.

It is always advisable to trust the services of the professionals if you are looking for the best sale property in Dubai or if you are looking forward to the real estate market of the city of Dubai. If you are planning to invest in a residential or a commercial property for sale, it is best to take help from an expert who can guide you through the process in a smooth sailing. It will make your property purchase easy and profitable, and transparent, and no hidden costs.