Frequently Asked Questions.

Yes, foreigners can buy property in Dubai in designated freehold areas. Freehold ownership means that buyers have complete ownership of the property and the land it stands on.

Dubai does not impose property taxes, capital gains taxes, or inheritance taxes. Only, a 4% transfer fee is charged by the Dubai Land Department on property transactions.

Rental income in Dubai is not subject to taxation. However, landlords must comply with local regulations, including registering the tenancy contracts with Ejari, a RERA initiative.

This guide offers a snapshot of the typical process and requirements for obtaining a mortgage as a non-resident in Dubai. For detailed information and specific bank policies, please consult directly with banks or mortgage advisors in Dubai. If you would like to chat with one of our vetted mortgage partners, we would be happy to make the connection.

Non-Resident Mortgages in Dubai:

Eligibility

• Nationality: Most nationalities are eligible, but policies can vary by bank.

• Income: Proof of stable income is required, typically a minimum monthly income of AED 25,000 (CAD $10,000).

• Age: Applicants must be between 21 and 65 years old.

Types of Mortgages

• Fixed Rate: Interest rate remains constant for a specified period.

• Variable Rate: Interest rate fluctuates based on the EIBOR (Emirates Interbank Offered Rate).

Loan-to-Value (LTV) Ratios for Non-Residents

Typically, 50% of the property value.

Required Documents:

• Passport and Visa Copies: Identification and residency documents.

• Proof of Address: Utility bills or bank statements.

• Bank Statements: Usually 6-12 months of statements.

• Proof of Income: Salary slips, employment letter, or audited financials for self-employed individuals.

Interest Rates and Fees

• Interest Rates: Generally range from 3.5% to 5% per annum.

• Processing Fees: Typically 1% of the loan amount.

• Valuation Fees: Fees for property appraisal, varying by property value.

Process

1. Pre-Approval: Initial assessment and pre-approval from the bank.

2. Property Selection: Choose a property within the pre-approved budget.

3. Final Approval: Submit all required documents for final loan approval.

4. Property Valuation: Bank conducts a valuation of the property.

5. Signing: Sign the mortgage agreement and property transfer at the Dubai Land Department.

Considerations

• Repayment Terms: Mortgages can have terms up to 25 years.

• Early Settlement: Check for any early repayment charges.

• Currency Exchange: Non-residents should consider currency fluctuations if earning in a different currency.

Dubai has made significant improvements in recent years to protect investors in off-plan real estate projects through escrow accounts. Here's a breakdown of the key points:

1. Government-Backed Security: Real estate in Dubai is backed by the government, providing a layer of security for investors.

2. Escrow Account Model: Dubai's escrow account system is based on a successful model from Singapore.

3. Developer Commitment: Before selling any units, the developer must commit 20% of the project's total value to the escrow account. This can be done in three ways:

   • Depositing cash

   • Providing a bank guarantee for the same amount

   • Completing 20% of construction upfront

4. Payment Plan:

   • The remaining balance is paid according to a predetermined payment plan. These funds go directly into the escrow account, not the developer's account.

   • Accounts are monitored by Dubai Land Department (DLD), Real Estate Regulatory Agency (RERA) and the central banks.

5. Controlled Access for Developers: Developers can only withdraw specific amounts from the escrow account after reaching milestones:

   • No withdrawals until specific construction phases are met

   • 10% of the project value remains in escrow for one year after completion to cover any defects or liabilities

6. Dispute Resolution: If there are disagreements about defects, the Real Estate Regulatory Agency (RERA) appoints specialists to assess the situation. If the claim is valid, repairs are funded from the escrow account.

7. Quality Control: The escrow system incentivizes developers to build high-quality projects.

   • Developers can only pay subcontractors through the escrow account as milestones are met.

   • Since payments are made through escrow, developers ensure enough sales to keep the project liquid and on schedule.

   • This focus on ‘sales quality’ leads to more innovative and desirable projects.

   • Developers must provide regular progress reports to RERA and the bank managing the escrow account ensuring transparency and accountability in the real estate market.

8. Investor Protection: If a project is canceled, the escrow account funds are used to reimburse investors.

9. Tracking: You can actually track the progress of any development through the Dubai REST app.

In Dubai, the Real Estate Regulatory Agency (RERA) enforces strict guidelines to ensure timely project completion and protect investors. Developers must adhere to timelines in the Sales and Purchase Agreement (SPA). They are allowed a grace period of one year from the handover date. If delays extend beyond this period, RERA can impose penalties, cancel projects, and ensure investor refunds. Legal action can be pursued after the grace period. RERA’s active monitoring and intervention safeguard buyers' interests, ensuring developers fulfill their commitments.

Service charges in Dubai are calculated on a per square foot basis and vary widely depending on the location and type of property. On average, these charges range from AED 3 to AED 30 per square foot annually. These charges cover a range of services, including maintenance, cleaning, security, utilities, and contributions to a sinking fund for major repairs. 

How are service charges calculated?

Service charges in Dubai are typically calculated based on the total area of the property, measured in square feet. The calculation formula is as follows:

Annual Service Charge = Service Charge Rate per Square Foot × Total Square Footage of Property

This rate is provided annually, meaning it does not need to be multiplied by 12 months.

What services do these charges cover?

• Maintenance: Regular upkeep and repairs of common areas such as lobbies, hallways, and communal facilities.

• Utilities: Water, sewage, and garbage collection, including potential chiller fees for air conditioning.

• Security: 24-hour security services, CCTV surveillance, and access control systems.

• Insurance: Property insurance for common areas.

• Master Community Fees: Costs associated with the larger community’s infrastructure and amenities.

• Sinking Fund: A reserve fund for major future repairs and maintenance.

What are the average service charge rates in different areas?

Service charge rates vary depending on the location and type of property. Here are some examples:

• High-End Communities:

  • Downtown Dubai: AED 15-30/sq. ft. (CAD $5.50 - $11.00/sq. ft.)

  • Burj Khalifa: AED 72/sq. ft. (CAD $26/sq. ft.)

  • Palm Jumeirah: AED 16-41/sq. ft. (CAD $5.75 - $15/sq. ft.)

• Mid-Range Communities:

  • Jumeirah Village Circle: AED 8-15/sq. ft. (CAD $2.90 - $5.50/sq. ft.)

  • Dubai Marina: AED 14-21/sq. ft. (CAD $5.10 - $7.70/sq. ft.)

• Affordable Communities:

  • International City: AED 3-8/sq. ft. (CAD $1.10-$2.90/sq. ft.)

  • Silicon Oasis: AED 5-12/sq. ft. (CAD $1.80 - $4.40/sq. ft.)

• Villas:

  • Arabian Ranches: AED 2.81/sq. ft. (CAD $1.03/sq. ft.)

How are service charges paid?

Service charges are typically billed on an annual basis but can be paid in installments (quarterly or monthly), depending on the agreement with the property management or owner’s association. Payments can be made via bank transfer, cheque, or online through platforms like the Dubai REST App or the Dubai Land Department’s official website.

Additional Costs:

• Chiller Fees: Additional charges for air conditioning, usually calculated separately.

• Sinking Fund Contributions: Reserve funds for major repairs and maintenance.

Dispute Resolution:

If property owners believe their service charges are too high, they can file a complaint with the Dubai Land Department (DLD), which can investigate and take necessary actions.

Example Calculation:

For a 1,000 sq. ft. apartment in a mid-range community with a service charge rate of AED 15/sq. ft. (CAD $5.50/sq. ft.), the annual service charge would be:

Annual Service Charge = 15 AED/sq. ft. x 1,000 sq. ft. = 15,000 AED/year

Annual Service Charge in CAD = $5.50 CAD/sq. ft. x 1,000 sq. ft. = $5,500 CAD/year

For the most accurate and up-to-date information on service charges, consult the Dubai Land Department's Service Charge Index or use the Dubai REST App.

• Select a Property: Choose an off-plan project and a specific unit.

• Booking: Pay a booking fee to reserve the unit. (usually AED 50K for most developers)

• Sales and Purchase Agreement (SPA): Sign the SPA and pay the down payment (usually 10-20% + 4% DLD).

• Payment Plan: Follow the developer’s payment schedule.

• Handover: Take possession of the property upon completion and final payment.

Note: During the construction process you can keep track of the status and progress of the project through the Dubai REST App.

Yes, you can sell your off-plan property before completion, but it often depends on the developer’s terms and conditions. This process is known as an “assignment sale,” where the buyer transfers their rights and obligations to another buyer.

It varies from developer to developer, but before being able to sell it to a new owner, the developer requires investors to have min of 40% of their off plan property paid off. However, the 40% figure does depend on the developer, so it’s essential to check with the developer first.

Typically, you will need:

• Passport copy

• Proof of address

• Proof of income

• Bank statements

• Signed sales agreement

• No Objection Certificate (NOC) from the developer