Dubai’s growth has been extraordinary in the past couple of decades, and investors have always had eyes on the constantly expanding urban zones in the city. Its laws once strongly restricted foreign ownership, but luckily that’s not the case anymore. Costs of rentals are soaring at the moment, and the property market continues to grow as we speak.
For expats living in the city, this understandably makes it a valuable option to buy a property in Dubai. But every successful investor knows the importance of understanding the process, assessing and minimizing the potential risks that may be involved in the purchase. After all, it might be the biggest financial transaction you’ll make this year, or possibly this decade. In this article, we’ve put together some must-know tips that would genuinely help you out.
Know the procedures inside out
Before you start searching for the perfect property for you, it’s vital to equip yourself with the knowledge of ’how it’s done’ in Dubai. Basically, you can either get an ‘off-plan’ property (through a developer), with the purchaser being the first user, or you could simply go the ‘resale’ route (buying from a private seller).
If you choose the former option, you’ll be required to submit your passport and a reservation form with the terms and conditions of the agreement. The form requires a reservation fee to accompany it, which would be anywhere around 10% of the total cost, committing each party to the agreement.
On the other hand, if you opt for purchasing a resale property from a private seller, the deal would begin with a bilateral MoU (memorandum of understanding) outlining the terms agreed upon. The buyer, similar to the above scenario, puts down 10% of the transaction amount as a token that confirms his purchase commitment. Once the pending finances are obtained, deeds can be transferred to the buyer.
Survey the property
Make sure to take a close look at what you consider as a viable purchase option. A resale property may not always be as good as it seems. If you’re going to make such a significant investment, you might as well hire someone that alerts you of the potential risks that might haunt you later.
There are established surveying companies in Dubai that assess the property you have your eyes on, and let you know how good or bad of an option it is in terms of the risks involved. For instance, some villas in Dubai could go unoccupied for months on end (hence causing loss of rent income), and others may have high maintenance costs due to their build or location. Therefore, before you finalize your decision, it’s best to involve a professional surveying company – just to be sure!
Get expert legal advice
The law doesn’t require potential buyers to seek legal advice when they’re buying a property in Dubai, but it’s highly recommended to so. It could seriously help you out throughout the purchasing process, and it is definitely worth it.
Apart from assisting in the usual legal proceedings of the purchase, a legal advisor will help you consider future potential risks related to the law. Regardless of whether or not you choose to hire such a service, you should at least be aware of the complete legal process for buying a property in Dubai.
Check for debt, mortgages or liabilities on a property
Make sure you receive a debt-free title on the property when you’re making the purchase. Under Dubai law, it’s the responsibility of the seller to obtain a ‘no objection certificate’ from the office of the developer. Before giving out these NOCs, developers would perform a detailed check on the title of the property to make sure it doesn’t have charges or debt liabilities on it.
Be meticulous throughout the process
When purchasing a property, every party generally acts in their own best interests. No seller is your friend, as friendly as they may seem. It’s incredibly important to practice scepticism and diligence throughout the buying procedure, whether you’re purchasing a resale or an off-plan property. Ask tons of questions and determine what repute the agent or developer holds in the market. For off-plan purchases, it’s important to look at the developer’s history with respect to quality and punctuality. Run every contract, MoU, and Sale or Purchase Agreement (SPA) by your expert legal advisor and make sure everything is in order.
Property purchases are always hugely significant transactions, and no amount of reading is too much when it comes to taking precise steps in the best of your interests. There are helpful websites like www.bayut.com around to help you throughout the process of buying a property in Dubai, featuring the market trends, laws, and tips for you to benefit from. Make sure you absorb as much knowledge and advice as you can to be able to deal with potential challenges in this competitive market. All the best!
Guest Post By Sophie Karcher