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Dubai Buyers Face Higher Upfront Costs for Mortgages

Property Purchase Costs in Dubai Increase

Starting February 1, 2025, Dubai property buyers using mortgages will need to cover higher upfront costs. A new directive from the Central Bank of the UAE now prohibits banks from financing the mandatory 4% Dubai Land Department (DLD) fee and 2% brokerage fee. Previously, these charges could be included in the mortgage, easing the financial burden on buyers.

This change means prospective buyers must budget for these costs at the time of purchase, significantly increasing the cash required to secure a property.

What Are the DLD and Brokerage Fees?

The DLD fee is a government-mandated charge for registering property ownership in Dubai. It amounts to 4% of the property’s total price. For instance, purchasing a property worth AED 1,000,000 would require AED 40,000 for the DLD fee alone.

Brokerage fees, typically 2% of the property price, are paid to real estate agents for facilitating the transaction. Together, these fees now represent an additional 6% of the purchase price, which buyers must pay upfront.

Increased Down Payments for Buyers

The new regulation impacts buyers significantly, especially when combined with the existing down payment requirements. Currently, expatriates must pay at least:

  • 20% down payment for properties under AED 5,000,000
  • 30% down payment for properties priced above AED 5,000,000

With the added 6% for DLD and brokerage fees, buyers will need to prepare a much larger initial outlay.

Impact on Dubai’s Real Estate Market

The secondary property market, where completed homes are bought and sold, is expected to feel the immediate effects of this policy. Many buyers may hesitate due to the increased upfront costs, slowing down activity in this segment.

However, the off-plan property market, where buyers purchase homes still under construction, could benefit. Developers of off-plan projects often offer flexible payment plans, including smaller initial payments and extended installment periods, making them an attractive option under the new rules.

Tips for Navigating the New Costs

1. Plan Your Budget Carefully

Buyers should account for the additional 6% in fees when planning their property purchase. Factoring in these costs early can help avoid unexpected financial stress.

2. Explore Off-Plan Properties

Off-plan properties often come with developer incentives such as lower upfront payments or fee waivers. These options can reduce the financial burden and make property ownership more accessible.

3. Negotiate with Developers

Some developers may offer to waive a portion or all of the DLD fee as part of their promotional strategies. Buyers should actively explore such offers to save money.

4. Consult a Real Estate Expert

Working with an experienced real estate agent or financial advisor can help buyers make informed decisions and navigate the new financial requirements effectively.

This policy change marks a significant shift in Dubai’s property buying process. While it increases upfront costs, buyers who plan carefully and explore flexible options can still find value in Dubai’s thriving real estate market.

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Written by
Nidhi Singh Parihar

Hey there! I’m Nidhi, a web content writer with a knack for turning ideas into impactful words. With a B.Tech background and a passion for creativity, I switched gears from tech to text, crafting everything from SaaS copy to social media magic. Whether it’s blogs, product descriptions, or email campaigns, I love creating content that connects and converts. Let's create something amazing together!

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