Buying property in Dubai is always a smart move, regardless of the reason behind it, as it offers benefits across the board. Property ownership in Dubai is important to highlight the costs involved, especially the hidden expenses that many buyers tend to overlook. Understanding these costs can help you plan better and avoid surprises during the buying process.

Sometimes, people overlook the additional costs involved in buying a property, and due to a lack of awareness, they often face unexpected issues during the final stages of the purchase process of property.

So, from here, you can get complete information about all the additional costs involved in buying a property in Dubai.

Overall cost structure for real estate buyers in Dubai.

Whether you’re buying a reasonably priced apartment or a luxury villa, it’s important to set aside extra funds beyond the property’s actual price. From government charges and administrative fees to ongoing maintenance and insurance, we’ll break down every cost category involved in purchasing property in Dubai, helping you make a well-informed investment decision.

Government-imposed fees

In Dubai, every property transaction must be registered with the Dubai Land Department (DLD) within 60 days. Failure to do so renders the transaction void. Although the 4% DLD fee is officially meant to be split between the buyer and the seller, in most cases, the buyer ends up paying the entire amount.

Additionally, buyers are required to pay a property registration fee. If the purchase involves a mortgage, there is an extra fee of 0.25% of the loan amount to register the mortgage with the DLD. This fee does not apply to cash purchases.

Initial deposit

Due to the fast-paced nature of Dubai’s property market, an initial deposit is required to secure a purchase. This deposit is usually paid by the buyer to the seller via cheque but is held in escrow by a RERA – authorised agent until the property is officially transferred.

For secondary market purchases of ready properties, the government of Dubai requires a 10% deposit.

Additionally, if the buyer is financing the property through a mortgage, a No Objection Certificate (NOC) fee must be paid. This certificate is essential for the legal transfer of ownership.

Insurance charges

Due to the fast-paced nature of Dubai’s property market, an initial deposit is required to secure a purchase. This deposit is usually paid by the buyer to the seller via cheque but is held in escrow by a RERA – authorised agent until the property is officially transferred. 

For secondary market purchases of ready properties, the government of Dubai requires a 10% deposit.

Additionally, if the buyer is financing the property through a mortgage, a No Objection Certificate (NOC) fee must be paid. This certificate is essential for the legal transfer of ownership.

How it works:

• Banks typically charge annual insurance premiums based on the declining balance of the mortgage.
• These premiums usually range between 0.4% and 0.8% per year.
• Many banks also require life insurance, which can be paid annually or monthly, depending on the lender.
• Banks often offer in-house life insurance policies in collaboration with well-known insurers, but these are generally more expensive than external options, especially for young, healthy individuals who may qualify for lower rates.
  
  

Key points to remember:

• Insurance offers peace of mind and financial protection.
• Life insurance is often bundled with monthly mortgage payments.
• Bank-provided life insurance can be costly—consider comparing rates with independent providers.
• Always include insurance charges in your annual mortgage budget.

Service fees

After purchasing your property and completing the title transfer, it’s important to account for ongoing service charges. These annual fees are paid to the Dubai Land Department and are calculated based on the RERA index, which sets a rate per square foot depending on the specific community.

Service fees cover the maintenance of shared facilities such as swimming pools, gardens, elevators, and security. You can check the latest applicable rates anytime on the official DLD website.

Bank and mortgage-related costs

If you’re purchasing a property in Dubai with a mortgage, there are several additional costs to consider.

Firstly, banks charge a mortgage arrangement fee, typically 1% of the loan amount plus 5% VAT. You’ll also need to cover a property valuation fee, usually between AED 2,500 and AED 3,500 plus 5% VAT, which allows the bank to assess the property’s market value.

If the seller has an existing mortgage, they must obtain a No Objection Certificate (NOC) confirming all dues are cleared. While this fee is generally paid by the seller, it’s important to know that NOC charges can range from AED 500 to AED 5,000.

These costs should be factored into your overall budget to avoid any surprises during the buying process.

Agency Fees

Hiring a real estate agent in Dubai typically costs around 2% of the property price plus VAT, payable upon deal completion. A good agent adds value by guiding you through the entire process—from property search to handover—while offering insights on the area, developer, and market trends.

Additionally, if you use a licensed conveyancer to handle legal paperwork and ensure compliance with UAE property laws, expect to pay between AED 6,000 and AED 10,000. This helps ensure a smooth, legally sound transaction for both buyer and seller.

FAQs:

How is VAT applied in real estate purchases?
VAT is charged on service-related costs—such as agency commission and legal or conveyancing services—not on the property’s sale price.

Do service fees fluctuate depending on the property location in Dubai?
Yes, service charges vary across Dubai depending on the property and the community. Villas, apartments, and townhouses all have different rates. Communities with more luxury amenities—like pools, gyms, and gardens—usually have higher fees. Always check these costs before buying, as they add to your yearly expenses.

Is life insurance compulsory when purchasing property via a mortgage in Dubai?
Yes, if you’re getting a mortgage in Dubai, you’ll most likely need life insurance. It’s there to make sure the loan is paid off if something unexpected happens to you. Expect to pay around 0.4% to 0.8% a year based on what’s left on your loan.

Conclusion:

Buying property in Dubai involves more than just the purchase price – from government fees to mortgage costs, there are several expenses to plan for. On top of that, everyday living costs like groceries, utilities, and school fees vary by location.

It’s not just about money – it’s about choosing a home that suits your lifestyle. With proper research and the right guidance from Auxilium Real Estate, you can make a smart, confident decision and enjoy a smooth buying journey.