Fees Payable to Dubai Land Department on Real Estate Purchases

When you buy a flat or a house in Dubai, bear in mind that you must also pay state fees and duties. It is advisable to take them into account when you are buying a property in Dubai because the additional costs of fees can equal up to 7% of the property’s value. Dubai Land Department (DLD) monitors and registers all real estate transactions in the city. It also issues the most important document when it comes to Dubai real estate - the Title Deed. Read on to learn about DLD’s fees and other expenses that you may incur when you take out a mortgage and the real estate is appraised.

• Additional Expenses on the Purchase of Finished Housing in Dubai
• Fees for Buying Off-Plan Properties
• When and How to Pay the Property Transfer Fee
• How to Calculate the Fees on Your Own
• Fees for Transferring Properties between Relatives
• DLD Fees  in the Event of the Letting of a Property
• Penalties for Unpaid Fees

Additional Expenses on the Purchase of Finished Housing in Dubai

If you buy a completed property, you have to pay on average an additional 7% of the property’s value. Some fees are mandatory, while others depend on whether you take out a mortgage or buy real estate with assistance from real estate agencies and appraisers.

The mandatory fees include:

• the Property Transfer Fee of Dubai Land Department which is equal to 4% of the property’s value, plus a fixed admin fee of AED 580 (about USD 160),
• the Property Registration Fee (DLD registration fees) which ranges from AED 2,000 to AED 4,000 (USD 545 to USD 1,100) depending on the price of the property, and
  
• the fee for obtaining a title deed – AED 250 (USD 68).

In certain instances you may also incur additional fees for buying property in Dubai, such as the following:

• 2% of the property’s value plus VAT for the services of a real estate agency,
• AED 2,500 to AED 3,500, plus VAT (USD 650 to USD 950) for the services of an appraiser,
• payment for the mortgage agreement – on average, 1% plus VAT and
• the fee of the Dubai Land Department for registering the mortgage – 0.25% of the total mortgage, plus AED  290  (USD 80).

Fees for Buying Off-Plan Properties

If you want to buy an off-plan property, you will have to pay 4% of the property’s value to the Dubai Land Department (DLD fee).

All transactions with off-plan properties must initially be included in the temporary register. After registration, the buyer receives an Oqood certificate that will be replaced with a title deed later. The fee for obtaining the Oqood is AED 3,000 (USD 816).

If you conclude an off-plan deal directly with the property developer, you do not have to pay any additional agency fees. As real estate agents usually charge 2% of the property’s value, plus VAT, the rate is the same for ready and off-plan properties.

When and How to Pay the Property Transfer Fee

Regardless of the type of property that you buy, you must pay the Property Transfer Fee to the Dubai Land Department. If you want to transfer title to real estate, you still have to pay this fee. For example,

• when concluding a leasehold contract and transferring the use of ownership rights for up to 99 years,
• or when you donate your property to anyone other than close relatives. 

The idea behind the Transfer Fee is to reduce the number of speculative deals when people want to buy off-plan properties only to resell them later at a higher price.

The Property Transfer Fee is always 4% of the property’s value. A separate resolution on the fees of the Dubai Land Department states that the buyer and the seller should split the transfer fee equally. However, you can negotiate that only one party pays the whole fee and spell this out in the agreement. Developers sometimes include the cost of the Transfer Fee in the property’s value to attract more buyers. However, under the law the buyer is responsible for the payment of this fee.

If you buy a warehouse, the DLD calculates the Property Transfer Fee differently. It charges AED 10 per square metre of the land where the warehouse is built, but the fee must not be less than AED 10,000.

How to Calculate the Fees on Your Own

The rate of the administrative and registration fees can vary, depending on the cost and type of property.

The registration fee depends on the cost of the property.

• It is AED 2,000 (USD 545) if the property costs less than AED 500,000 (USD 137,500).
• Otherwise, the registration fee is AED 4,000 (USD 1,100).

The administrative fee depends on the type of property.

• AED 80 (USD 160) for flats and offices,
• AED 430 (USD 120) for plots of land, and
• AED 40 (USD 10) for off-plan properties.

Then you add the Property Transfer Fee (4% of the property’s value) and the Title Deed Fee (AED 250 or USD 68) to the total amount.

So if you buy a ready flat for AED 400,000 (USD 109,000), you will have to pay AED 18,930 (USD 5,168) in fees. If you buy a flat for 700,000 (USD 190,600), the fees will reach AED 33,030 AED (USD 8,992).

Be sure to have a look at Housearch for information about cost of buying property in Dubai and a comparison of different properties in Dubai.

Fees for Transferring Properties between Relatives

You can transfer properties from one family member to another. In this case, you also have to pay the DLD Transfer Fee (conveyancing fees in Dubai). The rate will depend on whether you sell or donate the property.

If you donate the property to a close relative (spouse or children), the fee will be 0.125% of the appraised value of the property, but not less than AED 2,000 (USD 545). The donee pays the fee unless you have agreed on another option.

If you sell the property to another relative, then the Transfer Fee is payable at the standard rate of 4% of the property’s value.

DLD Fees  in the Event of the Letting of a Property

Fees are also stipulated in Dubai on the registration of long-term tenancy agreements: 5% for residential properties and 10% for commercial properties. This municipal fee is included in the utility bill and is paid by the tenant. 

If this concerns a lease agreement with the subsequent buyout of the real estate, you will have to pay the Transfer Fee. In this case, the Transfer Fee will be  split as follows: 

• the lessor pays 2% of the property’s  value,
• the tenant pays another 2%, and 
• the tenant also pays 0.25% of the rent.

At least, that is what the law says. In practice, it is highly likely that the tenant and future owner of the real estate will have to pay all the fees.

Penalties for Unpaid Fees

You will be fined if you do not pay the fee of Dubai Land Department. The fine is usually double the amount of the DLD fees, but other penalties may also be applied. In this case, property developers and real estate agents are also fined twice the amount.

While failure to pay the fee is not a crime, the Dubai Land Department has the right to contact the police and report fraud. In this case, a careless buyer might not only have legal issues to deal with – they might even lose residency or the opportunity to obtain it.

In a Nutshell

All in all, how much Dubai property purchase costs? When you buy a property in Dubai, you must pay state fees, first and foremost the Property Transfer Fee which is 4% of the value of the flat or villa. Be ready to pay another AED 2,000 to AED 4,000 (USD 545 to USD 1,100) for the registration of the property, depending on the value of the property. Finally, you must pay AED 250 (USD 68) for the Title Deed. Other buying property in Dubai fees are not mandatory and depend on whether you buy property with a mortgage or via a real estate agency, or need the services of an appraiser.

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