A New Shift in UAE’s Property Market
Buying property in Dubai has always come with additional costs beyond the property price—such as Dubai Land Department (DLD) registration fees and brokerage commissions. Traditionally, some banks in the UAE would include these costs in mortgage financing, making it easier for buyers to manage their cash flow.
However, the latest update in the market indicates that UAE banks have now stopped financing DLD and brokerage fees, meaning property buyers will need to pay these charges entirely upfront.
What Does This Mean for Property Buyers?
This move has a direct impact on affordability and upfront financial planning. Here’s what buyers should know:
- Higher Initial Payment
Buyers will now need to arrange cash for not only the down payment but also the full 4% DLD fee and the 2% brokerage fee (on average). - More Savings Required
Previously, including these fees in mortgage financing allowed buyers to spread the cost over their loan term. Now, buyers must ensure they have adequate liquidity before committing to a purchase. - Impact on First-Time Buyers
First-time property investors and end-users might feel the pinch most, as they often rely heavily on mortgage financing to cover all costs. - Market Stability Factor
Analysts believe this change could filter out speculative buyers and ensure more financially stable investors enter the market.
Example of Cost Impact
Let’s assume you’re buying a property worth AED 2,000,000:
- Down Payment (20%): AED 400,000
- DLD Fee (4%): AED 80,000
- Brokerage Fee (2%): AED 40,000
Earlier, some buyers could finance part of the DLD and brokerage fees through a mortgage. Now, the additional AED 120,000 must be paid upfront—raising the total cash-in requirement to AED 520,000.
How Can Buyers Prepare?
- Plan Early: Factor in all fees when calculating affordability.
- Build a Savings Buffer: Have funds set aside beyond your down payment.
- Negotiate Brokerage Fees: Some agents may be flexible with their commissions.
- Seek Expert Advice: A mortgage broker can help structure your financing in the most cost-effective way.
Final Thoughts
The decision by UAE banks to stop financing DLD and brokerage fees marks a significant shift in Dubai’s real estate landscape. While it increases the upfront cost burden, it also promotes a healthier, more stable property market by encouraging buyers to be financially well-prepared.
For buyers, the key takeaway is simple: Plan your finances carefully, save more upfront, and work with professionals who can guide you through the new process.
