Factors to consider when buying a home in Dubai

Whether a first-time buyer or seasoned investor, buying a home can be both an exciting and daunting time. We list the most important factors to consider before becoming a homeowner in Dubai.

What to Consider

• Tenure: How long have you been in Dubai and how long do you plan to call the city home? The answers to these questions are important in estimating your potential return on investment. If you are unsure of your long-term plans or commitment to the region, renting may be more suitable for you.
• Affordability: A global norm that helps to define affordability is that your monthly housing expenses should not exceed 30% of your salary. It is also crucial to budget for upfront fees, which can be estimated at approximately 7-8% of the purchase price. As an owner, you will also have to keep up with ongoing maintenance fees as well as paying the annual service fees

Maintenance costs:
Annual maintenance charges on your property are payable to the Dubai Land Department based on the RERA Service Charge and Maintenance Index. This index determines a specific charge per square foot and varies by community. Up to date fees can be sourced directly from the DLD’s website.

• Savings: Perhaps the most important factor to consider when contemplating buying a home is your down-payment. In line with UAE Central Bank Regulations, the minimum deposit required for expats is 25% of the purchase price for properties valued at less than AED 5 million, and 20% for nationals. A personal loan obtained from a local bank cannot be used to finance your down-payment — this must come from your own savings. However, the above mentioned upfront transaction costs, agent fees and bank fees may be financed through a personal loan.
• Rental yields: Thinking longer-term, if you want to convert your home into an investment property down the line, it’s important to assess whether the projected rental income will be sufficient to cover your monthly mortgage repayment and maintenance expenses.
• Residence visa: For properties valued above AED 1 million, you may be entitled to a residency visa through home-ownership, subject to meeting certain conditions. Two types of visas are available, a 6-month multi-entry or a 2-year residency. Property owners can also sponsor a visa for their immediate family members.
  For properties valued above AED 5 million, with no mortgage attached and that of which are retained for 3 years, may entitle you to a 5-year residency visa, again subject to certain eligibility conditions.

Additional things to consider…

Doing your due diligence is an important aspect of buying a home to ensure the property will keep you and your family happy for the long term.

• Location: Take into consideration the size of your family, stage of life and lifestyle. Is the property near schools or childcare facilities? What are the approximate daily commute times from the property to your work or children’s school? Is public transport easily accessible? Are restaurants, cafes, cultural attractions or nightlife destinations important to you? Does your chosen community have adequate options?
• Size: Again, taking into account the size of your family, is the property large enough to meet your needs? Do you have plans to expand your family in the near future? Are you looking for a spacious backyard for your children?
• Layout: Not all square footage is equal, which is where properly assessing floor-plans and layout becomes important. Are you looking for open-plan living? Seeking spacious living areas or do you prefer larger bedrooms?
• Quality: Have you considered the age of the property? If buying off-plan, was the property built by a reputable developer? If investing in the secondary market, does the property require any renovations?