The Arab world, due to the instability and unrest, was severely limited when it came to foreign ownership. It was an unpopular place for investment by foreigners in the real estate sector before 2002. However, when the Freehold Decree was introduced in 2002 as a formal legislature, it permitted the foreign nationals to buy a property, lease or rent a property in Dubai and the middle east particularly. Moreover, the process of buying property in Dubai is very easy compared to other countries in the world. This can be an advantage and hindrance to the purchasers. Despite the process being simple, it is very imperative for many due to the immaturity of the legal system in Dubai. Hence, it is better to understand the process of purchasing and minimize any risks associated with it.
Here are essential tips for purchasing a property in Dubai.
Know the process of purchasing in Dubai
There are two ways to buy property in Dubai. Either as ‘off-plan’ from a developer or as a resale from a private seller. Whenever the purchase is being made off-plan, the expats will need to provide their passports, along with a reservation from the terms and conditions of the deal. A fee for the reservation, which is fife to fifteen percent is paid to draw up the sales and purchase agreement. However, the properties that are still being constructed, need to have an agreement with the completion dates and the outlines. So, compensation can be paid if there is any delay in the completion based on the stipulated period of time.
Consider why you are purchasing the property
The fact that you are either buying property for your own personal use or investment purposes puts a huge impact on the type of property being purchased and your decision making as well. If the main purpose for buying a property is an investment, most of the expats will preferably rent out such property. In such a case, it is very important to look at the market and study the properties and its types, knowing whichever ones have the highest rental yield. It would be better to invest in one or two-room apartments. Purchasing a villa will also have a better rental yield compared to the latter, although the latter may feel much more luxurious to own.
Importance of due diligence
Whether it is an off-plan or a resale property, it is very important that the buyers ask multiple questions before making the purchase. It will help in developing the reputation of the developer and the real estate agent. In case you are making a purchase from a developer, you need to look at their reputation, particularly for the quality as well as timely delivery. In several cases of personal purchases, the homes that are bought are not even developers, hence it is necessary to visit show homes as the potential buyers.
Survey the property
If you are planning on buying property from a seller who is private on the secondary market. It will be more sensible to hire the services of a registered and professional surveying company. The up-keeping of a property is mainly the responsibility of the owners and the surveyors can assess the property by doing a check thoroughly. It can alert potential buyers if there is any risk in the future for a high maintenance cost. Especially for properties such as villas, which may be unoccupied for a lot of months. Once the property is under your possession, it is your duty to take care of its maintenance. As a buyer, you will have to make sure that no problems are inherited by you along the line.
It is recommended highly that all the potential buyers seek professional legal advice to get help regarding the process of the purchase, However, it is not necessary by law for buyers to do so. It is totally their own wish. It is advisable that they do so, to prevent any underlying potential risks.
If you are planning on buying a property with a mortgage, it is essential that you request an opt-out clause included in your agreement for the sale or Memorandum of Understanding.
When you are buying a property, you need to ensure that you receive a title that is free from all sorts of liabilities and debts. It is the responsibility of the seller to get a N.O.C- no objection certificate from the developer’s office. The developers usually do a lot of checks on the property ensuring that it is free from any sorts of liability before issuing the N.O.C.