What does it cost to buy and own property in Dubai?

· Editor: George Vanous (editorial policy)

An artist's rendering at dusk of residential towers on the water at Dubai Creek Harbour, with a white arched bridge crossing the creek and palm trees along the promenade
Image: Creek Waters 2 by Emaar Properties

On top of the price, budget 4% for registration with the Dubai Land Department (DLD) when you buy, a few small fixed fees, and then service charges every year you own, with 5% VAT on them. A new home carries no VAT, and an individual who rents out a home pays no tax on the rent. If you borrow, a bank may lend at most half the value of a home bought off-plan, so the rest is yours to fund.

We think most buyers compare starting prices and payment plans and leave out the two numbers that decide what a home really costs: the 4% at the start and the service charge every year after. This page lists each cost we can point to an official source for, in the order you meet it. It is a summary to help you budget, not legal, tax or financial advice, and fees change, so confirm the current figures before you pay.

What do you pay when you buy?

The price itself is paid in stages set by the developer's payment plan, into the project's escrow account. How plans differ is in our post on the best off-plan payment plan in Dubai.

The fees on top are set by the DLD. Its service page for registering an initial sale lists these for an off-plan purchase:

Fee Amount
Seller 2% of the sale value
Purchaser 2% of the sale value
Knowledge fee AED 10
Innovation fee AED 10
Developer's self-registration through the Oqood portal AED 1,000

Together that is 4% of the price. The rules divide it between the two sides; your contract may not. Many sale agreements pass the full 4% to the buyer, so find that clause and get the amount confirmed in writing. On a home of AED 1,500,000, 2% is AED 30,000 and 4% is AED 60,000. To be safe, count all 4% as yours when you budget, which is what our purchase cost calculator does. What the registration gives you is explained on our glossary page for Oqood.

Is there VAT on the price?

Not on a home. The Federal Tax Authority's Real Estate VAT Guide treats the first sale of a new residential building as zero-rated and later residential sales as exempt, so you pay no VAT on the price either way. Commercial property carries 5%.

The exception to watch is a home sold with hotel services. The guide does not count a hotel or a serviced apartment as residential, so before you sign for a branded or hotel-operated unit, get the developer's VAT treatment in writing. More in Do you pay tax on property in the UAE?

What if you take a mortgage?

Plan to fund at least half yourself. The UAE Central Bank caps lending on a home that is not yet built at 50% of its value, for every kind of buyer (Article 3 of its mortgage regulations). For a completed home the limit depends on the buyer and the price: the same article allows an expatriate up to 80% on a first home under AED 5 million.

A bank also charges its own fees and asks for a valuation, and those differ by lender, so ask for them in writing before you apply. Our post on off-plan mortgages walks through the Central Bank's rules, which apply across the UAE.

What do you pay at handover?

When the building is complete and you have paid what your contract asks, your purchase moves from the interim register to the Real Estate Register and you receive a title deed. The DLD charges AED 540 per unit for that first registration, according to its frequently asked questions: the deed, the map and two minor fees. It is not a second 4%.

Ask your developer whether it or you pays the AED 540, and whether it adds handover charges of its own. Our post What happens at handover in Dubai? covers the inspection and the deed in order.

What do you pay every year?

Service charges. Every owner pays a yearly share of the building's shared costs: cleaning, security, maintenance, insurance and management. Under Dubai's Law No. 6 of 2019 your share follows the area of your unit, and the rate must be approved before it is charged. You can look up a building's approved rate on the DLD's service charge index. The bill is the owner's whether or not a tenant lives there. How it works is in What are service charges in Dubai?

VAT on service charges. The same VAT guide puts 5% on service charges, because they pay for services and not for the home.

The housing fee, if you let the home. It is the tenant's to pay, not the owner's: the UAE government portal says tenants in Dubai pay a housing fee to Dubai Municipality of 5% of the yearly rent.

What if you rent it out?

An individual who rents out a home without needing a business license pays no Corporate Tax on the rent, and the UAE has no personal income tax, as the Federal Tax Authority's guide for natural persons sets out. Residential rent is exempt from VAT.

Holiday lets are different: they run under a permit, which makes them a licensed business, and Corporate Tax can apply once business turnover passes AED 1 million in a year. The permit and its rules are in How do you get a holiday home permit in Dubai?

A worked example

For an off-plan apartment at a starting price of AED 1,500,000, bought by an individual without a mortgage:

Cost When Amount
Price In stages, as the payment plan sets AED 1,500,000
Registration, if the contract puts all 4% on the buyer At booking or registration AED 60,000
Knowledge and innovation fees With registration AED 20
Title deed at first registration At handover AED 540
Service charges, plus 5% VAT Every year after handover The building's approved rate times your area

The yearly figure is the one a starting price hides. Two homes at the same price can carry very different service charges, so ask for the building's approved rate per sq ft before you compare.

What to confirm before you pay

  1. Who pays the 4% registration fee under your sale agreement, in writing.
  2. The escrow account for the project, since every payment you make must go there.
  3. The building's approved service charge rate, and your unit's area.
  4. Whether the developer adds any handover charges beyond the AED 540.
  5. If you are borrowing, the bank's own fees and how much it will lend.
  6. For a serviced or hotel-run apartment, how VAT applies to the sale.

An advisor can go through these for a specific project with you: message us on WhatsApp from any project page.

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