1. Never sign a contract that you do not understand
When buying properly in Dubai there is a agreement drawn up between buyer and seller called either Memorandum of Understanding (MOU) or Sale and Purchase Agreement (SPA) is normally drawn up by the real estate agency and defines all the terms and conditions for the transfer of the property from the seller to the buyer.
2. Always ensure that you seek specialist advice from independent Solicitors, Architects and Surveyors before considering a purchase overseas.
This is not normally the norm in Dubai but sound advice there are a few Dubai Land Depart Registered Conveying companies who have specialist property lawyers and Escrow facilities to ensure the transaction is transparent and safe for both buyer and seller.
As many buildings in Dubai have been occupied for a few years and there may be the usual wear and tear of the property. With villas definitely a good idea to have a Surveyor assess the property as the upkeep of the property is the responsibility of the owner and some villas may have been left unoccupied for some time, therefore a through check will reduce the risk of high maintenance costs to fix problems once you have taken possession of the villa or apartment.
3. Ensure you do not inherit a debt on the property before you purchase, which a solicitor should be able to check
The process of purchasing a property in Dubai is fairly straight forward compared to other parts of the world, to ensure the property is free from any liabilities or debt, before the property can be transferred at the Dubai Land Department it is the sellers responsibility to obtain a No Objections Certificates (NOC letter) from the developers office there are a number of official clearance letters that is required and need to be provided to the developer for them to do their checks on the property to make sure the property is free from any liabilities, the developer then issues a NOC letter confirming that the property is ready for transfer and Dubai Land Department.
4. If you are arranging finance on the property, ensure that this is stated in any contract and you have an ‘opt-out clause’ if the loan is not agreed (which will ensure any deposit paid is refunded).
This point above is a very important tip, as a buyer who is purchasing a property with a mortgage the real estate broker my not add this opt-out clause it is imperative that you as a buyer request this clause and the wording correctly, I have in my experience seen other agents mention that the deal is only agreed “subject to financing approval” I personally find this vague and improper, here is my example you as the buyer approach the bank they in Dubai issue a finance pre-approval you now have approval and you are legally tied into the agreement, you agree a price with the buyer and sign the sale agreement SPA/MOU now the bank valuation comes in lower then expected and issues you a final approval letter again approved, leaving you the buyer having to pay more down payment, if you do not proceed with the deal you will have to forfeit the 10% deposit cheque amount you put down to secure the property this could be a large amount of money coming out of your pocket for a situation out of your control, surveying companies determine the property value. So I personally think this is unethical for the buyer to be penalized, I would recommend something alone the lines “subject to valuation amount of xxxx amount by the bank the deal will proceed else default without any penalty to either buyer or seller”
5. Try to arrange your mortgage finance ‘in principle (pre-approval)’, before agreeing to purchase the property, or before signing any contracts and paying over a deposit.
This is self explanatory if you have not got the money to purchase the property in principle don’t do the deal. Also a good agent will request you have your pre-approval in place before finding you the perfect property, first reason is that the property you may like may gets sold during the time you wait for your pre-approval, or you may spend hours of yours and the agents time and energy viewing apartments and not be approved for finance, thus a lot of wasted time and effort on all parties.
6. Arrange your mortgage in the currency that you earn in where possible, unless you are going to receive rental income from that property in the local currency and then this may be a possible alternative option, dependent on the lender’s criteria.
The above tip is depending on who you decide to finance with, always good to find a few good options and find the best one that suits your purpose.
7. Think about combining your cash with friends or family: it could bring a Villa with pool within your financial reach, rather than simply an Apartment.
This is a good tip but all depends on your motivation to buy, buy to rent, holiday home or permanent family home.
8. Check with the Estate Agent or vendor that you are aware of the costs charged by the legal and government authorities for purchasing a property in Dubai.
Very important TIP all cost associated to the buyer and seller should clearly be mentioned in the SPA/MOU signed between buyer and seller, before signing the sale agreement SPA/MOU it is recommended you get a draft copy of the agreement SPA/MOU from the real estate agency carefully check all terms and conditions, confirm all payment amounts to be make to the relevant parties. For Dubai Land Department fees all information can be found at http://www.rpdubai.com.
9. Open a bank account in your chosen country and ensure you get a Certificate of Importation for the money you bring in from your home country.
Depending on your country of the residence and legal requirements for importation of monies earn outside your resident country.
10. Set up standing orders in a local bank account to meet bills and taxes. Failure to pay your taxes in some countries, such as France, Portugal and Spain, could lead to court action and possible seizure of your property.
Depending on your country of the residence and legal tax requirements to declare any incomes gained from outside your residence country.
11. Remember that bills do not end at the asking price. Lawyer’s fees, Taxes, Insurance etc must all be met in your host country and can often be more expensive.
In Dubai the process to buy a property does not require a lawyer, there are no property tax laws in UAE and insurance is not required to purchase a property but if for peace of mind you appoint a lawyer or require insurance please confirm and reconfirm all cost related to the completion of the property transaction for services rendered by all parties.
12. List the features that are essential to you on a daily basis. e.g. being near public transport or having adequate parking.
Have a list of requirements for the property for you, give as much detail as you can of the requirements, your lifestyle, motivation to purchase this will save your agent and you time and a higher success rate of find your perfect property.
13. Put the ten most important features in order and decide which ones you can do without.
With the abundance of developments in Dubai and availability you as a buyer can be over whelmed list your features in order of importance and preference this will help you identify the perfect community or type of property that suits your needs.