From Renting to Buying in Dubai
Making the move from renting to buying in Dubai
After years of skyrocketing rents, tenants who have been renting houses and apartments in Dubai are now thinking of buying, thanks to the availability of more affordable housing.
Affordable Housing in Dubai
The recent proposal by Dubai Municipality to introduce mandatory affordable housing quotas for all new residential developments, coupled with a slowdown in the property market, means that many householders now have the opportunity to buy.
The trend towards greater affordability has already begun, as many developers are now releasing off-plan properties at a price range designed to appeal to the budget-conscious buyer.
Making the leap to owner occupation
Steven Morgan, Chief Executive Officer of Cluttons Middle East, recently described the obstacles buyers have faced in recent years when trying to gain a foothold on the property ladder:
“The introduction of the Federal Mortgage caps and the doubling of property registration fees saw genuine end users in the market forced into a holding pattern.�
He went on to acknowledge that surging rents, driven by strong demand, put so much pressure on household incomes that saving for a deposit has, until recently, been out of the question.
First steps to ownership: where to buy
Residents who have been renting in a community where property prices are high may find they need to make compromises on living space if they intend to stay on the same area.
A solution might be to look at buying off-plan at some of Dubai’s newlylaunched developments such as Nshama’s Town Square near Al Barsha or GGICO’s Topaz Residencies project in Dubai Silicon Oasis (where prices start at 536,982 AED for a one-bedroom unit).
Alternatively more
affordable resale property can found in Dubai Silicon Oasis, Jumeirah Village Circle or Dubai Sports City.
The reputation of the developer is vital when buying off-plan: purchasers should not only consider the quality of the work, but the developer’s track record for completing developments on time. Buyers of resale properties should ensure the estate agent is registered with the Dubai Land Department.
Understanding how it works First-time buyers should also make sure they understand the purchasing process in Dubai. For off-plan purchases, buyers will pay a Reservation Fee of between five and fifteen per cent. If the property is still under construction then the Sales and Purchase Agreement should contain a completion date plus details of any compensation to be paid if the building is not finished in time.
In the case of a resale property bought from a private seller, a Memorandum of Understanding will be drawn up outlining the terms and conditions of the deal. After this the buyer will be asked to put down 10% of the property price as a deposit to confirm his intention to buy (pending approval of any financing).
For Dubai residents who have previously been happy to rent this is a big step, but with adequate finances in place - and providing due diligence is observed - the trend towards affordable housing could provide an opportunity for many householders to swap their monthly rent payments for a valuable property investment.
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