Starting February 1, 2025, property buyers in Dubai seeking mortgages will face an increase in upfront costs due to a new directive from the UAE Central Bank.
Previously, the 4% Dubai Land Department (DLD) registration fee and the 2% brokerage fee could be included in mortgage loans. However, under the new rule, these fees must now be paid in cash upfront.
Impact on Buyers:
Increased Down Payment: This change necessitates a larger down payment for buyers. Expatriates purchasing homes under AED 5,000,000 already require a 20% down payment, while those buying properties above that threshold need a 30% down payment. For UAE nationals, the minimum down payment is 15%.
Tightened Borrowing Power: The Central Bank’s mortgage cap for first-time buyers, which limits borrowing to up to seven times their annual salary, could further restrict purchasing power.
Higher Overall Costs: For example, purchasing a AED 1,000,000 property will now incur AED 60,000 in upfront fees (AED 40,000 for DLD and AED 20,000 for brokerage), significantly increasing the initial financial burden.
Shifting Market Dynamics:
Increased Demand for Off-Plan Properties: The new rule is expected to boost demand for off-plan properties. Developers often offer flexible payment plans and lower initial costs, including potential waivers or discounts on DLD fees, making them more appealing to buyers.
* Impact on Market Competition: Real estate experts anticipate that the market will become more competitive, with buyers favoring developers who offer more buyer-friendly terms and conditions, particularly in the off-plan segment.
The Central Bank’s directive aims to promote responsible borrowing practices within the Dubai property market.
Key Changes:
* DLD registration and brokerage fees must now be paid in cash upfront.
* Increased upfront costs for buyers.
* Potential shift towards off-plan property purchases.
* Increased competition among developers.
This rewritten version aims for:
* Conciseness and clarity: The text is more concise and easier to read.
* Focus on key information: The most important points are highlighted.
* Neutral tone: The language is objective and avoids overly dramatic phrasing.
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I hope this revised version is helpful!
