Property has once again become a hot topic in the UAE. Since ownership of apartments and villas was made available to non-GCC nationals in 2002 the UAE property market has grown incredibly fast as shown by the huge rate of development inland, as well as along the coast. Despite the downturn a few years ago which left many people with burnt fingers, many analysts believe that the price increases we are now seeing are based on more substantial fundamentals. Whilst this may be the case, I would still urge caution.
And if not buying here, many people are keen to buy in their home country or to buy a house in a place where they might like to retire to. It’s not just an Englishman’s home that is his castle and we all want to own the roof over our heads one day.
Prices are still somewhat lower than at the peak and coupled with a general air of optimism this has meant that there are ready buyers for all types of property across the UAE and in Dubai in particular. Buyers of all nationalities are purchasing properties to let out, but also as a long term home for themselves.
For decades property ownership has been seen as desirable and even if you have no wish to buy in the UAE, you may be thinking about buying in your home country or elsewhere.
Who lends in the UAE?
There are now many banks and specialist lenders active in the UAE, some 31 at last count. Whereas in the past most offered just one product, now there is frequently a choice between a variable and a fixed rate of interest. The latter is usually higher, but does offer the security of knowing exactly what your repayments will be for an extended period.
How to go about it
As with any major purchase, you should consider the best way to go about buying and ensure that you can realistically afford the repayments. This is where dealing with an experienced broker comes into its own as they can guide you in your decision making and will explain the full process, as well as pre warning you about the myriad charges.
Unlike in many other countries, lenders in the UAE do not lend against all properties. Some will only consider certain properties built by particular developers, or in specific developments. Their requirements are not all the same and incentives come and go. This is why it is much easier to work with an experienced mortgage broker who is aware of all offers and the foibles of each lender.
Costs and concerns
At the time of writing a minimum deposit of 15% is required for an expat to buy a property in the UAE, although there are rumblings from the UAE Central Bank about enforcing higher deposit levels. Although we are awaiting a formal announcement, many people expect that a deposit of at least 25% will be required before too long.
The charges, including assorted mortgage costs, agent’s fees, surveyor’s charges and the Land Department could be as much as 7% of the purchase price. Whilst you are not obliged to engage a lawyer when buying property in the UAE, we recommend that you do so. Considering the cost of property their fees are worth paying to ensure you have no problems.
It is my personal view that the UAE is still a relatively immature property market so we are likely to see future falls as well as increases in values. It is essential that people do not overextend themselves and understand the negatives as well as the positives of property ownership.
How can I help?
I do not arrange mortgages personally as it is a field that you need to stay on top of and I concentrate of other issues of financial planning, but I started my career in mortgages so have good general knowledge as well as being qualified to advise on them. I have contacts with experienced mortgage brokers who are active in the UAE, UK and much of the rest of the world and will refer queries to whoever is best suited to assist.
In addition I can arrange the most cost effective life assurance and assist with writing a will that takes the implications of owning property into account. For some people there may also be tax implications when it comes to either receiving a rental income or on the sale of a property so I provide advice where relevant.
Where else can I buy?
You do not have to be a resident of a country to buy a property, whether as a buy-to-let investment or as a holiday home. Countries where my contacts can assist with arranging mortgage finance include:
This is not an exhaustive list, so just ask if you are considering somewhere else. Brokers can also assist with finance on some non-residential properties.
For any queries, please contact me at firstname.lastname@example.org