Buying property in the UAE is an exciting investment, whether you're looking for a home or a rental asset. However, many buyers focus only on the property's listed price and overlook the extra costs involved in the process. These additional expenses can add up quickly and should be factored into your budget to avoid surprises.
Here’s a breakdown of the hidden costs you need to know before purchasing property in the UAE.
1. Dubai Land Department (DLD) Fees
One of the biggest expenses buyers face is the Dubai Land Department (DLD) registration fee, which is 4% of the property price. This fee is mandatory and must be paid upfront.
Breakdown of DLD Fees:
- 4% of the property value (mandatory)
- AED 580 for the title deed issuance
- AED 4,200 – AED 5,250 for administrative costs if using a trustee service
Some developers offer to cover the DLD fee as part of promotional deals for off-plan properties, so it's worth asking before committing to a purchase.
2. Real Estate Agent Commission
If you buy a property through a real estate agent, you will need to pay a commission fee. In Dubai, this is typically 2% of the purchase price plus 5% VAT on the commission amount.
For example, if the property costs AED 2 million:
- Agent commission (2%) = AED 40,000
- VAT (5% on commission) = AED 2,000
- Total commission fee = AED 42,000
3. Mortgage Fees (If Financing the Purchase)
For buyers taking out a mortgage, banks charge several fees, including:
- Mortgage registration fee: 0.25% of the loan amount (paid to the DLD), plus AED 290 for admin costs
- Bank processing fee: 0.5% – 1% of the loan amount + 5% VAT
- Property valuation fee: AED 2,500 – AED 3,500 + VAT
Mortgage registration fees are a one-time cost, but they can significantly impact your upfront expenses.
4. Service Charges & Maintenance Fees
In the UAE, property owners must pay annual service charges for building maintenance, security, and common area upkeep. These fees vary based on location and property type.
Estimated Service Charges (per sq. ft.):
- Dubai Marina: AED 14 – 25
- Downtown Dubai: AED 20 – 30
- Jumeirah Village Circle (JVC): AED 10 – 15
For a 1,000 sq. ft. apartment, service charges can range between AED 10,000 – 30,000 per year. Villas may have lower rates, but owners are responsible for their own maintenance costs.
5. VAT on Off-Plan Properties
If you’re buying an off-plan property, a 5% VAT applies to the purchase price. However, resale (secondary market) properties are exempt from VAT.
For instance, if you're purchasing an off-plan unit for AED 1.5 million:
- VAT (5%) = AED 75,000
Some developers offer promotions where they absorb the VAT cost, so it's worth checking if any incentives are available.
6. Utility & DEWA Connection Fees
Once the property is registered in your name, you’ll need to set up Dubai Electricity and Water Authority (DEWA) services.
DEWA Deposit Fees:
- Apartments: AED 2,000
- Villas: AED 4,000
If the property is in a district cooling area (such as Dubai Marina or Downtown), you’ll also need to pay a chiller deposit and possible connection fees, which can range between AED 1,000 – 2,500.
7. Moving & Furnishing Costs
Beyond the purchase, you’ll need to budget for moving expenses, which depend on the size of your home and the distance between locations.
Estimated Moving Costs:
- Small apartment: AED 1,500 – 3,000
- Large apartment or villa: AED 4,000 – 8,000
If the property is unfurnished, furnishing costs can range from AED 20,000 – 100,000+, depending on the size and quality of furniture.
8. Home Insurance (Optional but Recommended)
While home insurance isn’t legally required, some banks make it mandatory for mortgage approval. It covers damages due to fire, water leaks, or natural disasters.
- Basic home insurance: AED 1,000 – 3,000 per year
- Comprehensive home & contents insurance: AED 2,500 – 5,000 per year
If you’re renting out your property, landlord insurance can provide additional protection against tenant-related damages.
Final Thoughts: Budget for the Extras
Many buyers focus only on the property price, but the hidden costs can add up quickly. To avoid financial surprises, it’s crucial to plan for these additional expenses.
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