Description: Real Estate in Abu Dhabi: A Comprehensive Guide to Buying Property. Abu Dhabi is Slightly more Expensive than Dubai. Fees, Rates, and Money matter. Mortgages attract More Fees than Payments in Cash.
The United Arab Emirates is one of the jewels of the East. With the towering prices of real estate in Abu Dhabi for sale many people become terrified of entering the market due to its cost implications. Imagine buying a small Villa for 2 000 000 AED (about 544 000 dollars), not to mention the cost of maintenance and furnishing of the apartments. More so, having a house does not automatically remove all your other responsibilities! Yes, you have to feed, clothe yourself and your family, and live a decent life. So, when doing the financial plan, many people give up on their dreams of having a house, but it shouldn’t always be so.
Abu Dhabi is Slightly more Expensive than Dubai
You probably did not expect that. Abu Dhabi is slightly more expensive to live in than Dubai. To the international community, Dubai is often regarded as the soft spot for wealthy ex-pats to live and vacation, but in fact, it is one of the most tourism-friendly places with a reasonable cost of living in the UAE. The capital of the United Arab Emirates costs more in living terms, and properties are relatively more expensive too.
Facing the truth, many people will not be able to afford the highly luxurious houses in Abu Dhabi. But what if there are options? Attractive, viable options in the less congested and marketed areas and parts of the city?
To find lovely apartments for sale in Abu Dhabi, Read more on the official website Emirates.Estate today.
Fees, Rates, and Money Matters
Now, on to money parts, which is invariably one of the most important parts of investments. At least, this will tell you how to put your house in order and what structures to put in place. Buying property in Abu Dhabi attracts certain fees and rates, regardless of who the purchaser is, even as a foreigner, you are required to pay these fees and rates in addition to the purchase price.
VAT at about 5% of Property Price: This tax is levied by the municipality and is aimed to provide revenue at that level. It is a flat rate, however, it is not chargeable on certain properties. For example, properties built for residential purposes are not taxable in this regard, provided it is within the first 3 years of completion. Additionally, bare lands are not liable to pay VATs. These rules were put in place to encourage real estate investments in the country. Please note that commercial properties are exempted from these provisions and dealers or parties must pay 5% VAT if it is over a commercial unit.
Transfer Tax of 1% – 4% of Property Price: Secondly, all property dealings in Abu Dhabi carry a transfer tax ranging from 1% to 4%, based on what is decided by the Executive committee in the various municipalities. This transfer tax is regardless of the property type, or function (that is, both commercial and residential units are included).
Registration of Transfer of Title Fees: To register the transfer of title from the previous owner, to the new one, attracts a fee of 2% of the total purchase price. This fee is often borne by the purchaser because it is a registration of his title, and critical to his right over the property. Where 2% of the purchase price is above one million AED, it will not be charged in full – in such a case, the purchaser will be liable to pay only one million AED for the registration of the transfer of title.
Property Valuation Fees: If you intend on taking on Mortgage, then you should prepare to pay an additional property valuation fee. This fee is chargeable by the mortgage bank, for the valuation of the property and its minimum value in the event of a foreclosure or distress sale also in order to determine the volume of mortgage loans to issue. Most Banks charge around 3 000 AED and 5% VAT just to value the property and provide the requisite documentation.
Registration of Mortgage Fees: Additionally, for the mortgage users, after the valuation is done, and you receive the loan, you will pay to register that loan again. The fee chargeable here is 1 AED per 1 000 AED payable on the property. So if the property is worth 2 000 000 AED, you will pay 2 000 AED as fees for its registration.
Estate Agent Fees: If you use an agent to get your property, they are likely to charge 2% or less for their services. You need not factor in these expenses if you are buying directly from the house owner or the developer company. However, with the myriad of property options in the Abu Dhabi market, you may need assistance from the local market to avoid scams and shamble purchases.
Registration of Title Deeds: This is the final lap of fees for every property purchaser, it is usually at a flat rate of about 1 000 AED. It registers the title deed upon the execution of the contract and completion of the entire process.
Mortgages attract More Fees than Payments in Cash
From the above, you can see that mortgages cost relatively more than a purchase by cash. If you buy by cash, you may only pay estate agent fees, transfer fees, and VAT (in commercial properties), but as a mortgagee, you will incur additional mortgage charges running into thousands of AED.
Conclusively, you should have a reserve of about 5% – 20% of the total property price when planning to purchase a property in Abu Dhabi. That is because the rates and charges are within that margin. Budgeting this amount will speed up the purchase process and ensure you have enough at hand. As minimal as it seems, 5% can be a lot especially when you are purchasing a property costing as high as hundreds of AED or even millions as the case may be.