What you actually pay when you buy a property in Dubai

Four per cent of the sale price goes to the Dubai Land Department. The figure comes from Executive Council Resolution No. (30) of 2013, which prices the registration of a real property sale contract at 4% of the value of the sale contract. Every buyer in Dubai knows that number. The cheques that sit beside it are the ones people forget to budget for, and a Real Estate Registration Trustee centre will not complete a transfer until all of them are drawn.

Some of the lines below are government fees with published amounts. Others are charges set by a private party and published nowhere at all. That distinction matters more than the totals, because it tells a purchaser which figures are fixed and which are still open before anything is signed.

Who the law says pays the 4%

The resolution splits the fee down the middle. Article 3(1) is the operative wording.

The Land Department's own service page for property sale registration repeats the split: 2% of the sale value from the seller, 2% from the buyer. In the resale market the contract almost always assigns the whole 4% to the buyer instead. The article permits that, because the equal split applies only where the parties have not agreed something else. So read the clause. A purchaser who assumes the statutory split and budgets 2% arrives AED 40,000 short on a two million dirham flat.

The Land Department's other line items

These are published, small, and not negotiable.

• Title deed issuance: AED 250.
• Knowledge fee: AED 10.
• Innovation fee: AED 10.
• Map fee: AED 250 for a building or an apartment, AED 225 for the unified map at Dubai Municipality, AED 100 for a map of land outside Dubai Municipality's jurisdiction.
• Trustee centre service fee: AED 4,000 plus VAT where the sale value is AED 500,000 or more, AED 2,000 plus VAT below that. The Land Department's page on selling a mortgaged property gives the same amounts inclusive of VAT, at AED 4,200 and AED 2,100.

The transfer happens at a trustee centre rather than at a Land Department counter, and the Land Department puts the service at 25 minutes. That is processing time once every document and cheque is in order. It is not how long the morning takes.

A worked purchase at two million dirhams

Take a ready apartment in a freehold area, declared sale price AED 2,000,000, bought without a mortgage.

AED 84,720, or 4.24% of the price, before a broker or a developer has invoiced anything.

The value the fee is charged on

The 4% bites on the value of the sale contract, which is why understating the price is an old idea and a poor one. Article 4 of the same resolution allows the Department to verify the value of the property, and to assess that value itself where the value stated in the disposition contract is less than the market value, or where false information has been submitted. The declared price also feeds the buyer's own record of what was paid. Shrink it and the gain on a future sale looks larger than it was.

The charges with no published figure

Two of the larger numbers on a Dubai transfer are not government fees at all. The first is the developer's no objection certificate. The Land Department's document list for a sale registration calls for an e-NOC from the developer in freehold areas, obtained through the Dubai REST app. No amount for it appears in the 2013 fee schedule, because the developer sets its own. It varies by developer and by project, and the only reliable way to know is to ask for the current figure in writing before the memorandum of understanding is signed. In practice the seller carries this line, since the certificate is issued against the seller's account and developers generally want the service charge ledger clear first.

The second is the broker's commission. Neither Law No. (7) of 2006 nor the 2013 fee schedule fixes a percentage, and neither imposes a ceiling. It is whatever the signed brokerage agreement says, and who pays turns on which side engaged which broker. Expect VAT at 5% on top, as on the trustee's service fee.

A lender's valuation is a third. The bank instructs it and prices it, and no Land Department schedule covers it. The Department does issue its own valuation certificate, which is a different document for a different purpose: AED 4,000 for a residential apartment or villa, plus the AED 10 knowledge fee and the AED 10 innovation fee, plus AED 230 and VAT where the application is made at a registrar centre. The two are not interchangeable. A mortgage valuation is not a Land Department certificate.

If there is a mortgage

A mortgage adds its own registration at 0.25% of the mortgage value, item 10 of the same schedule. On a loan of AED 1,500,000 the Land Department side looks like this.

The exemption in that table is worth a diary entry. The Land Department states that the registrar's fee is waived where the mortgage is registered on the same day, and that a service partner fee of AED 4,000 plus VAT is charged where it happens the next day. Where the seller still has a loan against the property, it has to be discharged before title moves; the Department's document list for that transaction asks for a liability letter from the bank or developer and three manager's cheques. Settlement of the seller's loan is one of them.

Off-plan pays the same 4%, earlier

Buying from a developer does not avoid the fee. It moves it forward. The initial sale is registered through the Land Department's developer portal, Oqood, and the service page states the same division: 2% of the sale value from the seller and 2% from the buyer, plus AED 10 knowledge and AED 10 innovation. Where the developer registers the contract itself through the portal, the page shows AED 1,000. Registration is not a formality. Article 3(1) of Law No. (13) of 2008 makes any disposition of an off-plan unit void unless it is entered in the Interim Property Register.

VAT on the price itself

There is none on a second-hand home. The Federal Tax Authority treats supplies of residential property as generally exempt, and zero-rates the first supply of a residential property within three years of completion. Commercial property is standard rated at 5%. VAT was introduced across the UAE on 1 January 2018 at that rate. The service lines in a transfer still carry it, which is why the trustee fee is quoted plus VAT and why a broker's invoice will be as well.

One practical point to finish on. Book the sale and the mortgage registration into the same trustee appointment. Leaving the mortgage to the following morning costs AED 4,000 plus VAT, and buys nothing.