Starting February 1, 2025, property buyers in the UAE who opt for mortgages will face higher upfront costs. This change comes as banks will no longer finance the Dubai Land Department (DLD) fee, which is 4% of the property value, and the 2% brokerage commission. Previously, these fees were included in the total mortgage amount, but under the new regulations, buyers will need to pay these costs out of pocket.
Alignment with Global Standards
This shift brings the UAE in line with mature real estate markets such as the UK and the USA, where banks typically do not finance such fees and only provide mortgages for fixed assets. While this change may cause some initial challenges, it is a step toward aligning the UAE’s real estate market with international norms. Industry experts believe that the market will adapt to this new standard over time, and the long-term impact on mortgage borrowing is expected to be minimal. Given the current growth trajectory of the UAE real estate market, this adjustment is unlikely to hinder its continued expansion.
Impact on Off-Plan and Primary Properties
The new policy is expected to make off-plan properties more attractive to buyers. Since purchasing secondary market properties will now require a higher upfront payment—especially for those taking out a mortgage—buyers may find off-plan and primary properties more appealing due to their lower down payment requirements and easier entry barriers. Developers offering extended payment plans are likely to benefit, as these options reduce the immediate financial burden on buyers. For example, on a property valued at Dh1 million, buyers will now need to pay an additional Dh60,000 upfront, which could influence their purchasing decisions.
Market Stabilization and Price Control
This policy change is seen as a strategic move by the government to prevent the real estate market from overheating. By increasing the upfront costs for buyers, the decision aims to stabilize property prices and maintain a balanced market. While the initial impact may include a slight downward pressure on prices, this adjustment is necessary to ensure long-term market health and sustainability.
Published On: 26 Jan 2025
Source: https://www.khaleejtimes.com/business/realty/uae-property-buyers-to-pay-higher-upfront-as-banks-to-stop-financing-dld-brokerage-fees
