The United Arab Emirates is one of the jewels of the East. However, with the high 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.
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 must 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 three years of completion. Additionally, bare lands are not liable to pay VATs. These rules were implemented 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 (both commercial and residential units are included).
- Registration of Transfer of Title Fees: Registering the title transfer from the previous owner to the new one attracts a fee of 2% of the total purchase price. The purchaser often bears this fee because it registers his title and is 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 to take on a mortgage, 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 and also to determine the volume of mortgage loans to issue. Most Banks charge around 3 000 AED and 5% VAT 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 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 will likely charge 2% or less for their services. You need not factor in these expenses if you buy 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, 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. For example, if you buy with cash, you may only pay estate agent fees, transfer fees, and VAT (in commercial properties). Still, as a mortgagee, you will incur additional mortgage charges running into thousands of AED.
Conclusively, you should reserve about 5% – 20% of the total property price when purchasing 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 purchasing a property costing as high as hundreds of AED or even millions, as the case may be.
