NAVI® Buying Guide
Buying a property is one of the biggest financial decisions you will ever make. It's an exciting time but it's also daunting, and that is why it is reassuring to know that your local NAVI® agent is here to help.
This guide will guide you through the process of finding the property of your dreams with information such as finance and legal terms that may be new to you and the steps involved in buying your Dubai property.
What type of property are you looking for?
What can you afford?
Where to find your dream property?
The Research
Inspecting and securing your property
Making an offer
Acceptance
Buying at Auction
Deposits
When is the property yours?
Property Law
Checklist
What can you afford?
Where to find your dream property?
The Research
Inspecting and securing your property
Making an offer
Acceptance
Buying at Auction
Deposits
When is the property yours?
Property Law
Checklist
Property ownership remains "the great dream", regardless of whether it is for investment or residential purposes.
Some people prefer houses; others might be looking for a unit, townhouse or villa. Choosing the property type is just the first of the decisions. How many bedrooms do you need? How many bathrooms? Do you need a car space or a garage? Would you like a garden or prefer a terrace, or both and what kitchen size do you require? All these requirements needs to be considered so that the property you're looking for meet your needs.
Then you need to think about where you want to live. Your budget might help that decision, but you still need to consider proximity to schools, transport, shops and sporting facilities to ensure the property suits your lifestyle or, if it is an investment, those you expect as tenants.
When searching for a property, it's good to select a property with at least one unique feature. It could be a renovated bathroom, large kitchen, original federation fixtures or beautifully landscaped grounds. Different properties are harder to replace, so historically they have a higher resale value.
Keep an open mind, the best deal might be just be around the corner.
Calculate what repayments you can afford. As a 'rule of thumb', lenders will base the loan on an amount that does not exceed a set percentage of gross (pre-tax) income.
It makes sense to have your finances organized before you start looking. This ensures a smooth buying process so that if you find something you like, you know your limit and have your deposit ready.
You also need to allow for additional costs such as legal, conveyance, stamp duty on the transfer of the property, stamp duty on the mortgage, loan application fees, moving expenses, repair and maintenance, insurance fees and adjustment fees such as water and council rates.
If you are having trouble finding the right lender, your NAVI® agent will be able to refer you to their recommended lender.
There are numerous ways to sell a property, so there are a variety of places to find your property.
You have several options:
- Register with NAVI's® Property Finder
- Register your intent to buy with the NAVI®
- Research local newspapers
- Search real estate websites
- Word of mouth - tell lots of people you are looking to buy. They might know a place for sale that would suit you
- Drive around the suburbs you are interested in and see what is available
- Find out what is available at both ends of your price range
- Attend auctions in your preferred area
- Go to open house events for inspections to find out what is available
- Contact NAVI® for a research profile on the suburb
- Start your search and research early
Inspection times are usually displayed on the marketing material. There are two types: open house or inspection by appointment. In an open house arrangement the public is invited to view a property at set dates and times. Inspection by appointment requires you to contact the sales agent to arrange a time to inspect the property.
When inspecting a property take your wish list and make notes about the property. Check with NAVI® agent if you can take photos of the property to remind you of its features. Once you have inspected several properties, you will have a good idea of features are important to you when choosing your Dubai property.
When you have chosen the property you plan to buy, you may choose to have a pest or building inspection. If the property is being sold at auction, it is essential that these inspections are completed beforehand, and you review the contract of sale.
It is important to note that the laws differ, so consult with your legal representative or NAVI® agent.
The offer and acceptance process is quite formalized, so it is important to understand the process before making an offer.
For a property that is for private treaty sale at a price:
- The agent will submit all offers to the seller
- The property remains on the market until an offer is accepted
- Your offer may include a finite date
- Your offer can be made subject to finance
- Your offer can be made with specific items being omitted or included in the contract e.g. to exclude an above ground pool. These special conditions must be written into the contract.
- You can make an offer containing a deposit, prior to acceptance, to demonstrate your intention to purchase. (The balance of the deposit is paid after acceptance). Should your offer be declined, your deposit will be refunded.
- An offer is not legally binding to both parties until both the buyer and the seller have signed the contract.
Once your offer has been accepted, you are required to pay the deposit as specified in the contract. The seller will then sign the offer document, making a "contract", legally binding you to the sale.
Some States have cooling off periods after contracts have been signed. We strongly recommend you seek legal advice before signing.
Before attending an auction you must register as a bidder. A NAVI® agent will be able to assist you with this process.
Ensure you have conducted all inspections and you are ready to purchase the property.
Auctions are held either on-site or in-rooms. It is essential that your finances are in order, that you have money ready to pay a deposit and, if you intend on borrowing, a certificate from a mortgage lender indicating how much you can borrow.
Prior to auction, your solicitor must check the terms and conditions of the Contract.
If your bid is successful, you are required to pay the deposit and sign the contracts immediately. A personal or bank cheque is usually acceptable - consult with NAVI® agent beforehand. there is generally no cooling-off period, you are now committed to buy.
If your bid is successful, you are required to pay the deposit and sign the contracts immediately. A personal or bank cheque is usually acceptable - consult with NAVI® agent beforehand. there is generally no cooling-off period, you are now committed to buy.
If the bidding does not reach the reserve price, the house is not sold, and is termed "Passed In". The highest bidder at the auction now has the first opportunity to negotiate with the seller.
By law, all deposit money must be banked into an official trust account on the next day they are received or by no later than the next business working day.
Real estate agents do not receive any interest or benefits whatsoever from holding deposits on behalf of the seller.
If purchasing at an auction the holding deposit must be paid on the day or as stated in the contract.
It is important for buyers to recognize that the legal process governing what happens after an offer has been accepted varies, It can be a lengthy process. The property does not become yours when you hand over the holding deposit. It is not until both parties have signed the contract and it becomes unconditional and binding that it is time to celebrate.
NAVI® real estate agents are professionals, and will keep in touch throughout the legal process to advise you of any developments. They will make sure that your purchase is as worry-free as possible.
Property LawLaw no. (7) of 2006 concerning real estate property registration in the Emirate of Dubai (the ‘dubai property law’) was signed by His Highness Sheikh Mohammed bin Rashid al Maktoum, Vice President of UAE and Ruler of Dubai, on 13th march 2006 and came into force on 1st april 2006.
According to the Dubai property law, The Lands Department will be the only authority recognised as being able to register real estate property rights for property in Dubai. Real estate property rights capable of registration include rights of freehold ownership, rights of usufruct, long leases of up to 99 years, rights of musataha and also collateral rights such as easements, restrictions and mortgages over real estate property.
A couple of the above concepts explained:
- The ‘right of usufruct’ is a concept that is found in our federal civil code. it is the right to use and exploit property belonging to another person. it is a ‘right in rem’, in other words, it is a real estate property right. A lease is very similar. it also grants the right to use and take advantage of property belonging to another person, but according to our federal civil code, a tenant does not acquire a property right through a lease, he just acquires a personal right, a right that is enforceable through a contract between himself and the landlord.
- The distinction between the ‘right of usufruct’ and a leasehold right is important in the context of foreigners’ property rights in dubai and will be discussed in further detail hereunder. for uae and gcc nationals, there is really very little practical distinction between the ‘right of usufruct’ and a lease. both give a tenant the same rights, namely the right to use and exploit a property and both can be registered.
- The ‘right of musataha’ is similar to the ‘right of usufruct’. it is the right to use and exploit land belonging to another person along with the right to build on that land. it is the right that we commonly see granted to a tenant through a ‘ground development lease’
Ownership by UAE and GCC Nationals
According to article 4 of the Dubai Property Law, uae and gcc nationals and companies wholly owned by such nationals have the right to own any property interest in the emirate of dubai, and to have such rights registered at the lands department. UAE or GCC Nationals can therefore own property rights in all areas of dubai, and so can their companies. this includes limited liability companies and private joint stock companies in which all the shareholders are UAE or GCC Nationals.
If a company is incorporated in the UAE or in any of the other GCC countries and has foreign shareholders, it will not be considered a UAE or GCC Nationals for the purpose of owning property. the only exception to this is public joint stock companies, companies such as Emaar and Union Properties, that are listed on the Dubai financial market. These companies allow their shares to be bought by foreigners but are still considered to be UAE Nationals and can own property anywhere in Dubai.
Ownership by Nationals other than UAE and GCC Nationals
According to article 4 of the Dubai property law, all nationalities other than UAE or GCC Nationals are granted the right to own a freehold interest, a right of usufruct or a long lease of up to 99 years in ‘designated areas’of Dubai as approved by the ruler.
Regulation no. 3 of 2006 was signed by the ruler and published in the government’s official gazette on july 3rd 2006. this regulation provides at article 3 that “non-locals may own properties as freehold not limited by time, or may have the usufruct right or hire right for a period not exceeding (99) years in the plot or plots shown opposite each of the under-mentioned areas according to the maps issued by the department and attached with this regulation”. the maps were not published with the regulation. article 3 lists 23 designated areas and specifies the applicable plots by their plot numbers.
Foreign companies, as well as individuals, can own a freehold title, long lease or a usufruct right of up to 99 years in the designated areas. it is understood that The Land Department will impose no restrictions on this and it will therefore make no difference whether the company is registered in the Cayman Islands, England, Hong Kong or any other foreign jurisdiction, provided that evidence of lawful existence in the country of incorporation is given.
Status of long leases granted to foreigners outside designated areas
Long leases, sold in areas which are not designated areas, fall outside the ambit of the dubai property law, but nonetheless are not illegal in any way. they do not contravene this law or any federal law. however, such unregistered leases are treated in a different way for some purposes:
- unregistered leases remain personal rights, not rights in rem or property rights;
- unregistered leases are still capable of being inherited;
- disputes arising between a landlord and a tenant of an unregistered long lease will still be adjudicated by the rents committee.
Void arrangements
Article 26 (1) of the Dubai Property Law provides that, “any agreement or disposal made in violation to the provisions of this law or with the intent to circumvent its provisions shall be null and void”. article 26 (2) gives any interested third party, the lands department and the public prosecution the right to request the court to declare such a transaction void. this is directed at so called ‘sham arrangements’. this provision is not saying, for example, that long leases granted to foreigners in areas that are not designated areas are illegal. What this provision is aimed at, are those agreements that purport to give a property ownership right to someone who is not entitled to own it and is not entitled to register it. What would be void, for example, is a sale & purchase agreement for the sale of a freehold right in favour of a foreigner in respect of a property in Deira, as foreigners do not have the right to own freehold property in Deira, that is an obvious example.
A more subtle example might be the ‘nominee ownership’ type arrangements that we sometimes see, where a foreigner who wishes to own property will reach an arrangement with a uae national, wherein the uae national will hold title to the property at the lands department, but for all intents and purpose the foreigner considers himself to be the property owner. The best advice to any foreigner wishing to ‘own’ property in a location which is not approved for foreign ownership, is to take a long lease of the property. Whilst the lease cannot be registered, the foreigner would at least have contractual rights pursuant to the lease, which can be enforced and a lease arrangement is not illegal or invalid.
How does a person prove his ownership?
Regarding proof of ownership of property, in terms of articles 5, 22 and 24 of the dubai property law, if a purchaser considers that he is the owner of a property, the contract or other agreement by which he acquires that ownership is insufficient to prove it. The purchaser needs to take the contract to the lands department and apply for ownership to be registered in his name. If the application is in order, The Land Department will register his ownership in the property register and issue him with a ‘title certificate’. This is the document which proves his ownership.
If title certificates are conclusive evidence of property ownership, what if they have been issued incorrectly or contain incorrect information? Article 7 of the Dubai Property Law allows objections to the data recorded in the property register ‘on the grounds of fraud or forgery’. Further, article 13 authorises the lands department to correct errors in the property register on its own initiative or at the request of an interested party.
In conclusion, it is the property register itself that at any point in time is the conclusive source of information regarding property rights, and the title certificates contain a mirror record of that information as of the date that they are issued. if some time has passed since a title certificate was issued, and a party wishes to rely on the information that it contains, he should go to the lands department and check it against the property register. The information may have changed since the title certificate was issued, perhaps because the lands department has rectified the register pursuant to article 7 or article 13. or maybe subsequent entries have been made in the property register without the co-operation of the title holder, and therefore without amendment to his title certificate, for example, some form of third party interest or a court judgment.
Registration of third party interests
Article 24(2) of the Dubai Property Law provides for third party interests, any conditions, undertakings, encumbrances or any other liabilities related to real estate property rights to be registered in the designated folio (page) of the real estate property unit.
Many of the new private communities that we see in Dubai are managed and maintained through a master community declaration and multi-owned buildings are managed through a constitution of the co-owners association. these two documents contain a number of covenants and easements, such as the promise to pay service charges and so on. The Land Department has confirmed to us that the third party interests contained in these documents will be registered on the individual property titles.
Dealing with property disputes
In the case of a property dispute, article 10 of the Dubai property law provides that the liability for breaching an undertaking to transfer any real property right shall be limited to payment of indemnity, whether or not such undertaking provides for an indemnity. therefore if a seller defaults on his obligations under a sale & purchase agreement and fails to transfer the property to the purchaser, the purchaser can claim damages from the seller for his losses suffered, but cannot force the seller to transfer the property to him. In other words, specific performance is not available as a remedy.
The question arises as to which forum should be utilised for settling disputes arising under this law? article 27 of the law specifically repeals a decree dated 6th november 1977. That 1977 decree prevented any property related disputes from being filed at court unless the case was referred to it by the lands department. Now that decree has been repealed and any aggrieved party can now file a claim direct with the dubai courts or implement any agreed arbitration process.
- Create a Wish List
- How old is the property
- Do you want to renovate
- Size of the property
- Type of property
- How many bedrooms
- Location
- How many car spaces
- Organize Finance
- Conduct Research
- What other properties have sold in the last six months
- Ask your NAVI® agent for a research profile of the suburb
- Attend auctions and open houses to see what is available
- Look at extra costs, council rates, proposed developments
- Inspect the Property
- Do more than one personal inspection
- Conduct a building inspection
- Conduct a pest inspection
- Look for any extra expenses
- Check the outside pipes
- Look for structural movement
- Check the lighting
- Do the taps creak and check the water pressure
- Open and close doors
- Does it need a coat of paint
- Find out about termite protection
- Does it meet your wish list
- If necessary, get a second opinion
- Read the Contract of Sale
- It should contain:
- Rates; council, water, body corporate
- Building details, plans, restrictions, permits
- A copy of the title
- Any money owning on the property (mortgage)
- Ensure your solicitor is given this document
- It should contain:
- Make an Offer
- Be prepared to negotiate
- Don't become emotionally involved
- Be persistent
- Do not exceed your highest price
- At Auction
- Register as a bidder
- Ensure you have pre-approved finance
- Ensure all inspections are completed before the Auction
- Ensure you have reviewed the contract conditions before the Auction
- Set your price and don't get caught up in the excitement
- Ensure you have the holding deposit
- The Legal Process
- Exchange of contracts
- Pay stamp duty
- Cooling off periods
- Transfer of land
- Notice of sale
