Which is Better: Buying or Renting Real Estate in the UAE?
The United Arab Emirates embraces a wide and diverse range of residential properties varying in sizes, spaces, and locations, to meet the desires and needs of everyone. Some are developed within residential complexes and others in residential buildings, some enjoying waterfront views and others overlooking green spaces, in addition to their proximity or inclusion of service facilities such as swimming pools and gyms. The financial aspect varies depending on the size of the property, its location, proximity or distance from public transportation, tourist attractions, and many other factors. Now, let's explore what is the best option for buying or renting property in the United Arab Emirates?
Things to Consider Before Buying or Renting Property in the United Arab Emirates
There are several points to consider before making a decision to buy or rent property in the United Arab Emirates, which we will discuss in detail.
Duration of Stay in the UAE
The decision to buy or rent property in the United Arab Emirates is linked to the planned duration of stay in the country. If it's 5 years or more, then buying property is something to consider, whereas if the duration is two years or less, renting property in the UAE is optimal in this case. Once you decide to move to another country, you only need to notify the landlord 3 months before the end of the lease.
Financial Situation
If you have a steady income and can afford to pay the down payment, which is 20% of the property value, along with monthly installments for the mortgage, and as long as you have made the United Arab Emirates your second home for more than 5 years, then renting property and paying an annual rent amounting to or equivalent to the monthly installments for the mortgage becomes in this case a decision to consider buying the property.
Real Estate Market Situation
Before purchasing real estate, it's essential to understand the current real estate market and its situation. The real estate market in the United Arab Emirates is currently favorable for buyers and investors, given the high return on investment despite the decrease in purchase prices for all residential property sizes. This makes it an opportune time to make this important decision.
Conducting Research and Engaging a Real Estate Agent
It's necessary to seize the opportunity of declining property prices in the UAE currently. However, this necessitates due diligence, extensive research, understanding the real estate market, and forecasting expected trends and developments over the next two years.
Some buyers may need to engage a experienced real estate agent in the area or the property they intend to purchase. It's also important to find a real estate agent they feel comfortable with and trust.
Down Payment
In the process of buying or renting a property in the United Arab Emirates, the down payment is a portion of the total amount for purchasing property in the UAE, which is 20%. It's worth mentioning that the down payment amount should be without personal loans.
Using a Bank for Mortgage
When using a bank, it should be taken into consideration that the mortgage is 85% of the property value minus the down payment amount. It's important to pay attention to the monthly income to determine whether the borrower can afford the monthly installments before making a decision to buy or rent property in the UAE.
Other Fees When Purchasing Property
There are several fees and costs incurred by property buyers ranging between 6% to 7% of the property price. Unlike the down payment amount, these expenses can be taken out as personal loans. The initial costs include:
- Real estate agent fees: 2% of the property value plus 5% value-added tax
- Land Department fees: 4% of the property purchase value plus AED 580 administrative fees
- Property registration fees
- AED 2,000 for properties less than AED 500,000 plus 5% value-added tax
- AED 4,000 for properties more than AED 500,000 plus 5% value-added tax
- Property evaluation fees ranging from AED 2,500 to AED 3,000 plus 5% value-added tax
Annual Maintenance Fees
We conclude the list of whether it's better to buy or rent property in the United Arab Emirates with the maintenance fees paid annually by the property owner to the Land Department, which are predetermined based on the service fee index of the Real Estate Regulatory Authority, giving specific fees per square foot of the property and varying between different residential complexes in Dubai. These fees also vary between the emirates of the country.
Thus, we have discussed everything related to choosing to buy or rent property in the United Arab Emirates. If you are a fan of the UAE and aspire to obtain long-term residency, learn about the investor visa in Dubai. If you have spent many years in the country and wish to stay after reaching a certain age, you can explore the procedures for obtaining retirement visa in Dubai.
