In a move that could reshape Dubai’s property market, the Central Bank of the UAE (CBUAE) has issued a directive requiring banks to stop financing Dubai Land Department (DLD) fees and agency commissions. Effective February 1, 2025, property buyers will now need to pay these fees upfront, significantly increasing the financial commitment needed to purchase property in Dubai.
Currently, banks often include the 4% DLD registration fee and 2% agency fee in mortgage financing. With the new rule, these costs, amounting to 6% of the property value, will no longer be covered by loans, adding a substantial out-of-pocket expense for buyers.
What the New Rule Means for Buyers
The directive directly impacts how much cash property buyers need to have at hand when making a purchase:
- Properties below AED 5 million: Buyers will now need at least 26% of the property value upfront (20% down payment + 6% fees).
- Properties above AED 5 million: Buyers must prepare 36% upfront (30% down payment + 6% fees).
For a property worth AED 2 million, this means buyers will need AED 120,000 for DLD and agency fees on top of the down payment. The change is expected to impact affordability and could lead to slower decision-making among buyers.
What Buyers Should Do
With these new requirements, property buyers in Dubai should prepare by:
- Calculating Total Upfront Costs: Include the additional 6% fees in your financial planning to avoid surprises.
- Exploring Developer Incentives: Some developers may cover DLD fees or offer flexible payment plans to attract buyers under the new rules.
- Seeking Expert Guidance: Work with experienced real estate consultants or financial advisors to find the best deals and navigate the market efficiently.
- Considering Savings Plans: Buyers may need to focus on building higher savings before entering the property market.
While the Central Bank’s directive is set to take effect in February 2025, no official announcements have yet been made by UAE banks about their implementation plans. Developers and real estate professionals are closely monitoring the situation and may introduce offers or strategies to ease the impact on buyers.
For prospective buyers, staying informed is critical. Regularly check updates from trusted sources and consult financial institutions to understand how this change will affect your purchasing plans.
The new Central Bank regulation brings a significant shift for Dubai property buyers, requiring them to shoulder additional costs upfront. While it promotes financial discipline, it also places an added burden on buyers, particularly first-time investors and those looking to purchase mid-market properties.
As the market adjusts, buyers must adapt their strategies and remain informed about developments.