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The new Dubai property law has been effectively signed, sealed and delivered and foreign buyers once hesitant to commit to a marketplace where an element of doubt remained about their legal right to own freehold real estate are fuelling a resurgence of interest in property in Dubai.
Furthermore both international and local mortgage lenders are making it easier to borrow to finance a property purchase in the UAE and all in all Dubai is at least as attractive as it ever was for foreign property investors. This means that it’s high time to draw up a list of the dos and don’ts of buying property in Dubai to prevent false assumptions, poor decisions and costly mistakes being made.
First things first, while Dubai has a reputation for having a transparent and trouble free property purchase process that does not mean it is safe to enter into any form of property transaction without the aid and support of a competent and independent lawyer. There are many complexities associated with the purchase of property whether that property is off plan, completed or resale…money should not change hands and contracts should not be signed before the purchaser has sought independent legal advice.
When it comes to the signing of any contract and the acceptance of any terms, conditions and assignments it’s imperative that the purchaser reads, understands and accepts not only the obligations that the builder/developer/reseller/agents are committing to, but all the terms and conditions that the person buying property in Dubai has to agree to as well – such as getting insurances in place before completion, accepting that title deeds can be assigned to someone else nominated if permission to purchase is not granted to the initial buyer etc. If a buyer does not take a little time and make a tiny amount of effort to ensure they know what they are committing to then they mustn’t be surprised if they face problems further down the line.
Not all builders and developers in Dubai have the same reputation and not all build to expected standards. Enough property has been completed in Dubai by the majority of large constructors for those looking for an investment property in Dubai or a second home in the UAE to have examples of completed work to look at. Try and get as good and broad a perspective of a developer before committing to purchase from one of their off plan projects – while this is not an exact science as standards can change, it is as good a basis for making a decision as any!
The terms and conditions that mortgage lenders enforce vary from lender to lender and country to country. Many think that by entering into a mortgage contract they ‘only’ run the risk of losing the home on which the mortgage is based if they default – this is not always the case. Often the larger the financial institution the less scrupulous and customer caring they are too! Don’t get your fingers burned – read, understand and seriously think about any financial contract you sign – it could be that if you default and your home is repossessed that you still end up with a bill for charges, lost interest, the difference between the debt and what they sell your home for.
There is no such thing as a sympathetic bank, a kind lender or a generous financial institution – the sooner you come to KNOW that the better off you will be in life! Dubai mortgage lenders are no exception to this rule by the way – look after yourself and your own best interests, do not trust a bank, estate agent or property developer to do so! Think about what could happen to your dream home in Dubai when you die – sorry – grim topic but an essential one to consider when you bear in mind that the laws of succession differ from country to country and are affected by many issues such as whether you still have finance outstanding on the real estate etc. Make a will but also consider the option of owning property through a company structure or if appropriate to your circumstances, using an offshore trust for the ownership of any property assets purchased outside your country of domicile.
And finally – there is no such thing as a no-risk investment – and while some believe putting money into property as an asset class is the closest thing you can get to risk free investing, that is most certainly not the case. Dubai is still an immature and emerging market that has not been tried and tested, that has never had to suffer economic, social or political change on a large and significant scale and where no investor, market analyst or expert can predict future growth patterns. While property prices and rental yields are continuing to rise at the moment, they may not rise forever.
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