Hidden Costs in Dubai Property Purchase

Hidden Costs in Dubai Property Purchase: What Every Buyer Should Know

Buying property in Dubai involves more than the listed price. Hidden costs can affect cash flow, ROI, and investment strategy. This guide covers registration fees, service charges, maintenance, mortgage costs, insurance, and legal fees.

1. Dubai Land Department (DLD) Fees

• 4% of property price + Admin fees
• Mandatory for all property transfers
• Non-negotiable, included in overall purchase calculation

2. Agency Commission

• Typically, 2% of purchase price
• Some off-plan properties include the fee in developer promotions

3. Service Charges & Maintenance Fees

• Community maintenance fees vary by area
• Premium developments may charge AED 30–50/sq ft per year
• Impacts net rental yield

4. Mortgage & Bank Fees

• Bank evaluation and processing fees: AED 2,500–5,000
• Early settlement penalties for some mortgages
• Important for cash flow planning

5. Property Insurance

• Home insurance recommended to protect against damages
• Costs vary by property type and location

6. Utilities & Ejari Registration

• Ejari registration: Mandatory for tenants (AED 220–600)
• Utilities setup: DEWA connection fees and deposits

Example – Total Cost Calculation

Impact on ROI: Annual rent AED 70,000 → Net yield = (70,000 / 1,077,000) × 100 = 6.5%

Tips to Avoid Hidden Costs

• Use licensed agents and mortgage advisors
• Factor all fees into ROI calculation
• Compare properties including service charges and community fees
• Verify developer charges for off-plan properties

FAQs – Hidden Costs

Q1: Are DLD fees negotiable?
A: No, 4% + AED 580 is standard.

Q2: Can off-plan properties have hidden fees?
A: Yes, some developers may charge community or handover fees; always confirm.

Q3: How do service charges vary?
A: Based on amenities, property type, and community size; can affect net rental yield.