Starting from February 1st, 2025, property buyers in Dubai opting for a mortgage will face a significant change in the way they pay for their new homes. In a move aimed at adjusting the mortgage landscape, the Central Bank of the UAE has instructed banks to stop financing the four per cent Dubai Land Department (DLD) registration fees and two per cent brokerage fees. This means that buyers will now need to prepare a larger upfront deposit for their property purchases.
What Does This Mean for Buyers?
The Dubai Land Department (DLD) fee is a mandatory registration fee imposed by the Dubai government, which amounts to 4% of the property’s total price. This was previously often financed as part of the mortgage loan, making the process easier for buyers. However, with the new regulations, buyers must pay these fees directly, leading to an increased cash outflow at the time of purchase.
For example, if you were purchasing a property valued at Dhs 1,000,000, you would now need to pay approximately Dhs 60,000 upfront to cover the DLD fee, in addition to other costs such as the brokerage fee. This change could significantly affect buyers’ purchasing power, especially for first-time homebuyers who have limited funds saved for a property purchase.


Changes in Down Payments for Property Buyers
The new regulations also impact the overall down payment structure for property purchases. Typically, property buyers in Dubai need to pay a down payment ranging from 20% to 30% of the property’s value. For properties under Dhs 5,000,000, expats must pay a minimum down payment of 20%, while for properties over Dhs 5,000,000, the required down payment rises to 30%.
However, with the new regulations, buyers will now need to factor in the additional 6% fee (DLD and brokerage) into their upfront costs, effectively raising the total amount they need to pay at the time of purchase. This means a potential additional outlay of up to Dhs 60,000 for a property worth Dhs 1,000,000, on top of the 20% to 30% down payment.
How the Central Bank’s Decision Impacts the Market
The Central Bank’s decision to stop banks from financing the DLD and brokerage fees is likely to impact the real estate market in several ways. While buyers with ample liquidity may be unaffected, first-time buyers or those who are stretched financially will need to reassess their purchasing decisions. For many buyers, the additional fees could make it more difficult to secure a property, especially in a competitive market like Dubai.
Attraction of Off-Plan Properties
Interestingly, the new regulations could make off-plan properties even more attractive to buyers. Developers often offer more flexible payment plans for off-plan properties, including lower down payments and staggered payments, which may alleviate the burden of paying the DLD and brokerage fees upfront. Buyers looking for more manageable financial options may begin to shift towards off-plan properties, which typically come with longer payment terms and sometimes even offer DLD fee waivers or reductions.
In some cases, property developers may cover all or part of the DLD fees as part of a promotional offer or incentive package. These types of incentives could become more common in the market, providing relief to buyers looking to minimize their upfront costs. With Dubai’s ever-evolving real estate market, these strategies can help boost the demand for off-plan developments.
Potential Impact on the Secondary Market
This regulatory shift is expected to have a more immediate impact on the secondary market, where homes are purchased from other homeowners rather than developers. Buyers in the secondary market may now be hesitant to move forward with their purchases due to the higher upfront costs associated with the DLD and brokerage fees. This could lead to a slowdown in transactions in the secondary market in the short term.
A number of analysts, including those at Khaleej Times, have pointed out that the rise in upfront costs may cause some buyers to reconsider their options or seek more favorable terms, such as developer incentives or better payment plans. The secondary market could see a shift in demand, with many buyers gravitating toward newly developed properties or properties with flexible payment options.
Will This Impact Your Property Search?
If you’re looking to buy property in Dubai, it’s important to take these changes into account as you plan your finances. While the UAE property market remains one of the most attractive in the region, this shift in regulations could make the process more expensive and potentially delay purchases for some buyers.
As Dubai continues to experience rapid growth and expansion, these regulatory changes are part of a broader effort to ensure the real estate market remains robust and sustainable. However, with new challenges come new opportunities, especially for those willing to navigate the changing landscape and explore options like off-plan developments or properties with DLD fee waivers.
What Should Buyers Do Next?
If you are considering buying property in Dubai, it’s crucial to reassess your financial situation to account for these new costs. Understanding the full scope of the fees and being aware of alternative options, such as off-plan properties or developer incentives, will be important steps in making an informed decision.
The real estate market in Dubai remains dynamic and competitive, but with a little research and careful planning, buyers can still find ways to make their property dreams a reality without being overwhelmed by the new regulations.
Conclusion
The latest changes to the Dubai property buying process signify a shift in how buyers approach real estate purchases. With additional upfront fees and higher down payments required, the new regulations could cause some disruption in the market, particularly in the secondary market. However, with developers offering flexible payment plans and potential fee waivers, the off-plan property sector could see significant growth. Buyers should stay informed, assess their financial options, and be prepared for these new dynamics in the Dubai property market.
As Dubai’s real estate market continues to evolve, this latest development serves as a reminder of the importance of staying adaptable and informed in a fast-changing environment. The new fees may add some complexity to the home buying process, but with careful planning, prospective buyers can still navigate these changes successfully.
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