UAE Property Buyers to Pay Higher Upfront Costs as Banks Stop Financing DLD and Brokerage Fees

Starting February 1, 2025, UAE banks will no longer finance the 4% Dubai Land Department (DLD) fee and the 2% brokerage commission for property buyers seeking mortgages. This policy change will increase upfront costs for property buyers, aligning the UAE with international market standards.

Key Highlights

• Policy Shift:
  Previously, banks included the DLD fee and brokerage fee as part of the mortgage. This will no longer be allowed, requiring buyers to cover these costs upfront.

• Market Alignment:
  Rohit Bachani, Co-founder of Merlin Real Estate, noted that in mature markets like the UK and the USA, banks typically only finance fixed assets and not associated fees.

• Impact on Secondary Market:
  Farooq Syed, CEO of Springfield Properties, emphasized that the change will make secondary market properties less attractive, as buyers will need to pay an additional 6% upfront, significantly increasing their initial costs.

Off-Plan Properties Gain Appeal

• Developer Payment Plans:
  Off-plan properties with long-term payment plans will likely become more attractive to buyers as they require lower upfront payments.

• Market Stabilization:
  Syed highlighted that the move is intended to prevent market overheating, introducing slight downward pressure on property prices to maintain stability.

• Example Impact:
  For a property priced at AED 1 million, buyers will now need an additional AED 60,000 upfront to cover these fees.

Broader Market Perspective

While the decision may initially create a challenge for buyers, industry experts believe the market will adapt to the new standard without long-term disruption. The booming real estate sector is expected to maintain its growth trajectory, driven by robust demand and investor confidence.