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
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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
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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.
