UAE Property Buyers Face Higher Initial Costs as Banks End Financing for DLD and Broker Fees

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Starting February 1, prospective property buyers in the UAE will need to dig deeper into their pockets as the Central Bank of the UAE implements a new directive that eliminates bank financing for Dubai Land Department (DLD) registration fees and real estate broker commissions. This change is set to make home ownership more challenging by increasing the upfront costs for buyers, industry experts say.

Until now, banks allowed homebuyers to include the 4% DLD registration fee and 2% broker commission as part of their mortgage financing. This approach significantly eased the financial burden on buyers by spreading these costs over the term of the loan. However, under the new regulations, banks can no longer finance these additional expenses, forcing buyers to cover them out of pocket.

What This Means for Homebuyers

The move aims to promote responsible lending and reduce financial risks for both banks and consumers. However, for buyers, this means a higher financial commitment at the time of purchase.

In addition to the standard 20-30% down payment required for a mortgage, buyers will now need liquid funds to cover:

  • 4% DLD registration fee
  • 2% broker commission
  • Fixed DLD trustee fee of AED 4,200
  • Mortgage registration fee of 0.25% of the loan amount
  • Title deed fee of AED 500

For example, on a property worth AED 2 million, the DLD registration fee alone would amount to AED 80,000, while the broker’s commission would add AED 40,000, making the upfront cost AED 120,000 just for these two fees. Combined with other charges and the down payment, buyers may need to have significant liquid reserves to proceed with their purchase.

Impact on the Real Estate Market

Real estate professionals believe the new regulation may cool down the market temporarily, particularly for first-time buyers and those purchasing on a tight budget. The upfront costs could deter some buyers, leading to slower transaction volumes in the short term. However, experts note that the directive supports a more sustainable market by encouraging financial discipline among buyers.

In the long term, the move could lead to greater transparency and a stronger foundation for the real estate sector. By requiring buyers to bear these costs upfront, the regulation reduces over-leveraging and potential financial strain in the future.

How Buyers Can Prepare

Prospective buyers should reassess their budgets and plan ahead to accommodate these additional upfront costs. Real estate experts recommend setting aside a buffer amount for unexpected fees and consulting with financial advisors to better navigate the new market dynamics.

While the new regulation may seem daunting at first, it reflects the UAE’s commitment to creating a more balanced and sustainable property market. Buyers are advised to carefully evaluate their financial readiness and explore opportunities that align with their affordability.

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