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

Effective February 1, 2025, UAE property buyers seeking mortgages will need to pay the 4% Dubai Land Department (DLD) fees and 2% brokerage commission upfront. Banks will no longer include these costs as part of mortgage financing, marking a significant shift in the real estate landscape.

A Shift Toward International Standards

This policy change aligns the UAE’s real estate market with mature markets like the UK and USA, where banks typically fund only fixed assets. According to Rohit Bachani, co-founder of Merlin Real Estate, “This change is a step toward global standards. While there may be short-term challenges, the market will adapt, and the UAE’s booming real estate sector will continue to thrive.”

The immediate impact will be felt by buyers in the secondary market, who will need to allocate an additional 6% of the property value upfront. For instance, a property priced at AED 1 million will require an extra AED 60,000 in initial payments.

Impact on Off-Plan Properties

This shift is expected to make off-plan properties more appealing to buyers. Developers offering long-term payment plans will likely attract more interest, as these require less money upfront compared to secondary market transactions.

Farooq Syed, CEO of Springfield Properties, explains, “Buyers looking at the secondary market will now face higher financial barriers, which could shift demand toward off-plan properties. This change may also exert slight downward pressure on property prices, helping to stabilize the market.”

Stabilizing the Real Estate Sector

Experts view this move as a strategic step to prevent the real estate market from overheating. While it increases upfront costs for buyers, it also promotes long-term stability by aligning payment structures with global norms.

Bachani notes, “Although this decision might initially slow down activity in the secondary market, it is unlikely to affect the UAE’s overall real estate growth. The sector remains robust, supported by strong demand and ongoing development projects.”

What This Means for Buyers

For potential property buyers, the change means recalibrating budgets to account for higher upfront costs. It also highlights the growing appeal of primary market options, particularly those with flexible payment plans.

While the short-term impact may create challenges for buyers and sellers alike, the policy is expected to contribute to a more balanced and sustainable real estate market in the UAE.

For more such news and updates on the UAE property market, stay connected to N7 Real Estate.

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