Starting February 1, 2025, property buyers in Dubai taking out mortgages will need to pay Dubai Land Department (DLD) fees and brokerage commissions upfront, as UAE banks will no longer finance these costs, industry executives confirmed.
Previously, banks included DLD’s four per cent fee and brokers’ two per cent commission in mortgage financing. However, the new regulation aligns the UAE with global property markets like the UK and USA, where banks typically only fund fixed assets.
“This change is a step towards aligning with international standards,” said Rohit Bachani, co-founder of Merlin Real Estate. “While there might be an initial adjustment period, the market will adapt, and the booming real estate sector will continue its growth trajectory.”
The shift is expected to have an immediate impact on property buyers, particularly those seeking secondary market homes. Farooq Syed, CEO of Springfield Properties, explained that buyers will now need additional funds upfront, potentially driving more interest toward off-plan properties with long-term payment plans.
“Buyers will need six per cent extra to purchase secondary market properties, which is significant,” Syed said. “This makes off-plan properties more appealing due to lower initial payments and fewer barriers to entry.”
For example, on a property valued at AED 1 million, buyers will now need an additional AED 60,000 for upfront fees, making affordability a greater challenge for some.
Impact on the Market
The decision may create a temporary dip in secondary market demand, potentially putting slight downward pressure on prices. However, industry leaders view the move as a stabilizing measure.
“This step by the government aims to prevent the market from overheating and to maintain healthy growth,” Syed noted.
Developers offering long-term payment plans are likely to benefit from the change, as their offerings become more attractive to buyers who prefer smaller upfront costs.
While the new policy may initially slow mortgage-based transactions, Bachani predicts it will encourage more prudent financial planning among buyers and align Dubai’s real estate practices with global norms.
“This adjustment will foster a more mature and sustainable market, ensuring long-term stability,” he said.
Despite the immediate challenges for buyers, Dubai’s robust real estate market is expected to adapt and continue attracting investors drawn by its dynamic growth and competitive offerings.
