(MENAFN- Khaleej Times)
Property buyers opting for a mortgage will have to shell out the Dubai Land Department (DLD) fee and brokerage fee as part of their upfront fee from next week.
Real estate industry executives said that banks were previously financing DLD's four per cent fee and brokers' two per cent fee as part of the total mortgage.
"Starting February 1, 2025, UAE banks will no longer finance the four per cent Dubai Land Department (DLD) fees and the two per cent brokerage commission for property buyers seeking mortgages,” said Rohit Bachani, co-founder of Merlin Real Estate.
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Bachani added that in most mature markets like the UK and USA, banks typically don't fund these fees and only mortgage fixed assets.
Rohit Bachani
“This change is a step towards aligning with international standards. Although there might be an initial hiccup, the market will eventually accept the new standard, and there will be no long-term effect on the mortgage borrowing process. In fact, considering the booming market, it is expected to continue growing,” he said.
Farooq Syed, CEO of Springfield Properties, said banks will not allow mortgage DLD and brokerage fees from next week.
How will it impact off-plan properties
Syed added that this latest move will make off-plan more attractive now because buyers need more money in order to buy secondary market property, especially if they're taking a mortgage.
“Developers coming up with long payment plans will be more attractive options because buyers will need less money upfront. A property buyer will need six per cent extra, which is a lot. More people will opt for off-plan and primary properties as they will have lower down payments and less barriers to entry,” he added.
Farooq Syed
Springfield Properties' CEO expects this will cause a little bit of downward pressure on prices which is required to stabilise and keep the market good.
“This is a move from the government so that the market does not overheat. It is an important step to keep the prices under control,” said Syed.
Rohit Bachani added that this decision might initially impact the market as buyers will need to cover these costs upfront, leading to a higher initial payment.
“For instance, on a one Dh1 million deal, this means an additional Dh60,000 down payment,” he added.
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