Hidden Costs When Buying Property in the UAE

If you’re an expat living in Dubai, you’ve probably faced the same question many of us have: Should I keep renting, or is it finally time to buy?

For a long time, buying a property in Dubai felt out of reach for expats, and renting was the only feasible option. But that’s no longer the case. With freehold ownership and more affordable properties, buying a home in Dubai isn’t just a dream; it’s a smart financial decision. 

So, whether you’re planning to settle down, relocate, or invest, buying property in the UAE is an exciting step. However, while the listed price might seem clear-cut, several hidden costs can surprise you. Knowing these costs in advance can make your home-buying journey smoother, more transparent, and less stressful. 

Read on to find out the hidden costs of buying property in the UAE and what to expect.

1. The Dubai Land Department (DLD) Fees

Every property transaction in Dubai goes through the Dubai Land Department (DLD), and their fees are unavoidable. The typical DLD costs include:

• 4% of the purchase price as a registration fee
• AED 250 for the Title Deed
• AED 580 in admin fees
• 0.25% of the loan amount (if a mortgage is used) plus AED 290

Note:  The DLD fees must be paid within 60 days of signing the sale agreement, or the sale will expire. However, some developers include the DLD fee in promotional packages, especially for off-plan property, so do check before signing a buy.

2. Real Estate Agent Commission 

Working with a real estate agent is common in the UAE, especially for buyers who are new to the market. Agents can simplify the process, help with paperwork, and negotiate on your behalf. But their services come at a cost. The Agent Fees include:

• 2% of the property’s purchase price
• + 5% VAT on the commission amount

For example, the agent's fee for a property priced at AED 1 million would be AED 20,000 + VAT.

Tip: Always ensure who pays the commission, as some agents charge both the buyer and seller. Don't hesitate to negotiate; agents will reduce their fees in slow markets.

3. Mortgage Fees  

If you're financing your purchase with a mortgage, you can expect a few extra charges:

• Arrangement Fee: 1% of the loan amount + 5% VAT
• Valuation Fee: AED 2,500–3,500 (plus VAT)
• Mortgage Registration Fee: 0.25% of the loan amount + AED 290

These are prepaid and non-refundable charges, even if the deal does not go through. A few banks also permit you to add these charges to your mortgage to ease the first payment. Also, if the seller has an existing mortgage, it must be paid to get the No Objection Certificate (NOC) for transferring the title.

4. Service Charges & Maintenance Fees

Once the property is officially yours, there's an ongoing cost every owner needs to plan for in the annual service charges. These fees cover building maintenance, security, landscaping, and the upkeep of common areas like pools, elevators, and lobbies.

In Dubai, service charges are calculated per square foot and vary by location and property type. They are regulated by the RERA Service Charge and Maintenance Index, and payments are made to the Dubai Land Department.

For example, a 1,000 sq. ft. flat could have service fees of AED 10,000 – 30,000 per year. Larger units or villas will have lower per-square-foot charges, but the owners cover maintenance expenses.

5. Utility Deposits & Connection Fees

As a new homeowner, you must account for the next step: connecting utilities through DEWA (Dubai Electricity and Water Authority).

• DEWA (Dubai Electricity & Water) deposit: AED 2,000 (apartments) or AED 4,000 (villas)
• Housing fee (5% of annual rental value) applies even for owner-occupied properties.s
• Gas and internet setup fees

These initial costs can add up quickly.

6. Moving & Furnishing Costs

Moving into your new home comes with its expenses, depending on the size of your property and how far you’re relocating.  Here are the Estimated Moving Costs:

• Small apartment: AED 1,500 – 3,000
• Large apartment or villa: AED 4,000 – 8,000

If the new home is unfurnished, you also need to factor in the cost of furnishing. Depending on the size of the property, this will vary from AED 20,000 to over AED 100,000.

7. Home Insurance (Optional, but Worth Considering)

Although home insurance in the UAE is not compulsory under the law, most banks will require it as a prerequisite to approve a mortgage. And even if you are paying cash, it's a smart layer of protection. Following are the estimated Insurance Charges:

• Basic home insurance: AED 1,000 – 3,000/year
• Comprehensive home & contents insurance: AED 2,500 – 5,000/year

If you’re renting out your property, landlord insurance can help cover tenant-related damages.

8. Life Insurance (Mandatory with Mortgage)

Life insurance is compulsory if you take out a mortgage in the UAE. Most banks charge 0.4% to 0.8% per year on the reduced loan balance, usually billed monthly. Some may ask for the full year's premium upfront. Further, the banks often offer in-house policies, but choosing an external provider can be cheaper, especially if you're young and healthy. 

Life insurance is compulsory if you take a mortgage loan in the UAE. Most banks add 0.4% to 0.8% annually on the reduced loan balance, usually payable monthly. Some charge the annual premium in full upfront. The banks have in-house policies, but getting it from an outside supplier may be more economical, especially if you're young and not sick.

So, compare your options before signing, as the external policies can save you money.

Estimated Breakdown of Hidden Costs

Now that you know the hidden costs of buying property in the UAE, here is an estimated breakdown of secret costs for a property worth AED 1.5 million:

That’s nearly 9–10% extra on top of the property’s selling price.

Conclusion 

Hidden costs are part of every property purchase, especially in a competitive real estate market like the UAE. However, knowing the fees from the beginning allows you to budget better and not receive any unpleasant surprises when closing the deal. A wise investment is not just about the right location or price; it's being financially prepared for everything that comes with it. So, plan smart, budget better, and confidently buy your dream home.