UAE: Property buyers to pay higher upfront as banks stop financing DLD, brokerage fees
Starting next week buyers who choose a mortgage will be responsible for paying both the Dubai Land Department (DLD) fee and brokerage fee as part of their upfront costs.
According to real estate industry executives banks used to cover both the four percent DLD fee and the two percent brokerage fee within the total mortgage amount.
Rohit Bachani, co-founder of Merlin Real Estate announced that starting in February 2025 UAE banks will stop financing both the four percent Dubai Land Department fee as well as the two percent brokerage fee for property buyers who apply for mortgages.
Bachani noted that banks in mature markets such as the UK and USA generally do not finance these fees because they only mortgage fixed assets.
This adjustment brings UAE banking practices closer to global financial standards. The market will accept the new standard after a short adjustment period which will not have lasting effects on the mortgage borrowing process. Given the market's current expansion he projected that growth will persist.
The CEO of Springfield Properties, Farooq Syed announced that banks will stop permitting mortgage DLD and brokerage fees starting next week.
How will it impact off-plan properties
Syed stated that this new development will boost the attractiveness of off-plan properties since buyers must save more funds to purchase secondary market properties when they finance through mortgages.
Developers offering extended payment plans will become more appealing since buyers will be required to spend less money at the beginning. A property buyer must secure an additional six percentage points which represents a substantial amount. He remarked that off-plan properties and primary units will draw more buyers because they require lower down payments and fewer entry obstacles.
Springfield Properties’ CEO predicts that this development will generate slight downward pricing pressure which helps stabilize and maintain a healthy market.
The government implemented this measure to prevent the property market from overheating. Syed emphasized that price control is an essential step.
Rohit Bachani pointed out that buyers will need to pay more initially because they will have to cover upfront costs due to this decision. A one Dh1 million transaction now requires buyers to make an additional Dh60,000 down payment according to his statement.
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