Hidden Property Costs in UAE Buyers Often Miss 2025

REAL ESTATE1 month ago

The real estate market in the United Arab Emirates (UAE) is booming, attracting both local and international buyers. With luxurious developments, tax-friendly rules, and strong returns, buying property in cities like Dubai or Abu Dhabi is seen as a smart investment. However, many first-time buyers are unaware of the hidden costs involved in the process.

If you’re thinking of buying a home, apartment, or investment property in the UAE, understanding all the taxes and fees is important. These extra costs can quickly add up and affect your budget and long-term plans. This guide explains the key property-related expenses every buyer should know before signing a deal.

1. No Property Tax – But There’s More to It

One of the main attractions of buying property in the UAE is that there is no annual property tax. Unlike many countries that charge a yearly tax on owned real estate, the UAE offers a tax-free advantage.

However, this doesn’t mean there are no costs at all. Buyers need to consider one-time charges, service fees, and transaction costs. While there’s no traditional “property tax,” these other fees can have a big financial impact if not planned for.

2. Dubai Land Department (DLD) Fee

In Dubai, one of the biggest fees is the Dubai Land Department (DLD) fee. This is a 4% charge based on the property’s purchase price.

For example, if you buy a property worth AED 2 million, your DLD fee will be AED 80,000. This fee is usually split between the buyer and the seller, but in most cases, the buyer ends up paying the full amount. It is paid during the property registration process and must be factored into your budget early on.

3. Real Estate Agent Commission

Most buyers use real estate agents to find the right property. In the UAE, the standard commission is 2% of the property’s price, plus 5% VAT.

So, for a property priced at AED 2 million, expect to pay around AED 42,000 as agent commission. This amount is paid by the buyer, and it’s non-refundable.

4. Property Registration Fee

In addition to the DLD fee, there is also a property registration fee. This depends on the property type and can range between AED 2,000 and AED 5,000.

This fee goes to the Land Department to officially register the property in the buyer’s name. It’s a mandatory payment, and without it, the title deed cannot be issued.

5. Mortgage Registration Fee

If you’re taking out a mortgage to finance your property, you’ll also need to pay a mortgage registration fee. This is typically 0.25% of the total loan amount, plus an AED 290 administrative fee.

For instance, if your loan is AED 1.5 million, the registration cost would be AED 3,750 plus admin charges. It’s important to note that banks may also charge loan arrangement or processing fees that are separate.

6. Service Charges and Maintenance Fees

Once you own a property, you will need to pay yearly service charges. These cover building maintenance, security, cleaning, and facilities like swimming pools or gyms.

Charges vary depending on the property’s location, size, and type. In Dubai, for example, these costs range between AED 10 to AED 30 per square foot per year. So, a 1,000-square-foot apartment could cost you AED 10,000 to AED 30,000 annually.

Before purchasing, always ask for a breakdown of the service charges, as they can significantly affect your returns if you plan to rent out the property.

7. NOC (No Objection Certificate) Fee

When buying a property in a building or community, you might be required to get a No Objection Certificate (NOC) from the developer. This confirms there are no outstanding dues on the property.

NOC fees typically range between AED 500 and AED 5,000, depending on the developer. It’s a one-time payment, usually paid by the buyer at the time of transfer.

8. VAT on Commercial Properties

While residential property purchases are exempt from VAT, commercial property purchases in the UAE are subject to 5% VAT.

This tax is applied to the sale price and paid at the time of purchase. Commercial properties include office spaces, retail shops, and warehouses. If you’re investing in this segment, it’s important to include VAT in your total cost calculation.

9. Utility Connection Charges

Once you take ownership, you’ll need to connect electricity, water, and cooling services. Each emirate has its own utility provider. For example, in Dubai, DEWA (Dubai Electricity and Water Authority) charges around AED 2,000 to AED 4,000 for a new connection depending on the property type.

Cooling services, such as district cooling provided by companies like Empower, also charge a refundable deposit and monthly usage fees.

10. Admin Fees and Other Small Charges

There are several smaller charges that can arise during the purchase process, such as:

Title deed issuance fee: AED 540
Trustee office fee: AED 4,000 (for properties above AED 500,000)
Valuation fees (if getting a mortgage): AED 2,500 to AED 3,500

These may seem minor individually, but together they can add a few thousand dirhams to your total cost.

Tips to Save on Property Costs in UAE

Negotiate Fees: Some developers offer to cover DLD fees or service charges for the first year as part of promotions.
Work with Reputed Agents: They can help you avoid overpaying or being misinformed.
Get Legal Advice: A local property lawyer can help you review the contracts and fee structures clearly.

Final Thoughts

Buying property in the UAE can be rewarding, especially for long-term investors. But hidden costs and one-time fees can catch you off guard if you’re not prepared.

While there is no annual property tax, other costs like the DLD fee, agent commission, service charges, and utility setup fees make up for it. Understanding all these charges upfront will help you budget correctly and make smart property decisions.

Before making a purchase, take time to calculate your total ownership costs—not just the property price. This will ensure a smooth experience and avoid unexpected financial surprises.