The real cost of buying off-plan in Dubai

Work out the full cost before you fall for a unit, not after. These are the lines I add to every plan, with the figures limited to what the official pages state. Anything that changes with the project, the bank or the year is marked as such.

1. Registration fee: 4% of the price

The Dubai Land Department charges 4% of the purchase price to register the sale. For an off-plan purchase this is paid at registration in the interim register (the Oqood step), usually with the booking deposit. On an AED 1,000,000 unit that is AED 40,000, and it is not part of the payment plan percentages.

2. The fees around registration

Alongside the 4% there are fixed administrative fees for the registration itself and, on a secondary sale, a registration trustee fee. These are fixed sums, not percentages, and they change from time to time; the current table is on the Dubai Land Department's fees page. Ask the developer for the exact figures in writing before booking. For most buyers they are small next to the 4%, but they should still appear in your total.

3. Mortgage registration: 0.25% of the loan

If you finance the purchase, the Dubai Land Department charges a mortgage registration fee of 0.25% of the loan amount, plus a fixed administrative fee. The bank's own arrangement and valuation fees come on top; those are the bank's figures, not the Land Department's, so get them from the offer letter.

4. VAT: on fees, and on first supply

VAT in the UAE is 5%. For residential property, the Federal Tax Authority treats the first supply within three years of completion as zero-rated and later supplies as exempt, so a residential off-plan purchase does not normally carry VAT on the price. VAT does apply to most service fees around the purchase, such as agency and trustee fees. Commercial property is different: its supply is standard-rated. Read the FTA's real estate guidance with your consultant if the unit is not residential.

5. Service charges, from handover

Once the building is complete you pay annual service charges to the owners' association for the common areas, set per square foot and approved through the Dubai Land Department's Mollak system. The rate differs by building and is a real part of the holding cost: ask for the approved rate for comparable completed buildings by the same developer, and build it into your yield calculation before you buy, not after.

6. Furnishing, utilities and the gap

Connection deposits for electricity and water, furnishing if you let the unit, and the months between handover and the first tenant are not fees, but they are cash. A plan that leaves nothing for them is not a plan.

The habit

Put every line above into one sheet next to the payment plan, with the date each one falls due. The brochure price is the start of the calculation. The sheet is the cost.