What fees you must pay to buy a property in Abu Dhabi
Buying a property is a huge milestone. It’s a dream and an investment in one package. However, buying a property is not a walk in the park, especially if you have hidden fees to consider. These costs range from registration to infrastructure and may impact the purchase price. If you plan to invest in the capital city, this guide will help you decode service fees for buying property in Abu Dhabi.
Understanding Fees for Buying a Property in Abu Dhabi
- Sale and Purchase Fee
- Musataha and Usufruct Fees
- White Land Tax
- Infrastructure Fee
- Disposal of Granted Land
- Mortgage Fee
- Agent Fee
- Land Area Fee
- Other Fee
Understanding the costs associated with buying a property in Abu Dhabi is as important as knowing the location, outlay of the apartment, and amenities available nearby.
Let’s look at the total cost to buy a property in Abu Dhabi:
Sale and Purchase Fee
A significant cost when purchasing property in Abu Dhabi is the registration fee. Determined by the Executive Committee under Resolution No. 49, the sale and purchase registration fee typically ranges from 1% to 4% of the property value. It is generally shared equally by the buyer and seller. While the current rate is around 2%, it’s essential to note that the exact percentage can fluctuate.
Musataha and Usufruct Fees
Registration fees for Musataha and usufruct rights in Abu Dhabi are fixed at 4% of the rights’ value under Resolution No. 49. Unlike other fees, there is no cap on this amount. To calculate the fee, 4% of the annual Musataha or usufruct consideration (based on current market value) is multiplied by the agreement’s term length. This total fee must be paid upfront to the relevant municipality at the time of registration.
White Land Tax
Owners of undeveloped commercial and investment land in Abu Dhabi will soon face a new annual tax. This “white land tax” will range from 1% to 4% of the land’s value and applies only to properties with access to essential infrastructure.
While not yet implemented, this tax will encourage land development and utilisation.
Infrastructure Fee
Another cost to buy a property in Abu Dhabi is the infrastructure fee. Purchasing commercial or investment land in Abu Dhabi involves a one-time infrastructure fee paid to the local government. This charge, calculated based on the land’s square footage, helps fund the development of essential services like roads and utilities.
The fee is AED 100 per square meter in Abu Dhabi, AED 90 in Al Ain, and AED 80 in Al Dhafra. As property buyers carefully consider their financial plans, including this fee in their budget is important.
Disposal of Granted Land
Resolution No. 49 has lifted the previous ban on selling or transferring ownership of granted commercial and investment land in Abu Dhabi. However, if the land is vacant at the time of sale, gift or auction, a 15% fee must be paid to the local municipality.
Importantly, mortgaging the land is not considered a disposal. Lenders considering a mortgage on vacant granted land should be aware of this potential fee, as it could impact the borrower or a future buyer if the property is eventually sold through foreclosure.
Mortgage Fees
Securing a mortgage to purchase property in Abu Dhabi involves a tiny 0.1% registration fee mandated by UAE mortgage law. This additional cost is part of the overall property-buying process.
Agent Fee
The real estate agent explained the details of the home purchase contract and requested the buyer’s signature to finalise the agreement. It’s important to note that real estate agents typically charge a commission of 2% of the property’s value plus an additional 5% value-added tax (VAT).
Fees for Increasing the Land Area
- Residential and agricultural land: 5% of the market value of the area to be increased
- Commercial and investment land: 75% of the market value of the area to be increased
Other Fees for Buying Property in Abu Dhabi
Here are some more costs to buy a property in Abu Dhabi:
- Mortgage Transfer: AED 200
- Replacement of Mortgage: AED 1,000
- Commercial Land Consolidation: AED 10,000
- Investment Land Consolidation: AED 5,000
- Residential and Agricultural Land Consolidation: AED 3,000
- Site Plan: AED 200
- Will (For deceased person’s property): AED 3,000
- Abu Dhabi Municipality Fee: Approximately 2% of the purchase price.
- Mortgage Registration Fee: 0.1% of the purchase price.
- Real Estate Agency Fee: 2% of the property value, plus 5% VAT.
- Bank Mortgage Arrangement Fee: Usually up to 1% of the loan amount, plus 5% VAT.
- Title Deed Cost: AED 1,000.
- Bank Property Valuation Fee: Ranges from AED 2,500 to AED 3,000, plus 5% VAT.
FAQs About Service Fees for Buying Property in Abu Dhabi
Who pays the service fee when buying a property in Abu Dhabi?
Mostly, buyers pay service fees when purchasing a property in Abu Dhabi. However, buyers and sellers can negotiate and divide the fee into two parts.
Can we buy usufruct properties in Abu Dhabi?
Yes, you can buy usufruct properties in UAE, including the ones in Abu Dhabi. However, these properties have a validity of 99 years and come with certain conditions.
Can I transfer property ownership in Abu Dhabi?
Property ownership transfer in Abu Dhabi is common and can be done quickly if you know the costs and mandatory documents. Our guide outlines the full process.
Can I negotiate the service fee?
Most fees are fixed for specific types of property in Abu Dhabi. For instance, the sales and purchase agreement has a fixed cost in the UAE.
And this concludes our guide on service fees for buying property in Abu Dhabi. The list of fees may seem a lot to take in, but it’s better to be prepared than to get into a tight spot during the buying process or post-ownership.
If you have decided to buy a property in the capital city, look at Bayut’s Abu Dhabi Sales Market Report for H1 2024, which portrays how the real estate market fared in the first six months.
You can even consider the top luxury, mid-tier or affordable areas to buy an apartment or a house of your choice!
In addition to this, top off-plan projects in Abu Dhabi are spoiling investors and potential homeowners for choice with modern and stunning property options. Tiger Properties, Aldar and Modon are the leading developers in the game.
For more information on buying or renting properties in Abu Dhabi, subscribe to MyBayut!
