Starting next week, property buyers who opt for a mortgage will need to pay the Dubai Land Department (DLD) fee and the brokerage fee upfront.
Real estate industry experts noted that banks had previously covered these costs—DLD’s four per cent fee and brokers’ two per cent commission—within the total mortgage.
As of February 1, 2025, UAE banks will no longer finance the DLD fee and brokerage commission for property buyers obtaining mortgages, according to Rohit Bachani, co-founder of Merlin Real Estate.
Bachani explained that in many established markets, such as the UK and USA, banks typically do not fund such fees, only providing financing for the mortgage on the fixed asset.
“This change is a move towards aligning with international standards. While there may be some initial challenges, the market will eventually adapt, and it’s not expected to have a long-term impact on mortgage borrowing. In fact, with the market booming, it’s likely to keep growing,” he said.
Farooq Syed, CEO of Springfield Properties, confirmed that banks would no longer finance the DLD and brokerage fees starting next week.
He also noted that this shift would make off-plan properties more attractive since buyers will need more funds to purchase secondary market properties, particularly if using a mortgage.
“Developers offering long payment plans will likely become more appealing, as buyers will need less money upfront. The requirement for an additional six per cent can be quite significant. More buyers will opt for off-plan or primary properties due to lower down payments and fewer barriers to entry,” Syed added.
Syed anticipates that this change may apply some downward pressure on prices, which is needed to stabilize the market and maintain its health.
“This is a move by the government to prevent the market from overheating, and it’s an important step to keep prices under control,” Syed said.
Bachani also pointed out that while this decision may initially affect the market by requiring buyers to cover these fees upfront, it will result in a higher initial payment.
“For example, on a Dh1 million deal, this means an additional Dh60,000 down payment,” he added.
