A third of UAE people would consider investing in real estate abroad .Buy House in Dubai for holidays or in anticipation of retirement, invest to rent, etc. Whatever your motivations, take the time to educate yourself because real estate practices and legislation diverge outside of Dubai. Update on the main pitfalls.

Buyer protection: unequal practices 

When it comes to buying real estate, there are no common provisions between countries, not even in the European Union. In fact, each one applies its own administrative and legal formalities, which can be very different from one country to another, but also less protective than in  Dubai. 

The signing of a preliminary contract, defining obligations for the buyer and the seller before the final deed of sale is not always compulsory. In Sharjah, for example,  Buy House in Dubai can be done in three or four weeks. In Spain, Belgium and England, when some form of pre-contract exists, there is not always a reflection period or right of withdrawal. So once the document is signed, you can’t change your mind.

Pay attention to the conformity of the construction 

The mandatory guarantees in the construction sales contract can also vary significantly from one country to another. In Spain and Italy, as in  Dubai, manufacturers have a ten-year insurance obligation. The latter guarantees for 10 years the repair of damage that occurs after acceptance of the work. The purchaser is notably protected against hidden defects (the flooding nature of a house or defective foundations, for example). 

On the other hand, some countries are known for problems of conformity or even legality of constructions. In Portugal and Greece, for example, the building permit is not always respected. To avoid a dispute, consider requesting a certificate of conformity specifying the perimeter of the property.

Outside of Europe, the difficulties may even relate to property law. In Morocco and Thailand in particular, it is complicated to obtain proof of ownership.

Learn about administrative and legal practices

Before starting the search for the ideal property, find out about the formalities of the country in question:

  • The I  Buy House in Dubai site , offered by Les Notaires d’Europe, provides you with information sheets explaining how to buy real estate in countries with the notarial system, i.e. 22 countries within the European Union. . Whether or not there is a preliminary contract, acquisition formalities, type of financing and guarantees and documents required for the sales contract … a lot of useful information will be provided to you. 
  • Also consult the main real estate acquisition rules for European countries outside the European Union and the United Kingdom, notified by the European Affairs Commission of the International Union of Notaries (UINL).

Surround yourself with qualified professionals

  • To secure your real estate  Buy House in Dubai abroad, do not hesitate to seek advice from a UAE notary who can redirect you to a colleague specialized or installed in the country concerned. 
  • Good to know: depending on the country, it is not necessarily the notary who registers the sale.
  • In Spain, the deed of sale can be drawn up by a lawyer. The notary will simply make you sign it and register the sale. 
  • In England, it is the lawyer who performs both missions. 
  • In Sweden, it is sometimes the real estate agent who carries out the transaction. 
  • In the Czech Republic, the transaction is registered with the land registry administration.

Beware of acquisition costs

The selling price is often presented as one of the main attractions of a property purchase abroad. However, the total price to pay turns out to be more or less distant from the displayed price. 

In  Dubai, the acquisition costs, including taxes and the remuneration of the notary, amount to 2 to 3% of the sale price in new buildings and 7 to 8% in old ones. In Spain, it takes an average of 13% of purchase costs in new and old. Belgium is at the top of the basket with fees of around 15% to 25%. 

Outside the European Union, the exchange rate with the local currency can significantly vary the overall acquisition cost. In addition to these costs, there are the fees of the lawyer and other intermediaries to secure the operation and sometimes the costs of translating official documents. 

Financing: think about requests for guarantees and contributions 

You have two options for financing a real estate purchase abroad.

 

  • If you borrow in  Dubai, the bank will require a guarantee located in  Dubai: in priority a mortgage on a property, for a loan representing 70% to 80% of the estimated value of the real estate companies Dubai
  • A loan abroad is also possible. However, be careful: credit rules vary greatly from one country to another and you often have to bring together a much larger contribution than in  Dubai. In Spain, for example, it amounts to 40% of the value of the property. The exchange rate effect is also to be taken into account for the financing of a property outside the European Union. Finally, you must open an account in the country concerned and declare it to the tax authorities in  Dubai.

 

Taxation: beware of the risk of double taxation and disillusionment 

In principle, in real estate, it is the law of the place where the property is located that applies. This rule applies to registration fees, commonly known as notary fees. If you buy abroad, you will therefore generally pay the applicable taxes in the country concerned. 

To note. The acquisition of shares in a UAE company (SCI) which owns real estate companies Dubai generates a registration fee in  Dubai which can be combined with local tax.

For other taxes, owning property abroad will not exempt you from paying tax in  Dubai.

 

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