Expert Eye - Understanding the true cost of buying a house

Dhiren GuptaDhiren Gupta

Stable property prices and year-long dropped interest rates in the Dubai real estate market have enticed homeowners to shop around and pick a home that fits their budget.

And we apprehend that the steady growth will sustain this year and the market will endure an alluring investment decision for investors and end-users who anticipate long-term capital growth.

However, keep in mind that along with the property price, home ownership comes with extra costs.

Here are five essential factors every potential buyer should carefully consider before deciding to climb the property ladder:

1) Closing costs

Along with the purchase price, additional costs need to be calculated. These include transfer, title deed, real estate broker, NOC, market valuation, pre-approval, bank processing and mortgage application fees, and life and property insurance.

2) Utility charges

Once the property transfer process is finalised, the owner has to establish his Dubai Electricity and Water Authority (DEWA) connection in place. The fixed charge to get the connection varies from Dh1,000 to Dh2,000 depending on the type of property (apartment or villa). As a whole, it depends on the size and utility consumption.

3) Service charge and maintenance fee

Real estate maintenance fee should be added into the total cost of home ownership as this is an annual cost paid by every investor and landlord Understanding the true cost of buying a house Carefully consider some essentials before of freehold properties climbing the property ladderacross the emirates to the owners association (OA) or developers. The maintenance fees are charged as per the real estate category (apartment, villa, office or shop) and the location of the property. Property service charge is defined by a per-square-foot formula.

So, when buying a property, conduct proper due diligence and enquire about the applicable service fees with your broker or developer.

4) House shifting, furniture and appliances

When buying a property for your own use, you need to keep extra money in your pocket for shifting and for other home makeover stuff. Shifting cost varies from vendor to vendor. Here, you can negotiate as per your budget. But if you were in a small apartment and now moving to a bigger house, you probably need to consider additional furniture and extra appliances to make your life more comfortable. This may not be immediate expenses apart from shifting, but this is something you need to consider when planning for a bigger or a family house. Emergency fund

Whether you are moving to a new or an old property, always reserve some fund to cover unforeseen circumstances which may require immediate attention. Drains get clogged, ceilings leak, pipes burst, refrigerators stop cooling and washing machines break down. These are just some of the unexpected situations which may cause thousands of dirhams in property damage if ignored.

The root line

Buying a property is an exciting time, but the potential homeowner should be conscious that there ought to be some standby fund as he might need to pay much more than just the property buying price.

Understanding the true cost of property ownership allows buyers to precisely decide if they are financially organised to undertake what is likely to be the most expensive purchase deal of their life.

Hence, keep yourself well prepared and make an informed decision by smartly and wisely calculating the complete cost of home proprietorship.


Source: Dhiren Gupta,  Special to Freehold

Managing Director, 4C Mortgage Consultancy


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