Buyer beware! It's a warning most of us are familiar with. In the context of purchasing a property overseas, in Dubai or some other city or town in the United Arab Emirates (UAE), for example, it's a warning well worth heeding.
Taking out a home loan in the UAE from HSBC, or from any one of the country's other multinational or domestic banks, is a serious undertaking. Expatriates, in particular, need to think long and hard about the commitment, and to seek professional advice throughout the process. After all, you're not applying for a personal loan or opening a simple current account.
The British Embassy in the UAE strongly advises expatriates to do their homework before making a property purchase.
The embassy says, Ã¢â¬ÅBuying property is often the largest transaction in monetary terms that most people ever undertake. It can be a huge financial commitment, regardless of where you are in the world. Dubai is no different in that respect. Its relative immaturity as a legal system makes it even more imperative that you exercise care and attention, taking the precautions that you would in any other jurisdiction.Ã¢â¬Â
Expatriates should research as much as possible the area the property is in, advises the embassy. They should visit the Dubai Land Department website which has lots of information and details of possible fees which may be charged.
The embassy says, Ã¢â¬ÅDubai has no income tax but does charge fees on certain types of transactions including property purchases.Ã¢â¬Â
Expatriates need to be clear about why they are buying property, whether simply as somewhere to live or as an investment. Knowing the answer can help speed up the search for a suitable property.
The embassy continues, Ã¢â¬ÅThere are numerous international real estate brokers who can assist you with your purchase. Find one that is registered with the Dubai Land Department. Don't be afraid to ask up front what their costs will be.Ã¢â¬Â And it also urges expatriates to obtain accurate and experienced legal advice in advance of buying any property. Such a sensible precaution can highlight potential risks. To that end, the embassy provides useful links to pages containing lists of lawyers and translators.
Mortgages are much in the news in the UAE at the moment with the country's central bank announcing it wants bank mortgage lending to expatriates capped at 50% for a first property, and then 40% on any subsequent property purchase.
The reasoning behind the move appears to be prevention of the levels of real estate speculation seen in Dubai during 2007 and 2008, and which led to a property bubble.
But the country's banks believe the cap, which means expatriates having to pay a deposit of half the value of the property, is much too high and are calling for the lending ceiling to be raised to 60%. Otherwise, they fear, the recovery seen in the property market during 2012 might be placed in jeopardy.
If you are in need of experienced legal advice or a translator, check out the list of links provided by the UK embassy here.