Below are the answers to some commonly asked questions to enlighten those seeking to invest in the real estate market:

What is a premium?
The amount that you pay above the original price charged by the developer. This can be a percentage of the original price, or a fixed amount. The premium plus the original price is the net selling price to the owner, and does not include transfer fees or commission.

What is a transfer fee & Commission?
This fee is paid to the developer in transferring ownership from seller to buyer. It varies between 1 per cent and 7 per cent of the selling price or original price and so can be a substantial amount, usually paid by the buyer.Normally 2 per cent of the selling price and again the buyer pays, although on occasion the owner may pay 1 per cent of this.

Why do people want to know the original price?
This is the price which the original owner paid to the developer. From this you can work out the percentage premium which is often used as a guide to see if a property is good value or not. In addition, when financing, all lenders need to know the original price, as most will not lend on any of the premium.

What is Initial Deposit?
This applies when buying direct from a developer and is paid to the developer in order to secure the property in your name. It is usually 10 per cent or 15 per cent of the selling price.

What is Holding Deposit?
This secures the property for a period up to one month usually, allowing the buyer time to organise funds through either financing or transferring of cash funds. This deposit is non-refundable and can range from Dh20,000 to Dh1,000,000 depending on the property price.

What is a Memorandum Of Understanding?
This is a contract made between the buyer and seller to secure the sale. A holding deposit is paid to the agent or seller to make the contract more binding.

Are there different types of Freehold?
If we assume that the term freehold is being used in Dubai in its international sense, then the answer is yes. Freehold usually indicates that the owner of this kind of title enjoys the most superior form of private property ownership. A purchaser can have freehold title in land, in a free standing villa and also for an apartment, the latter kind of ownership is usually called commonhold and not freehold.

Can one lawfully sell freehold properties to foreigners in Dubai?
There is no provision in the law that forbids immovable property (except in an auction) from being sold to foreigners in the UAE.

In case of a husband's death, is the property distributed according to Sharia?
This is a very grey area and opinions differ widely, and is an estate planning concern. As such, I suggest that purchasers approach their lawyers or accountants to take their estate planning issues.

Are there any restrictions imposed on freehold apartments?
Yes, there are some restrictions being imposed in most sale and purchase agreements issued by developers in Dubai; these conditions are to make sure that owners of properties pay their Service Charges in time, especially if they intend to sell their property.

Does the buyer have the authority to sell the property or apartment? If so, when?
If a buyer has not yet become the registered owner of a property, then he can cede (i.e. transfer) his rights in his agreement of purchase under certain conditions to another purchaser but subject at all times to the approval of the Seller. Purchasers, once they are registered owners, are able to sell their property freely subject to all Service Charges and/or penalties having been paid.

How often will the Service Charges increase or will they fluctuate?
It is expected that the Service Charges levied will be reviewed yearly and only if necessary, increased annually. Unless all the owners of the building/dwellings have to pay for an emergency expense, it is not expected that there will be dramatic fluctuations or increases in the Service Charges during the year.

What type of residency visa is received upon the purchase of freehold in Dubai?
The residency visa is arranged by the developer and is usually a 3-year renewable visa. It does not normally include a work visa. It is purely to allow the owner and his immediate family to reside here without needing to renew transit visas.

Why are Guarantees needed?
If properties are not handed over for whatever reason to the purchaser after a particular time period, the buyer usually has the option to get his money back or receive some form of compensation. Most developers give a 10-year guarantee from structural defects.