Thinking of buying? Ben Crompton, managing partner at Crompton Partners Estate Agents, tells us the top 10 things to avoid when house hunting in the capital
Rising rents in some areas in Abu Dhabi and a flat sales market have meant that more and more people are looking to buy in the capital, either as an investment or just to control their own rent. Buying property anywhere in the world is a big investment, and each country has its own unique aspects. Here are ten things to consider in Abu Dhabi:
Don’t look in the wrong places
Expatriates can only buy in Investment Areas, which are Reem Island, Al Reef, Raha Beach, Saadiyat Island, Yas Island (but not West Yas), Hydra Village, Al Ghadeer and Nurai Island. Expats can’t buy in Raha Gardens, Golf Gardens, Khalifa City A or anywhere apart from those Investment Areas.
Don’t be fooled by freeholds
The only foreign nationals who can obtain freehold title to their property in Investment Areas are GCC nationals. Some developers are advertising freehold rights but this can only mean freehold rights for GCC citizens. Expats get 99-year leases when they buy, but this shouldn’t worry you, as it is similar to commonwealth regimes for owning apartments all over the world, including the UK.
Don’t ignore your budget
We see heartbreak every week when buyers find their dream home only to then ring their bank and find out they can’t afford it. Save time and anguish by talking to your broker and bank early about your finance options.
Don’t forget funding
Finance can be a huge hassle depending on your circumstances. If you are shopping around for the best mortgage terms, make sure you do it early and don’t leave it until you have found your dream home, as the delay means you might lose it.
Don’t skimp on the strategy
A lot of people buying property for investment don’t have a plan. A good broker should be able to assist you with important questions on what and where to buy, leverage (both on capital gains and income), tenancy law, rental yields and how to maximise your investment.
Don’t skim over the lease
There was a widely reported case recently in Al Reef where buyers bought units rented below market price without being shown the lease. They later found out the lease was for three years. When you buy, you take over the lease so you absolutely must see it first. If you are looking to move into the property, remember the tenant needs two months’ notice before the end of their current lease for you to move them out; you can’t move them out mid-lease.
Don’t forget the extras
Make sure you get from all parties – your bank, the developer, the agent – details of the fees you will be paying. All told these could be close to five percent of the purchase price, so you need to know.
Don’t pick a broker from an internet ad
You have heard the stories: there are some shady brokers out there but they are oh so easy to avoid. Get a recommendation for a broker from a friend, an internet review, perhaps someone who writes interesting and thought provoking articles in newspapers. Sit with them, have coffee, make sure they understand what it is that you want, then send them all of the internet adverts of places you love. Let them do the work sifting out the useless brokers and false adverts; the fees you pay will be the same.
Don’t use a poorly drafted agreement
The MoU is the agreement you sign when you put down a deposit on a property. You hand over a deposit cheque (usually about 10 percent) and the seller agrees to hold it until you can arrange financing and transfer. MoUs are usually drafted by the buyer’s broker. A good MoU needs to state exactly under what circumstances you will, and will not, forfeit your deposit. A poor MoU could see you lose it for a technical breach or minor delay.
Don’t be duped
Your MoU should set out what comes with the property you are buying. It should have a schedule stating if the kitchen goods are included, that the seller will leave the garden, the parking spaces and everything else you are acquiring. Don’t take possession and find an empty property when you were expecting furniture.
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