You’ve found the right business, the asking price fits your budget, and you’re ready to make an offer. But before you do, there’s something many first-time buyers in Dubai don’t expect: the asking price is not the total amount you’ll pay on transfer day.
There are a few other amounts that sit on top of the price. None of them are hidden fees. They are standard in almost every business sale. But if you don’t plan for them from the start, they can come as a shock right at the end of the deal.
Here’s what to budget for.
1. The landlord’s security deposit
When the seller first signed the lease, they paid the landlord a refundable security deposit. That money still belongs to the seller.
When the business transfers to you, you take over the lease or sign a new tenancy contract, and the landlord will need a deposit from you. In practice, this works in one of two ways:
- The landlord refunds the seller and you pay a new deposit to the landlord.
- The deposit stays with the landlord and moves to your name, and you pay the seller the same amount directly.
Either way, the deposit is paid by you on top of the sale price. The good news: it’s still refundable to you when you eventually leave or sell.
2. Rent the seller already paid in advance
Many Dubai landlords take rent in one or two cheques a year. If the seller has paid rent for months after the transfer date, you’ll be the one using those months, so you pay the seller back for them.
For example, if the seller paid AED 120,000 for the full year in January and the business transfers on 1 July, you would pay the seller AED 60,000 for the remaining six months.
3. Broker commission
If you’re buying through a broker, there is usually a buyer’s commission, a percentage of the sale price. Check the rate and when it’s payable before you sign anything, so it’s part of your budget from day one.
4. Licence transfer and government fees
Transferring the trade licence and updating approvals comes with government fees. The amount depends on the type of business and the authority involved, for example DED, or DHA for clinics and salons with medical services. Ask for an estimate early.
5. Anything that needs fixing or renewing
Check the dates on the trade licence, the lease, insurance and any permits. If something is due for renewal soon after you take over, that cost will fall on you.
A simple example
- Agreed sale price: AED 400,000
- Landlord security deposit: AED 10,000
- Unused advance rent: AED 30,000
- Paid to the seller on transfer: AED 440,000
Then add the broker commission and government fees on top. So a business with a price tag of AED 400,000 can easily need a budget closer to AED 480,000 or more.
What the seller covers
It’s not all on the buyer. The seller is responsible for all liabilities up to the day of transfer, including rent, staff salaries, utility bills and supplier payments. From the transfer date, those become yours.
How to protect yourself
- Ask for the full cost early. Before you make an offer, ask what the deposit and prepaid rent are.
- See the tenancy contract. Check the rent, how it was paid, the deposit amount and when the lease ends.
- Confirm landlord approval. The landlord has to agree to the transfer, and some will change the rent or the deposit.
- Get everything in writing. The price, the deposit, the advance rent and the transfer date should all be in the agreement.
The bottom line
When you’re buying a business in Dubai, look past the asking price. Budget for the security deposit, advance rent, commission and fees from the start, and you’ll walk into transfer day with no surprises.
The BFS team can help you work out the full cost of any business on our list before you commit.
FAQ
Is the asking price the total cost of buying a business in Dubai?
No. On top of the sale price, buyers usually pay the landlord security deposit, any rent the seller paid in advance, broker commission and government transfer fees.
Do I have to pay the seller’s security deposit?
Yes. The deposit belongs to the seller. Either the landlord refunds the seller and you pay a new deposit, or the deposit moves to your name and you pay the seller the same amount.
What happens to rent the seller already paid?
You pay the seller back for the part of the rent that covers the period after the transfer date.
Who pays salaries and bills before the transfer?
The seller pays all liabilities, including rent, salaries and bills, up to the day of transfer. The buyer takes over from that date.
Does the landlord need to approve the sale?
Yes. The landlord must agree to the transfer or issue a new tenancy contract, and may change the rent or deposit.
Call to Action
Thinking of buying a business in Dubai? Talk to BFS and get the full cost before you make an offer.
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