New property transactions fees structure to kick in from October 6; buyer, seller to pay 2% each
The new registration fees covers all property transactions in the emirate of Dubai except for the industrial sector, including warehouses.
The new fee structure will start to be implemented from October 6, 2013.
DLD Director-General Sultan Butti bin Mejren said: “The move is aimed to stop quick transactions (flipping) which are unhealthy for the market and result in sudden price increases. “The decision has come at the right time… the market has matured and investor confidence is growing. The move in not likely to have any negative impact.”
Mejren pointed out that 110 countries in the world had higher property registration rates than Dubai, citing United Kingdom, which charges 4-10 per cent, France 8 per cent and India 7.3 per cent.
As per the decree, the fee will be split 2 per cent each between the buyer and seller. Although the previous law did specify one per cent each for the seller and buyer, in practice the buyer always paid the two per cent. Mortgage registration fees remain same at 0.25 per cent of the mortgage value to encourage end-users.
Asked if the department would consider delaying the implementation, Mejren asserted in no way the decision would be rolled out.
“The mechanism to issue laws in Dubai has evolved. We took almost three months to finalise the decision and I was been reviewed by the financial and legal department and even by investors. The law has been issued and is being executed. There is no way it will be revised.” Although the government hopes to slow down the price rise and discourage flippers, some experts believe this will not discourage genuine buyers because the price increases are based on real demand in Dubai property and not flipping.
Transaction reach Dh162b
In the last week (Sept 15 to 19), DLD registered property transactions worth Dh1.2 billion apart from Dh990 million in mortgages, the highest recorded in the past 50 years, Mejren revealed, adding that in the first nine months of 2013, Dubai has registered transactions worth Dh162 billion compared to Dh90 billion same period last year. In 2012, total transaction reached Dh145 billion.
Revealing that the Dubai market was on an upswing, Knight Frank, UK-based global consultancy, said on Wednesday growing investor confidence has already led to price increases with villas witnessing price appreciation of 11.4 per cent and apartments rising 15.1 per cent since beginning of 2013.
The Wealth Report 2013, released earlier this year, has revealed Dubai as one of the most favoured ‘safe haven’ locations for global investors.
“There is a definite focus on quality by buyers, which is now recognised clearly by developers. With the resurgence of Dubai real estate has come a more acute awareness of trust, reputation and the ability of developers to deliver a high quality product,” the consultancy said.
Standard Chartered said earlier that Dubai’s property market is not heading towards another crash with market is more sustainable and influenced by an improved economy rather than speculation.