Dubai’s Land Department (LD) is taking further steps to stabilize the market, taking the rent committee under its wings and doubling the property registration fees. The IMF recently alerted of the risk of a property bubble emerging in Dubai, and this increase in registration fees may just be what the doctor ordered.
LD takes steps to stabilize sales and rental markets
“We studied this increase in the fees actually before the warning was issued by the IMF, and although we believe our decision is in line with the IMF’s concerns and increasing the fees to 4% will limit any indications of a bubble happening, limiting unhealthy flipping, we don’t agree that there is a bubble forming. On the contrary, we believe the market has reached maturity, is stable, with actual projects not speculation and the values today are at the right level for a global city like Dubai,” says Sultan Butti bin Mejren, the director general of the Land Department of Dubai (LD).
The increased fee from 2% to 4% to register a property on the land department’s interim or completed real estate registry applies to all properties, except industrial and warehousing, from October. As per law buyers and sellers are expected to continue sharing the fees on a 50-50 basis. The LD has recorded AED162 billion covering 44,000 transactions since the first nine months of this year. In comparison the same period last year saw transactions of Dh90 billion and Dh145 billion for thewhole year. Clearly the market is on the go. “It is good they’re trying to curb flipping, we would suggest a property tax and this is a good example of that. We’ll see how well the 4% will work but the experience in Singapore and Hong Kong is that transaction tax is s god way to reduce the amount of dissuading buyers selling on too quickly,” comments Craig Plumb, head of research at Jones Lang LaSalle – MENA.
Equally rents are on the way up. The LD hopes by moving the existing rents committee under Dubai Municipality into its judiciary remit, it will stabilize rent levels and decrease the number of disputes. The rentdispute settlement centre promises to speed up procedures and benchmark them to, if needed, introduce new laws, revise application fees and even the rent index.
“The LD has some very experienced people, so hopefully this new Centre will be a good thing for the market, but it remains to be seen how the transition goes and whether the new Centre looks at things the same way as the Rents Committee did,” comments Michael Lunjevich, partner at Hadef & Partners. The centre will open 60 days from when the already issued decree to form it is published in the Official Gazette. The next opportunity is October. “We expect to open by December,” confirms Sultan.
source: propertyonline / Property Times magazine