The real estate shake-up

The Dubai Land Department (DLD) is taking over the existing rents committee in a bid to fast-track the resolution of pending cases, while property transaction fees are now twice the previous rates as a way to discourage speculative investment.

The new policies came as a surprise, but according to the government they are part of efforts to protect the real estate market from another crash.

Resolution No 30 for 2013 issued by the Dubai Executive Council stipulates that the property registration fee, which is now 4 per cent of the property’s value, should be shared equally between the seller and the buyer and this applies to completed and off-plan property.

Sultan Butti Bin Mejren, the DLD Director General, stated that the decree came at the right time as real estate prices in Dubai are rising fast.

“In addition to Dh990 million worth of mortgages, that’s all in one day, so we don’t see a negative impact happening on transactions.”

The decree was implemented with the intention to curb speculation. “It will only affect quick transactions [flipping], which are actually unhealthy for the market,” said Bin Mejren.

Nonetheless, as completed properties are included in the decree, industry experts reckon it will raise property prices and slow down sales, at least temporarily.

“It makes sense to apply the percentage increase to off-plan property as speculation doesn’t happen with ready property. However, it will chill the market as completed properties will become more and more expensive, slowing down sales,” said Ludmila Yamalova, Founder and Managing Partner at HPL Yamalova and Plewka JLT.

While things may slow down in sales, rent dispute decisions are expected to speed up as the Dubai Municipality’s rents committee is being moved to the DLD. “The main concerns have been the slow pace of the procedures,” said Bin Mejren.

The centre is expected to open in December, employing new methods with flexible mechanisms.

Bin Mejren said the special judiciary committee is a more cost-effective way to resolve disputes. “The good news is that if you file the dispute with this committee it will be free of charge, saving the investor a lot of money. At Dubai Courts, you have to pay Dh30,000 for every unit case filed,” he said.