Property developers and buyers who fail to meet the mid-2008 deadline set by the Dubai Land Department to register their properties may have to pay three times more for registration.
The fee for registering a property in Dubai is currently two per cent of the price of the property as mentioned in the ownership contract between the developer and the buyer – both parties equally share the expense. According to new regulations, for those who do not meet the deadline, the fee will be calculated based not on the contract price of the property but on the prevailing market value. In many areas, this value has exceeded the original price by more than 300 per cent.
On The Palm – one of the most expensive developments in Dubai – prices have appreciated more than three times in the past five years. A villa bought in 2002 for Dh4.6 million is now worth between Dh15m to Dh30m, depending on facilities such as landscaping and interiors done by the original owner. A registration fee based on the contract price of that period would be equivalent to Dh 46,000, while at
the present market value, it would soar to as much as Dh 300,000.
In 2003, a one-bedroom apartment at the Greens community could have been bought for Dh 352,000. The current price ranges between Dh1.25m and Dh1.34m. Registration fees for the property will increase by at least 73 per cent if calculated on market price.
A comparison between the prices of properties in all major locations in Dubai shows an increase of at least 30 per cent, which will be reflected in registration fees. The price per square foot for a villa in the Meadows was Dh820 in 2006 and it increased to Dh 1,100 per square foot in 2007. In the same period, the price in the Meadows rose from Dh710 to approximately Dh1,050, in the Greens from Dh900 to Dh1,220, and at the International City from Dh500
Mohammad Sultan Thani, Director of Development and Marketing Administration at the Dubai Land Department, said: “The two per cent fee will generally be based on the market value, but we have decided to offer developers and investors a grace period to settle dues.”
Thani added that any delay on behalf of the developer or the buyer to register would entail the increased cost of registration, being shared equally by both parties. Until the formation of the Real Estate Regulatory Authority and registering of all properties, the responsibility varied from sharing the fees to the buyer pledging to pay the entire amount.
Faris Qavi, Corporate Communication Manager at Damac, said most contracts for the projects recently delivered stated buyers should pay the whole two per cent. “However, any law issued by the Land Department will definitely overwrite our contracts. We haven’t been officially informed,” added Qavi.
Late registration will hit owners hard