Dubai will waive 4% penalty on registration

Move could convince reluctant property owners to finally sign up

The Dubai Land Department will not be imposing penalties of 4 per cent of the value on developers and buyers who have failed to register their units to date. Only the 4 per cent Land Department fee will be applicable on these transactions.

This follows a directive late on Wednesday from Shaikh Hamdan Bin Mohammad Bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Dubai Executive Council. The penalty waiver will apply to all registrations that will now be done within the next 60 days.

The move essentially applies to relatively older projects and properties where developers/buyers have dragged their feet on getting them registered even after the handover. The Land Department had been issuing warnings that all such properties need to go through the registration process. The government agency had first set a dateline of end 2016 for this, and which was later extended to end of the first quarter of 2017. Based on market feedback, many developers and property owners had availed of the extension offered at the time.

But some continued to hold back, and they now have the encouragement to come under the registration net. “As against the 4 per cent plus 4 per cent (of the property value) for late registration, the property owner gets to make a saving,” said Sameer Lakhani, Managing Director at Global Capital Partners. “The Land Department and Rera (Real Estate Regulatory Agency) had been making it clear they want all properties registered and in their database. The penalty waiver should finally convince the final few holdouts to do so “These measures form part of a continuing suite of initiatives designed to streamline private sector activity.”

Apart from the 4 per cent, there is a fee of Dh2,000 for properties priced below Dh500,000 and Dh4,000 for those above.

The Land Department had also closed the loophole when it comes to property registrations on projects launched more recently. Now, the 4 per cent fee is incorporated right at the time of a buyer booking a unit.

This way there is no waiting until after the handover to get it registered and the fees being imposed.

Dubai Municipality yesterday said it will reduce the “market fee” for businesses by 50 per cent with immediate effect.

Dubai Executive Council on Wednesday said the civic body would cut the market fee imposed on businesses by half.

“This will come into effect immediately,” Syed Esmail Al Hashemi, director of General Revenue Department at Dubai Municipality, told Gulf News yesterday.

The market fee is five per cent of the annual rent of the commercial establishments.

“These payments are made once a year at the time of renewing the trade licence,” Al Hashemi said.

Though the fee is paid to Dubai Economy (DED), it is accepted as “fees for external departments” and channelled to the civic body.

As per the instruction from the executive council, the municipality will now charge only 2.5 per cent of the rent as market fee from private businesses.

“All commercial firms that have a trade licence will benefit [from the government’s move],” the official said.