EXCLUSIVE: Fees to rise to 4% in a bid to reduce flippers
Dubai Land Department is set to double the transfer fees on property sales, Arabian Business has learned.
The fees will rise from 2 percent to 4 percent of the sale price for all properties, except the first direct sale from a developer to buyer, which will remain at 2 per cent. It is understood that an official announcement on the change could come as early as this weekend.
“[The] idea is to curb flipping. It’s a good move. Keeps end users and longer term investors in the game,” a well regarded Dubai developer told Arabian Business, adding: “Gets rid of brokers who put down checks [sic] against properties hoping to find buyers quickly.”
By law, the property transfer fee is paid equally by both buyer and seller, but industry spokespeople said in practice, the buyer usually ended up paying the full amount.
The increase to 4 percent means the charge on a AED2m home would double from AED40,000 to AED80,000.
The amount must be paid in full, in cash and cannot be incorporated into a mortgage.
The change appears to be in a bid to reduce ‘flipping’ – the rapid on sale of off-plan properties – by making it less attractive for buyers to purchase from such speculators, but it also has the potential to affect end users.
A property sold by an end user – such as someone who has lived in the home for several years and wants to upgrade or leave Dubai – to another end user still would attract the higher transfer tax.
At least one real estate agent said it would likely encourage end users to remain in their property for longer.
With more than $6bn worth of property and land transferred in the year to July, according to Dubai Land Department figures, the increased fees could also see government coffers significantly enhanced.