Dubai Realty: Opening a new chapter

Dubai RealtyImage Credit: Supplied

The Dubai Land Department (DLD) has announced that owners will have to register their property and settle outstanding payments by the end of this month or face stiff penalties. The deadline, announced in March, applies to off-plan property, which must be registered in the interim land register (Oqood), as well as completed property, according to law firm Al Tamimi.

“The financial impact on those [who will not pay] the registration fee is unclear. We don’t know yet if the DLD will impose its notice and people will lose their units [when] failing to register and pay or extend the [grace] period, or issue a new circular,” says Karim Shiyab, Associate at Al Tamimi.

The severity of the DLD penalties would likely differ depending on the gravity of the violation, says Ludmila Yamalova, Managing Partner of HPL Yamalova & Plewka JLT. “If you have registered your property in Oqood [and paid] Dh1,000 but haven’t paid the 4 per cent [title registration fee], you wouldn’t lose your rights but risk a penalty, [which] hasn’t been specified yet. [The DLD] will block your transactions too.

“However, if you did not register the property at all, then all your rights would be waived and rightly so. If you didn’t bother to register [the property] how can you expect the authorities to protect your interests?”

All property owners — individuals, institutions and developers — will be affected by the deadline. But it is not certain whether legacy projects are included.

“Although there may be a sense of unfairness for buyers in stalled projects to have to register and pay, there may be another reason why the authorities are [implementing this policy],” says Yamalova. “They may want to see how many viable investors are left and know whether to cancel, restructure or go ahead with these projects.”

Abdul Betraoui, Managing Partner at Land Sterling, adds: “The authorities want to close the 2008 chapter once and for all and move on to the next chapter of Dubai.”

Full support
“It’s a very good thing and fair for everyone,” says Emil Samarah, CCO of Dia-mond Developers. “The DLD probably realised that some developers have collected registration fees but haven’t passed them on to the department, so although it would eventually receive the money, it would get it late.

“We used to be flexible with the timing when collecting the buyer’s share of the [title registration] fee [equivalent to 2 per cent of the property value]. But from now on we will have to collect it immediately on sale, as well as make sure we have all properties registered and fees paid by the deadline.”

While Diamond Developers pays half of the 4 per cent title registration fee, many developers don’t—the law states that the buyer and seller have to pay 2 per cent each as registration fee unless otherwise agreed—putting the onus on the buyer to pay the full amount.

“[It is] not just buyers, but developers may have been avoiding to register their unsold stock as then they would have to pay the full 4 per cent themselves,” says Yamalova, adding that the deadline could curb speculation further, reducing deals between investors who avoid paying registration fees.

Betraoui, meanwhile, would like to see some leniency and more awareness campaigns. “Instead of pushing the June 30 deadline, it could be easier to phase payments by area. The DLD is probably going to test the market sentiment, see how many will come and pay and maybe extend the deadline.

“In my experience a lot of people aren’t aware of the deadline. Three months is not a lot of [time], especially for those living abroad.”

Yamalova disagrees. “The news has been out since March,” she says. “The authorities had to enforce this deadline for people to take it seriously. [Everyone] wants a title deed as security for a completed property, but when it comes to off-plan, buyers risk relying on the contract without having their rights registered.”

Being careful
It is difficult to avoid registration and fees, says Shiyab, although he concedes that properties that were under construction before Oqood was implemented may not have been registered by the developer or buyer.

Betraoui concurs, noting that “people are still buying based on trust without [bothering about the] transfer [procedures], leaving the manager’s cheque and property in the seller’s name”. He also believes that owners would suffer unfairly in a court case. “A lot of buyers stopped making payments because of delays and still find themselves in court. They may have already paid [the] 2 per cent [registration fee], but since it has gone up to 4 per cent, they would now be forced to pay [the remainder even though] their unit issue hasn’t been solved.”

Registering a property will not only make the market more secure, but also ensure transparency in transactions. “Knowing the actual number of transactions helps the DLD to analyse and be aware of the situation of the real estate market, so it can make accurate decisions and implement measures to improve it,” says Shiyab.

Yamalova concurs. “It will also help [determine] how much developers have actually sold,” she says. “At times they say they have sold 20 per cent of the stock, but in reality they have just given these units to real estate agents without actually buying them and [the units] remain unregistered.

“A property that hasn’t been registered isn’t a property sold.”

Source: Nicole Walter, Special to Property Weekly


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