UAE real estate sector practice raises red flags

Published June 9th, 2014 - 07:55 GMT

A complaint has been lodged against a real estate firm for allegedly taking a slice out of transaction fees being collected for the government by doubling the charge to clients.

Dubai’s Real Estate Regulatory Authority (Rera) says the allegation, if true, is an illegal and punishable offence — and the first of its kind on record.

Four per cent fixed property registration fees are mandated by the government on the sales of Dubai properties.

But a Khaleej Times reader has lodged a complaint that a company was charging eight per cent instead.

Marwan bin Ghalita, Rera’s chief executive, said the ownership transfer fee was only to be collected on behalf of the government, and it was not permitted for anybody to impose additional fees on a buyer.

Rera had not received any complaints on this matter before, he said.

“Once Rera receives a complaint like that, it will embark on an investigation since this practice is illegal.”

The transaction fee was distinct from realtors’ commissions, which were determined by agreement between a seller and a buyer, he said.

The law stipulated that a commission had to be specified as a percentage or amount as agreed upon by both the seller and buyer, and if a commission was not mentioned, both parties could get one per cent, he said.

Bin Ghalita advised consumers and people willing to buy a property to approach Rera in case they suspected something wrong in an agreement so that the authority could play a role in investigating and regulating the real estate market in the emirate.

He said real estate companies could try to deceive and mislead buyers who were not familiar with the laws in the country — especially investors from abroad.

The real estate registration fee was increased from two per cent to four per cent last year, and has been enforced since October 6 on any transactions and sales of properties.

The real estate registration fee in Dubai remains among the lowest worldwide. In the UK, the real estate registration fee is set between four and 15 per cent; five to 10 per cent in Malaysia; six per cent in France; 5.6 per cent in Japan; 7.3 per cent in India; and 7.2 per cent in Pakistan. 

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