Includes developer and government enforcement actions

Real estate developers are calling for a reduction in fees on real estate to stimulate the sector

  • Service and maintenance fees represent a major obstacle to the flow of investments into the real estate sector.



Real estate developers demanded to reduce or freeze some real estate fees that burden the real estate investor,

Especially in the current period, which needs more stimuli for the real estate sector, in conjunction with the slowdown in market movement, due to the repercussions of the Corona crisis, and the entry of more new units to the market.

They indicated to Emirates Today that although the sector achieved good sales last year, it is not comparable to previous periods before the Corona pandemic, calling for an integrated plan to reduce these fees, whether imposed during the period of real estate purchase, such as “no Resistance », or the fees that are imposed after receiving the property, including service fees, and fees imposed by the real estate developer upon handing over the key to the property.

Service fees

In detail, the Chairman of the Board of Directors of "W Capital Real Estate Brokerage", Walid Al-Zarouni, said that "the service and maintenance fees represent a major obstacle to the flow of investments into the real estate sector, amid the high fees and their multiplicity in many forms, which burden the owners."

Al-Zarouni added that “the increase in these fees reflects negatively on the decline in rental returns, which leads real estate owners to raise the rent value to compensate for the lost revenues,” indicating that there are fees for the developer’s delivery of the property, as the investor is surprised by the developer’s request to pay fees in exchange for receiving the property, which may Sometimes it reaches 5000 dirhams.

And he directed the necessity of putting in place controls that address this problem and limit its height, in the interest of the real estate sector, and reduce the burdens on the target investors, stressing that the market urgently and immediately needs to control fees for services, maintenance and other things, and not to leave the real estate developer, with the need to reduce them, even in stages, But in a way that does not affect the sustainability of building maintenance, with the aim of preserving the real estate wealth in Dubai.

Al Zarouni praised the important role played by the Real Estate Regulatory Agency (RERA), the regulatory arm of the Dubai Land Department, in controlling and reducing these fees, and auditing facilities management companies, with the aim of moving the market and enhancing the competitiveness of the real estate sector, in a way that benefits all other vital sectors.

Normal fees

For his part, the real estate consultant, Saleh Tabakh, said that “most real estate fees do not constitute any obstacle to real estate development, and they are natural and minimal fees compared to global markets, with one exception being service fees, which deal with the operational expenses of common areas in residential complexes, which They are considered non-governmental fees, but they are subject to governmental approval, disposal and oversight.

Service fees have greatly reduced investment returns, and have transformed unused or un-rented real estate into a great burden on the owners, and considering reducing them is very important, by reducing basic fees such as refrigeration and waste collection fees, which constitute the largest share of these fees, and a major reason for the increase in value Service fees".

He pointed out that cooling fees, in addition to developer fees, constitute the largest part of service fees, and a major reason for the high operational cost, as it has the largest share of budgets, especially since the cooling fees are a real burden, especially in apartments and buildings more than villas and "Townhouses", and these fees played an important role in reducing demand for apartments and increasing demand for villas.

Tabakh pointed out that among the fees in the market, the fees for the delivery of the property, which are unreasonable fees, and must be prevented, as it is illogical to impose fees for the delivery of the customer what is his right and what he has paid in full and the delivery of the property is an obligation on the developer and not an additional service .

Own the property

In turn, the general manager of "Harbor Real Estate", Muhannad Al-Wadi, said, “When buying any real estate, the investor must take into account the subject of fees on the property so that he is not surprised by it. Fees are of two types: fees before the property is acquired, fees after the property is owned, and the type. The first includes the property registration fee estimated at 4%, and the no-objection fee and other fees, while the second type includes service fees.

He emphasized that reducing fees or freezing them for a period, including government fees, could represent a factor that pushes the real estate market, especially since government fees were the main reason for raising them from 2% to 4%, is the elimination of speculation, which was in the period before the financial crisis. Global in 2008.

Al-Wadi suggested reducing registration fees for the real investor or long-term investor who buys the property to keep it, while fixing it for the speculative investor who sells the property within a year.

He added that in addition to these fees, there are real estate registration trustee fees, and developers ’fees represented in the“ no objection ”letter, which in some cases reaches 10,000 dirhams, stressing that there are demands to regulate these fees, but so far the matter has not been taken fully. Grandpa.

He pointed out that service fees are among the most negatively affecting the market, which makes the new investor reluctant to buy when he becomes aware of these fees.

register fees

In the same context, the CEO of Al-Waleed Investment Company, Muhammad Al-Mutawa, suggested reducing or temporarily freezing real estate registration fees during the current period, with the aim of effectively revitalizing the real estate sector, especially in conjunction with the slowdown in sales in the past year, compared to previous years due to the repercussions « Corona ».

He pointed out that he had submitted a study to the Land and Property Department aiming to reduce fees incrementally with the value, as a sale of one million dirhams differs from a sale of 10 million dirhams, as well as a difference of 100 million dirhams, noting that it is possible to impose a fee of 2% in transactions Below a million, it decreases to 1.5% in transactions below 10 million dirhams, to become 1% in transactions less than 100 million dirhams.

He pointed out that reducing fees related to the real estate should not be limited to the fees related to the period before the purchase of the property, but also to the fees associated with after the purchase of the property, so a system must be found to reduce service fees in the post-purchase stage, in addition to the need to control the fees imposed by the real estate developer, That relates to the property delivery fees, which range between 5,000 and 700 dirhams for some developers just to deliver the property to its owner.

Reducing fees

Real estate expert, Dr. Raad Ramadan said: “Fees are considered an obstacle to real estate investment, and any reduction of these fees will contribute to increasing the growth of real estate investment,” indicating that the service fees for residential units in Dubai are considered high, and many investors are complaining about their high levels at the present time. Also, some government fees can be burdensome for the investor, and therefore any freezing of these fees for a temporary period, especially in the current circumstances, will be a stimulus for the market.

He pointed out that district cooling prices are high and must be reviewed, especially as they constitute a major obstacle for the real estate investor.

Ramadan explained that imposing fees from developers upon delivery of the property has a negative impact on the market, calling for avoiding imposing fees on the investor, because it is related to the permanence of movement in the sector.

• Increasing fees prompts property owners to raise their rent to compensate for lost revenues.

• The sector achieved good sales last year, but it does not compare to the periods before the Corona pandemic.

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