Dubai considers more property regulations
Transactions on off-plan units are a little dangerous.
January 9, 2014 12:49 by kippreport
As property prices have soared by more than 30 per cent last year, Dubai is planning to introduce new measures to control or curb speculation, preventing buyers from selling (flipping) properties before they are built.
According to Sultan bin Mejren, general director of Dubai’s Land Department, new regulations may be introduced in the second or third quarter of 2014, after a complete review of off-plan transactions.
“Transactions on off-plan properties are a little dangerous,” he was quoted saying earlier this week. “We are now studying them and looking at ways to ensure that they don’t hurt the market.”
He predicts that home prices may rise 35 per cent to 40 per cent this year.
The Land Department may also be planning on introducing measures to limit rent increases when tenants change. Currently, rent caps only control or limit increases for existing occupiers, with no caps on increases for new tenants.
“We are studying laws for residential and commercial properties, and each will have its own guidelines,” he says. “We expect to have them prepared in either June or the third quarter [of 2014]. There has to be some regulation for new contracts to have stable rental increases.”
In September, Sheikh Ahmed bin Saeed Al Maktoum, chairman of Dubai’s Supreme Fiscal Committee, confirmed that the government is working on regulations. “Sometimes I don’t think (high property prices) are a good thing. We don’t want Dubai to become an expensive city,” he said.
One of the steps taken earlier this year to control property speculation was the doubling of registration fees, from two per cent of the property’s value to four per cent, with the aim of deterring non-serious buyers from flipping the property before it is built. In November, real estate consultancy Cluttons revealed that regulatory measures introduced by the Land Department were already having a major impact and are successfully cooling the market.