Dubai property lawyers warn of illegal fees

A new report from a leading Dubai property lawyer has found that property owners in the country are being charged thousands of dirhams in illegal registration fees by developers.  Hadef and Partners claim that fees of AED5,000 (£840) are being charged for registering a property with another AED1,000 (£170) as a handling fee.

Developers charging illegal fees says overseas property lawyer

In Dubai, only the Dubai Land Department is legally allowed to collect property registration fees.  On a property worth AED1 million, a fee of 0.25 per cent (AED2,500) will be charged as a registration fee.

However, Michael Lunjevich, a partner in the firm, and author of the report believes that developers continue to break these rules.  He said: “Developers are split between those who are wilfully ignoring the law in order to make a profit and those who are not aware the practice is illegal.”

The Dubai property lawyers also found that developers were adding profits margins to service fees, which is against Dubai law.  Firms are only allowed to charge tenants the actual cost of maintaining the facilities.

Mr Lunjecich added: “There are some developers who are taking a collaborative approach with the new owners’ associations and some that are not, where again, they see it as an opportunity to make some money in a down market.”

Experts are concerned that illegal fees could have a negative impact on Dubai’s struggling real estate market.

Sadalla Abed, a senior consultant at Colliers International said: “It affects confidence in the market, which is required for the market to recover. And of course if people have to pay the fees twice, it might stop some them from entering the market because it will be too expensive for them.

“There could also be some legal implications down the road. If people haven’t registered their property they cannot sell it, there are so many things that they won’t be able to do with their properties.”

Overseas Propety Lawyers

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