DUBAI: The Dubai Land Department doubled the registration fee charged for real estate transactions in an effort to prevent excessive speculation in its property market.

The fee will increase to 4 percent from 2 percent from October 6, said Sultan Butti bin Mejren, director general of the Land Department.

The increase to 4 percent means the charge on a AED 1 million flat would double from AED20,000 to AED40,000.

“Warehouses and industrial property will be excluded from the new rule,” he added.

As per the rule, the fee will be split 2 percent each between the buyer and seller. Dubai has been working on new rules to protect its real estate market and prevent any excessive rise of property prices that could end in a crash. In 2009, the bursting of a property bubble had caused prices to plunge by more than 50 percent.

In a July report, the IMF said Dubai might need to intervene in its property market to prevent another boom-and-bust cycle.

“This (the new move) will reduce buying and selling properties in quick succession to make speculative profits. ‘Flipping’ is unhealthy for the market and result in sudden price increases. The decision has come at the right time as the market has matured and investor confidence is growing” Mejren said.

Mejren said real estate transactions in Dubai totaled AED162 billion so far this year, up from AED90 billion in the same period a year earlier. In 2012, total transaction reached AED145 billion.

“The new decision will not pose negative impact for transactions but it will be positive for genuine buyers.”

Mejren said 110 countries in the world had higher property registration rates than Dubai, citing United Kingdom, which charges 4-10 percent, France 8 percent and India 7.3 percent.

According to official figures, a large number of Kuwaitis and Saudis own over 40,000 real estate properties in Dubai.

While contacted, many investors in Dubai have welcomed the new decision which may help to keep away the brokers from real estate deals.

“This is a good step to curb flipping. By this rule, genuine investors will reap more gains and the new rule would get rid of brokers and their ‘speculation tricks’, said S. Zaman, a businessman who invested in different real estate projects in Dubai.

On Tuesday, Shaikh Mohammad bin Rashid Al-Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, issued Law No. 7 of 2013 regarding the objectives, tasks and jurisdictions of the Dubai’s Land Department.

According the provisions of the law, the department will work on achieving the government’s strategic objectives for the properties sector by developing property registration systems that keep abreast with those used on the global stage.

It will also be responsible for improving its capabilities in regulatory and real estate control operations, as well as managing and developing the rental sector.