Real Estate Transfer Fees Increase by 50 Percent Despite Sector Decline

Rabat – Real estate transfer fees are set to increase on November 1^st, but professionals from the sector have reservations regarding the decision because the tax would affect the volume of property sales in 2017 negatively.

Passed by the State Council as decree no. 2-16-375 in July, the provision raises real estate transfer or sale costs by 1 to 1.5 percent – the first such increase since 1963.

A notary in Casablanca told Medias24 that the decree would not help alleviate the pessimism permeating the real estate market.

“At a time when the National Council of Notaries demands provisions to encourage real estate sales, the National Association for the Protection of Real Estate, which is supported by the Ministry of Agriculture and the Ministry of the Economy, has increased the fees, which will make the situation worse,” the notary, who chose to remain anonymous, said.

Notaries also told the Moroccan publication that despite the five percent decline in the average selling price of various properties, the number of sales has not rebounded since the 50 percent fall began this year.

The decline has affected all sectors, including housing projects – which make up 70 percent of property sales – and have dodged the worst effects of the crisis, experienced by the intermediate and luxury real estate markets.

Still, the new provision will affect all buyers, especially those who have no choice but to buy into public housing projects.

Previously, a citizen who wanted to purchase to MAD 1 million home with bank loans would have to pay a one percent (MAD 10,000) sum to the seller and a one percent (MAD 10,000) sum to the lender bank. Financial closing costs would total approximately MAD 20,000.

The new provision will increase the amount paid to the seller and the bank by 0.5 percent, meaning closing costs would total MAD 30,000 for a one million-dirham home.