Proposal to raise the cost of electricity for second house from 2 fils to 38 fils

A governmental study on the residential real estate sector will be completed after three months, as a team formed by the Competition Protection Authority had been working from various stakeholders in the sector, according to an interview with the Executive Director of the Competition Protection Authority, Dr. Abdullah Al-Owaisi. The official revealed to the local Arab paper that the team monitored several practices and obstacles in the sector, one of which is the monopoly of centers in the market, as well as, inequality between dealers, as they discover new methods to buy homes that exceed their actual value.

Al-Owaisi pointed out the discovery of the real estate registered in the names of fraudulent buyers, in addition to the work of a non-isolable real estate agency for the benefit of the real buyer, which means that the registered owner of the house is just a fictitious owner, one of the monitored cases.

The team, he explained, generated several recommendations and procedures to address the imbalance in the real estate market. These will prepare them for submission to the board of directors of the agency and then to the Minister of Trade and Industry, in order to forward them to the Council of Ministers for necessary corrective measures, such as a review of real estate legislation. He said this move will also ensure the promotion of competition and the protection of the real estate sector from money laundering operations.

“In principle, the agency is concerned with arranging competition in the market as it is concerned with arranging all economic and commercial sectors, especially those in which buying and selling takes place, including residential real estate. The aim of this is to ensure equal opportunities and reform the competitive structure in the real estate market with its various components,” Al-Owaisi was quoted in the interview. He added that based on this role, the Protection of Competition is preparing to study the residential real estate sector, in which a working group was formed at the end of last May, with representative members from other parties to study and implement the recommendations of the residential real estate sector.

Al-Owaisi confirmed that all relevant authorities in the sector are represented by the committee, namely the ministries of commerce and industry (real estate management), finance (state property management), justice (real estate registry), electricity and water, in addition to the Public Corporation for Housing Welfare and Kuwait Municipality.

Moreover, he said that the committee is specialized in examining the residential real estate sector’s infrastructure, particularly its legislation, transactions, customs, reviewing decisions, and regulations that restrict competition in the sector, while preparing a proposal to amend decisions and regulations of the latter.

“We aim to know the structure of competition in the market, and potential monopolistic behavior. In its plan for this study, “Protection of Competition” has set out defining the value chain, studying the economic impacts, the regulatory situation, presenting recommendations and suggestions, and general policies for the regulators of this market,” he continued.

He specified that the agency’s aim is to reconsider the legislation related to the real estate sector in a way that contributes to enhancing competition and protecting the sector from money laundering operations.

The official mentioned that improper practices and obstacles were being monitored in the private residential real estate sector. The main obstacles come from, for example, the presence of some dominant monopolistic positions and inequality between dealers in the market, in addition to the difficulty of accessing the indicators on the basis of which the value of the property was determined. The team similarly noted imbalances in some of the laws regulating the sector, including the municipal law, electricity and water tariffs, subsidies, vacant land tax, and the role of brokers.

According to Al-Owaisi, there are several reasons a house is registered under another’s name, specifically obtaining housing care from the Public Institution for Housing Welfare, or artificially raising the value of the property. He said that the team’s important recommendations are canceling, modifying, or adding decisions in some government agencies to activate their oversight role, as well as break the overlap of competencies, provided that the assessment are adopted based on unified global technical standards to ensure the quality of the process.

“One of the proposals is to reconsider the non-separable real estate agency, and reorganize it to avoid being used in the buying and selling of violating real estate, given the lack of a building description certificate when concluding it. Among the recommendations is activating the supervision of the “Kuwait Municipality” on real estate that violates the construction ratios, as the private housing was exploited for investment purposes, in addition to the fact that the team developed a set of procedures to address the defect, most notably raising the electricity and water tariffs provided to private residential property owners,” Al-Owaisi explained.

He said the raise will be from two fils per kilowatt of consumption of the second property to 38 fils, doubling the cost 19 times and bringing the cost of the electricity and water consumption bill in the second house to an initial estimate of about KD 12,000, while in the meantime considering the circumstances and the size of the family that owns the property, as well as the need to reconsider the law of the vacant land tax so that it is progressive.

The Executive Director added imposing taxes on the multiple properties of private housing, in addition to approving the law establishing the Lands and Real Estate Authority, and the owners union law to regulate the relationship between owners of real estate units of joint ownership, as well as approving the real estate developer law to activate the strategy of the Public Institution for Housing Welfare related to the real estate developer, that would ease the burden on the state and speed up the allocation of housing plots to those entitled.

He also mentioned the need to create an integrated database of all real estate in Kuwait, as well as, the need to implement an automated link between relevant authorities to facilitate the process of transferring data, compiling it and enabling the regulatory authorities to monitor residential real estate transactions.

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