THE Shura Council’s public utilities and environment affairs committee issued a formal recommendation to reject exempting citizens from paying property registration fees once, if the transaction is for residential purposes.
The amendments proposed by MPs to Article 59 of the 2013 Real Estate Registration Law were approved earlier this month by Parliament.
Committee chairman Dr Mohammed Hassan said after thorough deliberation and consultations with various government bodies, the committee concluded that the proposal would significantly reduce public revenue and potentially open avenues for legal circumvention.
Dr Hassan
He added that while the committee supported the aim of assisting low-income citizens, the proposal was redundant and misaligned with fiscal priorities.
“We acknowledge the good intention behind the draft – to ease the financial burden on citizens acquiring residential property.
“However, this relief is already provided under current laws for housing loan recipients. Any further exemptions risk undermining public finances without adding real value.”
He noted that Article 59 of the current law already provides exemptions for citizens receiving housing loans from the Eskan (Housing) Bank, making the proposed amendment unnecessary.
The committee outlined several reasons for its recommendation:
1. Redundancy: The existing law already provides exemptions for housing-related transactions involving low-income citizens.
2. Legal integrity: According to constitutional and legal standards, fees are charged for government services. Broad exemptions contradict this principle.
3. Financial impact: The proposed exemption would cut into non-oil revenues, which are vital for maintaining and improving public services.
4. Risk of fraud: Loopholes in the proposal may enable individuals to exploit the system via fictitious transactions.
5. Established precedent: A similar bill was rejected during the fifth legislative term after detailed review.
Dr Hassan also referred to Bahrain’s current budget law.
“Under the 2025-2026 budget approved by both legislative and executive branches, fee-based revenues – including real estate transaction fees – are an essential pillar. This proposal threatens to compromise those revenue streams.
“After reviewing all perspectives and legal opinions, and in consideration of the financial and practical implications, we unanimously recommend rejecting the proposed amendment to Article 59 of the Real Estate Registration Law.”
In its memorandum, the government expressed reservations regarding the draft law, citing potential harm to the state treasury.
“The proposed exemption directly affects state revenues. Given the existing budget deficit, the focus must be on increasing – not reducing – government income.
“Article 109 (b) of the Constitution and the financial principles behind the current budget stress preserving fiscal stability and economic growth.”
The government also noted that exemptions from legally mandated fees are an exception, not the norm.
It emphasised that limited-income citizens already benefit from existing legal exemptions tied to housing services, particularly those supported by the Eskan (Housing) Bank.
Moreover, the government flagged practical challenges in applying the law fairly.
“A key issue lies in cases where one party to a property transaction qualifies for the exemption while the other does not.
“The lack of a personal income-based eligibility criterion could generate inconsistencies, especially in contracts involving property exchanges or gifts.”
Finally, the government warned of potential exploitation of the exemption clause.
“The law, as drafted, opens the door to fraudulent activity, such as using individuals who have never owned property to sign fictitious contracts, thereby avoiding registration fees under the guise of ‘first-time ownership’ for residential use.”
The Survey and Land Registration Bureau echoed these concerns.
“Approving the draft law would have a significant negative impact on public revenues. The intended goal is already achieved under current regulations.”
Shura Council members are set to vote on the legislation during their weekly session on Sunday.
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