Agents and investors in property in Dubai have been mulling over changes to the Emirate’s real estate laws that are designed to make the buying process safer and more transparent for investors, as well as bringing some degree of stability to the markets amid the financial turmoil gripping the rest of the world.
Three new laws have taken effect in the past few weeks, and all were published on 31st August. The laws concern the areas of off-plan sales, mortgage laws and property disputes.
Law 13, covering the sale of off-plan property in Dubai, states that all transactions must be registered with the Dubai Land Department. This means that developers can no longer launch and sell developments before they have taken possession of the land and been granted the necessary building permits. “Whereas previously you had some developers launching and advertising projects for sale before they had even taken possession of the land, now they will be forced to hold off”, according to Lynnette Brown, a partner at law firm Al Tamimi.
The law also gives buyers and investors added confidence in what they are buying for the future. As all sales now can only be completed after the plans and permissions have been lodged and registered, there can be little deviation between what buyers expect and the finished product.
The law pertaining to fees and charges for the sale of property in Dubai has also been amended. Developers will no longer be able to charge a transfer fee to clients, but may now charge an administration fee. This fee, which previously could be levied as a percentage of the property value, is now to be capped at a maximum of 5,000 Dirham.
The law also sets out defined timelines for different contingencies – for example, if a buyer defaults on a property the developer now can report it to the Land Department and begin a process of informing the buyer and ultimately cancelling the contract and putting the property back onto the market. This will provide added stability in the current market conditions.
The final law change is to do with the administering of mortgages in Dubai, which can only be issued by a UAE-registered bank and must be registered with the Land Department. The law also applies retrospectively to mortgage arrangements already in place, meaning that they must be registered or will be considered null and void. This extension of the mortgage laws has been hailed as a positive move, helping to reduce speculative pressure on the property markets
Tuesday 28 October 2008
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