New laws designed to protect buyers, investors and landlords
Two new real estate laws in the United Arab Emirates will improve protection for buyers, investors and landlords.
A new decree by the Dubai Executive Council will provide more protection to home buyers as well as increasing the Land Department’s role as mediator in property disputes.
The decree, due to be published in the Official Gazette shortly, will mean that a buyer can request the courts to cancel a contract if the developer ‘significantly changes’ the agreed specifications, or refuses to deliver the unit without any ‘justifiable reason’.
Buyers can also seek legal action if developers do not bind payments to construction based milestones approved by the DLD, or the unit is proved unstable due to major structural defects.
‘The regulations whilst providing some much needed clarity over many issues also throws up some interesting characteristics such as reinforcing the wide degree of power and discretion the DLD holds in respect of projects,’ said a spokesman for lawyers Hadef & Partners.
Under the regulations, which govern off plan property sales in Dubai, the DLD is able to cancel a project if the developer does not begin construction without ‘justifiable cause’ or because of ‘gross negligence’. If the developer is ‘not serious’ about the project or declares itself bankrupt the DLD can also cancel the project.
The regulations also prevent developers from selling off plan units before taking possession, which includes actual control of the land. ‘It is also still not clear how the DLD will approach situations where a purported termination of a purchaser is met with resistance and/or whether the DLD will remove an interest in the interim register without a court order where a legitimate dispute has arisen,’ the law firm also said.
‘Further clarity may also be needed where a bankruptcy event occurs as to how exactly the interim registered interests will be treated as far as priority is concerned in the bankruptcy situation,’ it added.
Meanwhile new real estate legislation in Abu Dhabi will make it easier for landlords to evict low paying tenants. Under the new law, due to come into force in November, judges will settle rent disputes under the umbrella of the Ministry of Justice.
Although the current 5% rent cap will remain, the legislation will allow landlords to evict tenants at the end of the lease period after giving two months’ notice for residential property and three months for commercial property.
The new law removes the automatic right of tenants to renew leases for five years with a maximum 5% rent increase each year.