Abu Dhabi’s new Real Eastate law Effective from January 2016

The much awaited new real estate law – No. (3) of 2015 Regulating Real Estate Sector in the Emirate of Abu Dhabi – has now been published, and will take effect as of January 2016. This law is mostly good news for the average person, but as with anything, we will have to see how it is implemented. Here are 10 the most interesting bits from the new regulation for residential buyers and sellers in the emirate’s investment zones:

It had been anticipated that this law would introduce some sort of rent cap or calculator as there has been much speculation as to how it might work. However, if it is coming it isn’t in this law, so rents will continue to be set by landlords as the market will allow.

Abu Dhabi’s Department of Municipal Affairs (DMA) has been tasked with regulating the real estate sector. The DMA’s responsibilities will include implementing the law, issuing licences, controlling escrow accounts and cancelling real estate projects. The DMA will now essentially perform the same function as RERA in Dubai. Let us hope its regulations (when published) come with some real teeth to dissuade the sharp practices that are still common in the emirate.

The law prohibits developers from collecting registration fees from investors and only allows developers to charge administrative fees, which must first be approved by the DMA. This means that the existing customary 2 per cent registration fee applicable on resales would be abolished.

• Owners associations to be created

The new owners associations will have constitutions, legal status, hold title to common property and be responsible for the property’s repair and maintenance. The new law even states that owners associations will have the right to apply to the courts for an order to sell the unit of an owner who hasn’t paid their services charges.

• Off-plan sales

A developer will now not be allowed to sell units off-plan unless it proves that it owns a real estate right over the project land and that it has opened an escrow account for the development. There will also be a requirement for a “disclosure statement” to be attached to the sale and purchase agreement that provides prescribed information on the development to ensure that purchasers are informed of all the relevant facts before buying.

• Escrow accounts will be set up for off-plan sales

One of the requirements for the sale and marketing of off-plan units will now include that the developer has set up an escrow account. The proceeds from off-plan sales will need to be paid into this account and only taken out in stages to fund construction. Given the restrictions on withdrawals, the developer will effectively have to self-fund (or obtain finance) for the first 20 per cent of construction works. These accounts also apply to existing projects as well, unless the building has reached at least 70 per cent completion.

• Right to terminate an off-plan purchase

Off-plan buyers can terminate their purchase of the unit in the case of “substantial prejudice”. Certain examples are given in the law, such as substantial changes the specifications contained in the unit SPA or delivery of a unit that is unusable due to fundamental defects in construction.

• Compensation for delayed projects

The DMA may fine developers to compensate purchasers where the developer is delayed beyond six months. Importantly, this may apply to existing developments depending on the stage of completion. The new law also includes provisions for the cancellation of projects or appointment of a new developer where there is significant delay.

• Building liability for developers

There will now be a 10-year liability for developers relating to fundamental structural building defects. It means developers will be legally responsible to fix any defects that manifest 10 years after handover and this will also include a one-year defects liability period

UAE slashes cost of property investor visa by 45%

The UAE has slashed the cost of getting a property visa by 45 per cent, a move that could see more foreign property owners spending time in the country.The six-month visa, which was Dh2,000 prior to August 1, will now cost Dh1,100.

The conditions continue to remain the same and include property valuation to be above Dh1 million, the owner requiring an income of Dh10,000 per month, the property has to be ready, etc.

Property owners have welcomed the reduction in the cost.Though no official numbers are available as to how many property visas have been issued by the immigration departments across the emirate, industry sources say property visa is popular mostly among Russians, Iranians and Pakistanis.

“These nationalities mostly tend to apply for property visa for their families,” industry sources said.

Over Dh37 billion were pumped into Dubai’s property market by more than 140 nationalities with total transaction crossing Dh113 billion in the first six months 2014.

Complete your property transaction in Dubai within 12 minutes-Developers get authority from Land department

Dubai developers will now be able to register property transactions and complete them in mere 12 minutes compared to seven days required previously.Dubai Land Department (DLD) tweeted, saying, “The LD has granted developers the authority to register property transactions. However, the department will carry the auditing process and issue the contracts.”

The department added: “Now your transaction can be completed in just 12 minutes instead of 7 days.”

According to DLD, it has successfully achieved a “new” record in saving the client’s effort and time, achieving its objective of offering client satisfaction, transparent transactions and internationally premium real estate services.Real estate agents say these are primary market transactions between the first purchaser and developer.

Already in July, DLD had launched “registration trustees” service for the secondary market sales, allowing customers to complete transactions outside official working hours through licensed legal offices. The service, however, costs Dh4,000 per transaction.

The department also got a pat on its back when World Bank’s 2013 Doing Business Index ranked it has the fourth best in the world for ease of real estate and property registration. A year back, it was placed at number 12 globally by the same index.

DLD Director-General Sultan Butti bin Mejren said in September that total property transactions crossed Dh162 billion in the first nine months of 2013 compared to Dh90bn same period last year.

Dubai raised registration fee from 2 per cent to 4 per cent of the property value from October 6 aimed at eliminating speculators and controlling price volatility.