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.

Law No 26 of 2007 issued to regulate eviction of tenants,Landlords can evict tenants to reconstruct property or recover it for personal use

Articles 25 (2) and 26 of Dubai Law No 26 of 2007 which regulate the relationship between landlords and tenants in the emirate of Dubai state that landlords may demand eviction of tenants prior to expiry of tenancy period in the following cases:

Article 25 (2): Landlord may demand eviction of tenant upon expiry of tenancy contract in the following cases: a.If development requirements in the emirate requires demolition and reconstruction of the property in accordance with government authorities’ instructions

b. If the property requires renovation or comprehensive maintenance which cannot be executed while tenant occupies the property, provided that a technical report attested by Dubai Municipality is submitted to this effect.

c.If landlord wishes to demolish the property for reconstruction or to add new constructions that prevent tenant from benefiting from the leased property, provided that necessary licences are obtained.

d. If landlord wishes to recover the property for use by him personally or by his children.

Article (26): If, upon expiry of the tenancy period, the landlord demands recovery of the property for his own use, or use by his children, and the committee approves the same, then the landlord shall not rent the property to others before one year from date of recovery of the property, otherwise the tenant shall have the right to request the committee to order proper compensation to him.

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.

Dubai property buyers' protection law Tanweer is ready and waiting for final approval

The Real Estate Investor Protection law, or ‘Tanweer’, as it is called now, is ready and awaiting clearance from higher authorities“Tanweer is ready we are just waiting for final approvals from higher authorities,” said Majida Ali Rashid, Chairwoman of the Real Estate Investment and Promotion Centre, Dubai Land Department.
“Tanweer is the first of its kind regionally and globally, the senior management has devoted considerable time and efforts in discussing its provisions with a large segment of workers in the real estate market and with consulting and legal firms to draft legal articles to reach the ambitions of the emirate in protecting investors,” Majida said.

She added: “This law will take full, complete and accurate inter legislative laws and regulations issued between 2003 and 2008 to ensure optimal application of those laws and legislations.”
Law allows full refund

In June 2012, the draft of investor protection law was released to get suggestions from industry participants.

The draft allows investors to get full refund if the developer fails to complete or handover a property within a certain timeframe or deliberately defrauds an investor or alters the specifications of the unit without obtaining requisite permission.

Investors can also claim compensation for breach of any warranty or undertaking contained in the contract for sale by the seller and the broker, misrepresentation by the developer or investor or broker, and specification in violation of the contract for sale after obtaining an expert’s report to that effect.

Registering property under a free zone firm is an option still under discussion: Official

Dubai has not finalised any new residence visa system for property owners and the talks of granting residency visa are very “premature“, a senior government official .

“At a recent meeting, ways of giving residency visas were discussed and one option was to allow people to register their properties as companies in free zone. This will then allow them to get residency visa. But, this was just a proposal and nothing has been finalised,” the official said on conditions of anonymity.

“There is no way a retired person who wants to live in Dubai can get a residency visa even if he owns a property. We are trying to help people like them.”

He reiterated “it was just a proposal in the meeting… nothing has been worked out.”

Last year, this website had reported that certain developers in Ras Al Khaimah were offering residency visa linked to properties if registered with a free zone. Real estate agents said that companies there were still helping buyers to get free zone visa.

When called, Rakia CEO, Dr Khater Massaad denied offering any such visas at all, saying, “We are fully committed to following the federal regulations on granting property visas.”

The federal law currently entitles foreign owners of the UAE property to a six-month multiple-entry visa, which came into effect on June 1, 2010. According to the law, applicants would have to own a property of not less than Dh1 million and earn Dh10,000 a month. The visa needs to be renewed every six months at the cost Dh2,000.

Abu Dhabi Issues Resolution No 64 2010 Regulations on Property Ownership

General Shaikh Mohammad Bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces, on Wednesday issued Resolution No. 64 of 2010 which aims to encourage real estate developers and investors in the emirate to register their real estate ownership and makes the process of transferring property ownership easier and faster, the official news agency WAM reported.

The resolution also aims to facilitate the process of acquiring loans to finance real estate investments. It specifies the framework and general rules related to property rights registration procedures.

Registration

The resolution stipulates that the director of the property registration department must register all dealings pertaining to the emirate's properties, or any property rights related to ownership, land development lease contract (Musataha) and long-term leases taking place both in and out of investment zones.

The director must also register mortgage contracts, and direct contracts concluded with banks and financing parties.

"It gives the purchase contract legitimacy and will help the buyers [get] access to finance and mortgage finance which is crucial to end-users. I’d love to see more openness in property regulations. I hope Abu Dhabi Finance will expand financing expatriate buyers," said Wael Tawil, chief executive of Baniyas Investment and Development Company (BID), which is developing the residential Bawabat Al Sharq project in Abu Dhabi.

Gurjit Singh, chief operating officer of Sorouh Real Estate, one of Abu Dhabi’s top real estate developers, said the resolution will help boost real estate development.

Confidence booster

"It's going to give a lot more confidence to the real estate market — to investors, property purchasers and developers," said Singh.

According to the resolution, real estate property ownership is limited to all Emiratis, and to people, companies and bodies who will be specified by a decision issued by the Abu Dhabi Executive Council.

Gulf Cooperation Council nationals and corporate bodies wholly owned by them are also allowed to own property as long as it is within the investment zones.

Non-Emiratis or corporate bodies will enjoy the right to own, buy, sell, rent, mortgage and invest in investment zones.

The registrar will also have to register these people and corporate bodies, who own apartments and storeyed buildings. The registrar will also issue title deeds to them after they have presented the necessary documents.

They may hold usufruct or Musataha right for up to 50 years (subject to renewal for a similar duration) and usufruct contract for up to 99 years and long-term tenancy contract in properties located in investment areas.

The registrar will register non-Emiratis or corporate bodies in the real estate registry as owners of these rights, after they have presented the necessary official documents specified in the regulations and laws issued by the director of the municipal affairs department

Ahmed Shaikhani, managing director of Memon Investments, a Dubai based property developer, welcomed the move which would boost market confidence. He said it would also encourage new projects by the developers as a law has been issued on the property registration. At a time when new investments into the real estate sector have slowed down a bit, this development would be helpful in attracting investors’ attention, he said.

Shaikhani said properties were already being registered in the emirate. Now those transactions have got a legal cover, he said.