New labour rule will not end current Labour card validity

Private sector employees holding a valid three-year labour card will not be compelled to rectify or adjust their status when the recent ministry decision becomes effective, a senior official said.

Humaid bin Deemas, acting Director-General of Ministry of Labour (MoL) told that the recent ministry decision on cutting the labour card validity from three to two years would not affect the actual holders of valid labour cards.“Starting January 2011, only workers with expired cards will be obliged to renew by applying for the two-year labour card. New applicants will also fall under the new decision upon issuance of their labour cards. Actual holders of valid cards will keep them until their expiry. Moreover, from now till January, things will go on as usual as far as applying for the three-year labour card is concerned.”

Benefits of the new rule

The move to reduce the validity of the labour card to two years has come following a thorough study and analysis based on successful labour practices in other countries. “If you look elsewhere, like for example the Gulf countries, you will see that labour cards are usually issued with a validity of a year or two years maximum. The contractual relationship resulting from such a relatively short period has proved to pay off for both parties’ interests,” Humaid said.

The Labour Ministry’s senior official said it is a good and acceptable idea which enhances and regulates the movement and flexibility within the labour market. “In a recent survey we did, we found that about 70 per cent of employers have to cancel labour cards and cut short the employment of workers, who were originally hired for three years. The cancellation would come before a solid two-year period has passed. According to our statistics, employers would save more than Dh600 million annually.”

This would be rewarding to workers too as the new decision will help them feel more free and flexible to change their work if they are not satisfied. They won’t have to wait for three years before moving on to a new job.

Humaid shrugged off the possibility that the new decision would result in a rush of applicants at the service counters of the ministry.

“We have adequate procedures and a mechanism put into place to help implement new policies and decisions taken by the ministry. Discarding the paper work has been one advantage for a smooth processing of transactions. The e-system allows the employer to check on his establishment’s status and other data pertaining to his employees online and fill in applications likewise. Many other services are available online, including the follow-up on fines resulting from violation of the labour law.”

Meanwhile, a spokesman of the Abu Dhabi-based EMKE Group welcomed the decision saying it will streamline the manpower market as well as reduce the financial burden on local companies at a time when the global economies are facing tough times.

The spokesman said: “We also agree with the fact that some employees do not complete the full term of their employment, which is three years. So we have to make new recruitments and apply for new labour cards, visas, health insurances and other relevant paperwork. With this change in the law, the market is ought to streamline further.”

Hassan Mirza, owner of a transport company in Abu Dhabi, also welcomed the new decision to reduce the life of the labour card for all employees in the private sector as, he added, it will result in cost cutting for local companies.

He said: “We pay for our workers’ health insurance, labour card and residence permit. We have been paying fees for a period of three years for each worker. There were cases when our employees did not complete even one year with us, and the money for the two years goes in waste. It was a huge financial lose for us. The new law reduces the financial burden on companies that have more than 50 employees

Steep fine for landlords who don't register with Ejari

Tenancy Contract

New tenants are advised to stay clear of landlords or real estate agents who don't register the lease contract with the new Ejari system to avoid problems with utility connections should authorities enforce the new law in full

Registering tenancy contracts with Ejari, Dubai Land Department (DLD)'s new online portal, is a must under Law No 26 of 2007 which is aimed to regulate landlord-tenant relationships.

Under the Ejari system, made mandatory in March 2010, landlords must first secure Rera approval for their property before leasing it to an individual or turning it over to a property management company.

New tenants presenting a simple tenancy contract to Dewa still get a connection, but that could change. Landlords are obliged to pay the Dh160 Ejari registration fee at the end of the process and failure invites a fine of up to Dh50,000.

Landlords must upload the data for each leased property into the system. Once approved, the Ejari system will print out a new contract which will be the tenant's ticket to get utility connections

Online registration must for lease contracts: Rera

The Real Estate Regulatory Agency (Rera) has announced that from now on all rental/lease contracts for Dubai properties must be registered through its new Ejari online portal.

The announcement makes effective the provisions of Law No 26 of 2007 regulating the relationship between tenants and landlords in Dubai and requires all individuals and companies acting as landlords to register tenancy agreements.

Landlords and tenants who fail to comply with the new ruling will find that their tenancy agreements fall outside the protection offered by the law and government agencies and will not be able to enforce the provisions of the agreements they enter into.

The law clearly states: "Judicial bodies and governmental departments and authorities should not consider any claim, case or execution based on a tenancy contract unless the same is registered with the agency."

Announcing the new ruling and the full activation of Ejari, its state-of-the-art online registration system, Rera called on everyone involved in drawing up and entering into such contracts to ensure full compliance and avoid violation.

Registration through Ejari is a simple process requiring little technical knowledge and only the basic details of agreements are entered. These include information such as details of the property, the name of the rental company and terms of the agreement. Once the agreement is entered into the system and registered, it is allocated a unique barcode that acts as its reference throughout the life of the contract.

What is EJARI

EJARI means ‘My Rent’ in Arabic. But technically it means a revolutionary system that shall move Dubai real estate sector to be one of the best regulated rental market in the world.

EJARI is the new initiative of RERA to regulate and facilitate the Rental Market of Dubai. This is a new system that will make provisions of Law No. 26 of 2007 effective that is regulating the relationship between Landlords and Tenants in Dubai. This will require all individuals and companies acting as landlords to register tenancy agreements using EJARI.

RERA has announced that with the effect of 14 March 2010, all rental / lease contracts for Dubai properties must be registered through its new EJARI online portal. The EJARI electronic registration web service is designed to meet the requirements of the law and RERA’s vision and mission to establish a robust regulatory system for the rental market and protect the rights of everyone involved. .

Its state-of-the-art online registration system offers full protection of their rights to all parties with tenancy agreement. It ensures these rights are recognized, upheld, and enforced by all Government agencies. It establishes full transparency between landlord and tenant, fully integrates rental contracts into the legal framework and opens up the possibility of being able to revise these contracts seamlessly in the event of disputes .

The Ejari system provides a full portfolio of services beyond registering the initial lease agreement. Renewals, cancellations, transfers and terminations can all be logged. Ejari will ensure rental agreements are fair and transparent to the parties involved and that their terms and conditions are given full weight .

How it works?

Registration through Ejari is a simple process requiring little technical knowledge and that only the basic details of agreements are entered. These include information such as details of the property, the name of the rental company, and terms of the agreement. Once the agreement is entered into the system and registered it is allocated a unique barcode which acts as its reference throughout the life of the contract. RERA will keep its own record of the agreement and update changes to the register as these occur.

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.

Investors purchase freehold property in Dubai through offshore company now need to set up an offshore firm with Jebel Ali Free Zone (Jafza).

Investors looking to purchase a freehold property in Dubai through a company now need to set up an offshore firm with Jebel Ali Free Zone (Jafza). Titles to freehold properties will not be registered unless a no-objection certificate (NoC) is procured from the free zone.

This follows the signing of a recent deal between the Dubai Land Department (DLD) and the free zone in a bid to maintain a more concise register of land and property transactions. This new policy, however, does not affect the ownership of properties registered in the name of local entities that were issued title deeds prior to October 26, 2010.

Improving transparency

According to Michael Lunjevich, partner and head of real estate at law firm Hadef & Partners, "It's for the Land Department to have some visibility on who the shareholders and directors are in an offshore company. It's very important to know who the beneficial owners are, and the transfer of property shouldn't be allowed off the Register."

While offshore companies were popular among expatriates, particularly the Muslim community, in Dubai owing to uncertainty over inheritance issues in the region, those established in offshore jurisdictions such as the British Virgin Islands (BVI), the Isle of Man and the Cayman Islands also legally avoid having to pay certain types of taxation on profits and income. "Some international investors don't want assets in their personal name since they could get sued internationally for assets you own in a different country. Transferring it from your name will minimise that risk," explains Brent Baldwin, associate at the law firm.

Despite the fact that the Jafza deal is expected to emphasise information access to shareholder details, investors can still ensure that the asset cannot be traced to their name.

"You may still have situations where the Jafza company is owned by an offshore trust or a nominee company. If you structure your investments well, you can ensure that nothing traces back to you. But, it will be more difficult to sell the structure onto someone else. You will have to transfer two companies and many companies may not be willing to take up collective liabilities," suggests Lunjevich.

Stringent reporting norms

Industry experts believe the DLD could make the reporting requirements for existing foreign offshore firms more stringent. "They might introduce more stringent reporting requirements on those grandfather acquisitions. The Land Department may sometimes enable free transition from a foreign offshore company to a local offshore firm, without charging a fee," Lunjevich says.

The nature of offshore firms not needing to disclose details of the beneficiary has lent itself to fraud and money laundering in many instances. "There have been examples where offshore companies, mostly BVIs, collected money for developments, did not put it into an escrow account and the directors disappeared. Whether it was done fraudulently or they were victims of circumstances, I wouldn't want to speculate," Lunjevich adds.

Residency departments will not renew the residence visas of expatriates if they are wanted by police for financial obligations

Residency departments will not renew the residence visas of expatriates if they are wanted by police for financial obligations, Interior Ministry officials said

Residency departments will not renew the residence visas of expatriates if they are wanted by police for financial obligations, Interior Ministry officials said.Residency visas of expatriates, their relatives and their employees will be renewed only after the settlement of the financial disputes.

Several residents told  that their applications to renew their visas were rejected because banks had lodged complaints against them with police, who had issued arrest warrants.Police have instructed residency departments to arrest these expatriates or send them to the authorities.

While this is the rule, Interior Ministry officials said they consider some cases on humanitarian grounds.

Lawyers, however, stressed that the police have no right to ask residency departments to arrest people who have defaulted on bank loans or other financial issues.Residency departments, lawyers said, are administrative units and have no right to arrest or punish people by not renewing their residence visas for such matters.

Major-General Nasser Al Awadi Al Menhali, Assistant Undersecretary in the Ministry of Interior for Naturalisation, Residency and Borders, told  that if banks file a case with police against a person for financial issues, such as delayed payments of loans or bounced cheques and an arrest warrant is out, no transaction is carried out for that person.

He said residency departments do make exceptions.

“We look at the case on humanitarian grounds. We renew the residency visa if the person has a family, wife and children,” he said. “The ministry does not want to increase the number of illegal residents. The residency department does not arrest people if they are involved in bank loans but we ask them to sort the matter out.”

Dr Khalifa Rashid Al Sha’ali, a lawyer and legal expert, told  that when police ask to bar a person from getting his visa, it is meant to pressure him into paying his dues and protect the other party’s rights.‘Illegal pressure’.However, Dr Al Sha’ali said not renewing the person’s residency visa is a kind of punishment or pressure that is illegal and unjustified.

“It is illegal if the residency department does not renew someone’s residence visa if they do not pay their bank loans. There is no article in the law which says residency will not be renewed for not paying banks, for example,” he said.

A businessman told  that this step by the residency department is illogical.

“It punishes the company for an issue that involves the employee. The loan defaulter in turn is punished using a different tool and is made illegal.”