UAE Central Bank caps mortgages at 50% of property value for expatsand 70% for Emiratis

In a move apparently aimed at eliminating speculators from the real estate market, the UAE’s Central Bank has decided to direct banks in the country to cap mortgage lending for expatriates at 50 per cent of the property’s value.
According to banking and real estate sources, mortgages for expatriates are being limited to 50 per cent of the property’s value for their first property, and 40 per cent for the second unit.
For UAE nationals, the rate will be slashed to 70 per cent for the first property and 60 per cent for the second unit.
A number of banks that  they were yet to analyse the circular from the UAE Central Bank and were therefore not in a position to comment on the move.
It said the new rules would be enforced at the start of 2013, adding that the Central Bank gave no reason for the decision.
Nevertheless, the Central Bank has been locked in a drive to bolster the country’s financial sector following the 2008 global fiscal distress and regional debt default crises that jolted many local banks.
In May 2011, the Central Bank enforced new rules on retail lending, capping personal loans at 20 times a borrower’s monthly salary and stipulating that the loan must be repaid within 48 months.
Those regulations covered all retail loans including personal, auto, housing loans and credit credits, and were aimed at controlling lending activity and excessive charges by banks following public complaints about a surge in bank fees.
According to Central Bank statistics, however, mortgage lending has not seen a major spike in recent months. The latest available data for August 2012 shows that real estate loans issued by UAE banks stood at Dh162.6 billion, marginally lower than the Dh163.2 billion registered at the end of 2010.
This means that, in effect, mortgages have stagnated at this level for 18 months. The Central Bank’s move, in such a scenario, is being looked at as a proactive one rather than a reactive one, aimed at ensuring that the country’s banks’ non-performing loans do not see a repeat of the spike that they saw after the 2008/09 global economic slowdown.
Banks in the country have seen specific provisions for NPLs surge by over 47 per cent since the end of 2010 – from Dh44.3bn at the end of December 2010 to Dh65.3 in October 2012.
Before this directive was issued, there was no official cap on the percentage of mortgage lending and each bank was free to decide the loan-to-value ratio that they offered.
Under the new guidelines, however, UAE nationals seeking mortgages must pay 30 per cent of the property value as a first instalment for the first unit and 40 per cent for the other units, ‘Emarat Al Youm’ daily said, citing the Central Bank circular to banks.
The new rules are expected to directly impact speculators, who might be targeting a resurgent property market in the UAE in general and Dubai in particular.
These new rules will make ‘flipping’ of properties much more difficult and ensure that a property bubble is not created.
The report said the new rules stipulated that banks would pay a maximum 70 per cent for the first property and 60 per cent for the remaining units for each Emirati customer.
“This means that banks must pay a maximum 60 per cent of the property value for expatriates receiving a mortgage loan,” the report said.
The new rules come amidst a steady recovery in the real estate sector in the second largest Arab economy, with the shares of most property firms rising in 2012.
The UAE has said it is considering joining Saudi Arabia, the largest Arab economy, in enacting a mortgage law to regulate the real estate sector, which was severely jolted in the wake of the 2008 global fiscal distress.

No criminal case for bounced security cheques in UAE courts -Ruling covers expats and Emiratis

UAE courts have stopped accepting cheques submitted by banks as a criminal tool against debt defaulters in line with new instructions by President His Highness Sheikh Khalifa bin Zayed Al Nahyan, the semi-official daily Alittihad reported on Monday.

The instructions had first benefited Emirati defaulters before courts were told last month to apply the same rule on expatriate debtors, the paper said.

Quoting Jassim Bu Aseeba, Director of the Judicial Inspection Division at the Ministry of Justice, the Arabic language paper said banks have been told that federal courts would no longer accept cheques presented to them by expatriates against a loan.

“All federal courts in the UAE have started to enforce the presidential instructions to stop accepting cheques presented by banks as criminal tools against expatriates as is the case with Emirati defaulters,” Bu Aseeba said.

“For this reason, the public prosecutor has released all those jailed because of those cheques. Many Emiratis were already released in October.”

The paper quoted another official as saying federal courts have stopped accepting all cheques presented to them by banks and all other financial firms.

“These cheques are no longer sufficient to put a defaulter in prison. They are not a criminal tool any more,” said Ali Khalfan Al Dahiri, director of the legal affairs department at the Ministry of Presidential Affairs.

“The decision is in line with the President’s directives to achieve justice for all residents including Emiratis and expatriates. The decision was enforced last month and all federal courts now enforce the same rule on both Emiratis and expatriates. There is no discrimination in the enforcement of these rules,” he added.

The paper also quoted banking officials as confirming cheques are no longer considered as a criminal tool but that they can be used by banks to prove they are owed money by debtors.

“Banks are still presenting cheques given to them by debtors only as documents proving their rights, including the loan and interest,” one source said. “But these cheques are no longer enough to arrest defaulters and convict them.”

Legal adviser Dr Mustafa El-Sherbini said that this does not mean the rights of the creditor are compromised, but it entitles the creditor to go to the civil court to claim dues.

Banking sources told the paper that banks have also stopped using security cheques as a criminal tool, but continued to request they be submitted as part of documentation for loans.

The report quoted sources as saying that this ruling only covers security cheques and that cheques submitted towards monthly, quarterly and other fixed-term payments can be used to file a criminal case if they are not honoured.

No further grace periods for Residency visa violators in UAE - prosecuted from February 4

 Abu Dhabi: People with expired residency visas will be fined and prosecuted from February 4, a statement by the Ministry of Interior said, adding that no further grace periods or exceptions will be made.

Brigadier Saeed Rakan Al Rashidi, Acting Director General of Naturalisation, Residency and Ports Affairs, said that the ministry is currently dealing with residency violators to ease procedures for their voluntary departure from the country during the amnesty.

Al Rashidi ensured that services are available to allow violators to benefit from the grace period by visiting residency departments across the UAE to obtain outpasses and leave the country without penalties.

The official also urged violators not to wait until amnesty’s final day to submit their papers.In a previous statement, Major General Nasser Awadi Al Menhali, Assistant Undersecretary for Naturalisation, Residency and Ports Affairs, said that amnesty, approved by the Cabinet in April, covers only those who overstayed their visit or resident visas, but not infiltrators, who he said will be treated like criminals.

Earlier, Al Menhali added that residents who overstayed their visas can come forward with their passports and air tickets to obtain an outpass, get their fines waived, and leave the country.Passports withheld by residency department in absconding cases will also be handed over to their holders, he said.

Best Rent options for moving out from sharing accommodation in Dubai, Sharjah and Ajman

Now the confusion on whether to provide tenancy contracts and utility bills across the UAE to get the residence visa renewed is over, families living in shared accommodation will have to look out to rent an apartment.
 International City or Dubai Academic City, where rents for a studio apartment range between Dh17,500 and Dh19,000, it may still exceed the budget of those earning a minimum Dh4,000 per month salary, the only alternative is to move to the Northern Emirates. Moreover, if the family has one earning member (his spouse isn’t working), then those earning the minimum salary of Dh4,000 pm can find the best alternatives in Sharjah or Ajman, where a studio apartment is available for less than Dh850 a month (read: only rent). The apartment size could vary between 350 and 400 square feet.

Sharjah, however, allows three people to share a studio apartment, but there is no such limit yet applicable in Ajman.

A salaried individual in the UAE can sponsor his family provided he earns a minimum salary of Dh4,000 per month (pm) and has his own accommodation, or earns Dh3,000 pm with company accommodation.

KK Ashraf and his family share a three bedroom apartment in Karama, Dubai, with two other family. He says he currently is paying Dh1,700 per month in rent.

“We have been sharing the apartment with my friend’s family for the past three years. Previously, we were sharing a villa in Al Rashidiya. We were never asked for a rent contract. I am a bit confused about whether to move to Sharjah and save on rent, or pay more than 35 per cent of my salary for housing in Dubai.”

Usman Ali, who shares an apartment in Bur Dubai, says he moved to Dubai to avoid the peak hour traffic of Sharjah. He pays Dh2,000 per month for the shared accommodation.

“I know I can get a one-bed apartment in Sharjah. I moved here as I work close by. Our only hope to stay in Bur Dubai totally depends on the authorities as you don’t know they might reconsider their decision again,” he mentions.

On Tuesday, Major General Nassir Al Minhali, the Ministry’s assistant undersecretary for naturalization and residence, confirmed that expatriate applicants must produce a tenancy contract for the renewal of their visas

The new rule is intended to allow authorities to locate their residence as “addresses given in previous applications are not clear or accurate.”

He said those sharing accommodation must also present proof of their residence by submitting a tenancy contract or utility bill in their names.
“The decision is not targeting any party or property group but it will serve those departments seeking accurate data about foreigners’ residences…this measure is not exclusive for the UAE as it is enforced in all advanced countries.”
So if you are looking for a house, here are the best (cheapest) alternatives for families:

Sharjah

• -Studio and one bed apartment in Rolla : Dh10,000 to Dh14,000 pa
• -Studio apartment in Al Qulaya: Dh15,000 pa
• -Studio apartment in Al Taawun area: Dh19,000 pa
• -One bed unit in Al Mina Road: Dh17,000 pa
• -Studio apartment on Al Wahda Road: Dh13,000 pa
• -Studio, one bed units in Al Buteena: Dh13,000 to Dh17,000 pa

Ajman

• -Studio, one bed units in Falcon Tower: Dh13,000 to Dh16,000 pa
• -Studio apartments in Al Naemiyah: Dh10,000 pa
• -Studio, one bed units in Horizon Tower: Dh12,000 to Dh15,000 pa

Dubai

• -Studio apartments in Skycourts: Dh18000-22,000 pa
• -Studio apartments in Deira: Dh20,000 pa
• -Studio apartments in International City: Dh17,500 to Dh19,000 pa
• -Studio apartments in Dubai Academic City: Dh18,000 pa
• -Studio apartments in IMPZ: Dh17,000 pa

New Year's Day paid UAE holiday for pvt, govt sectors

Humaid Al Qatami, Minister of Education and Chairman of the Federal Authority for Government Human Resources today issued a circular stating that January 1, 2013 - New Year's Day -  will be a holiday in the UAE.

Saqr Ghobash, Minister of Labour, has also issued a decision that designates Tuesday, January 1 2013 as a paid holiday for the private sector in the UAE. Work will resume on Wednesday, January 2.

All ministries and departments of the Federal State government will remain closed on Tuesday, January 1, 2013 and resume work the next day, Wednesday, January 2, 2013.

On this occasion Al Qatami offered his deepest congratulations and blessings to His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE and to His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, and to their brethren, members of the Supreme Council of Rulers, asking God Almighty to grant them good health and wellness.

Al Qatami also congratulated citizens and residents of the United Arab Emirates on this happy occasion.