RERA Announces New Law From January 2009

Dubai property laws have had to undergo large and sometimes rapid changes since the opening up of the market to foreigners in 2002. It is probably fair to say at that time the legal framework was somewhat unclear and in some cases downright confusing! As the property market here has taken off and grown, the legal aspects have also been forced to adapt to keep up. Whilst at times there may have been some problems, for the most part the legal side of things here has been able to provide adequate structure and order for all real estate deals to go ahead. The Dubai government has often changed and adapted the laws and regulations in the Dubai freehold real estate market in order to allow the market to function in the best possible way. And recently the Real Estate Regulatory Agency (RERA) has announced another legal adaptation that will see a large change in the way buyers will be expected to pay developers for projects yet to begin construction, good news for investors for Dubai apartments and villas.

Previously those who bought an off plan property would have been expected to have paid in installments all of the properties value to the developer come the time of completion with no nothing to take into account the time that construction had begun. However now RERA has announced that this method of payment will no longer be an option for developers, and instead starting from the 1st of January 2009 developers will have to abide by a new system. From now on developers will only be permitted to take no more that 20% of a properties worth before construction on the development has started.    

How well RERA implements the new legislation remains to be seen but it has so far sent out over 100 letters to developers and held meetings with them as well as meetings with banks and lending institutions. It has also gone as far as to set up the Real Estate Development Trust Account Department. This 11 member Body will collection information and monitor the construction process whilst supervising and scrutinizing that escrow account payments match the agreed timings and scheduling. RERA believe this should not disadvantage property developers too much, and to ensure their rights, in the case of any dispute developers have the option of turning to the property courts where contracts terms and agreements would be guaranteed. This should therefore be greeted as good news for buyers, who now will not have to pay out large sums of money on projects that have yet to begin construction. Hopefully with this and other new initiatives the Dubai real estate market can continue to move forward.    
 

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