Real Estate in Dubai – Rules & Regulations
Dubai is a captivating and magical place to visit- with many towering skyscrapers and conic landmarks. Burj khalifa building, burj al Arab. Madinat jumeirah, Dubai foundations, La Mer, Dubai frame, Dubai marina – honestly there are so many photo opportunities and instagrammable places in Dubai. Dubai is famous tourist, business and investment centre. As a favourable political and economic conditions, may businessmen prefer to invest in Dubai. The city is growing quickly and Dubai is always looking for new ways to bring more opportunities to investors
Over the past few years, buyers and investors have shown interest in investing in properties in Dubai. Due to the sudden increase in investments in real estate the government decided to implement several Dubai real estate laws & regulations for real estate investors. Laws & regulations of Dubai real estate address many legal issues related to selling, buying and owning Properties of Dubai. The main objective of the rules is to protect the interests of investors in real estate to make the investment process quickly an easy
The UAE has strict laws to prevent money laundering and terrorist financing. The country has consistently issued regulations over the years to curb financial crimes.
Before knowing about rules and regulations of real estate in Dubai we must need to know about Dubai Land Department (DLD). The Dubai Land Department (DLD) was established in 1960 may to establish the most prominent real estate sector both internationally and locally. It was the first body to deal with property and title matters until one of the founding fathers of UAE, HH Sheikh Rashid bin Zayed Al Maktoum established the land affairs commission. He empowered it to document certificates, audit, inspect and map properties
As per law no.4 of 2019, RERA, as a public body, will come under the Dubai Land department. The act also includes reorganizing the legal provisions of the agency established by Act no. (16) of 2007
RERA (Real estate regulatory agency) is primarily responsible for imposing Legal Dubai real estate rules and regulations on all real estate related activities of developers, brokerage companies and owner associations. It lays rules and regulations for registration of off-plan sales in Dubai for developers and real estate brokers. RERA monitors all projects of developers from financial and technical aspects to protect the wider inters of the real estate market and investors. Another mandate of Real estate regulatory agency (RERA) is monitor compliance of rules & regulations of Dubai real estate by developers, real estate brokers and other licensed real estate professional and impose fines for violations, including cancellation of projects
Now lets us discuss about important laws of real estate in Dubai
Rental property laws: As per the rental property act, a tenancy agreement must be signed between the landlord and the tenant for a 1 year period. During the validity of the agreement, a landlord is not allowed to increase the rent. The rental price can be changed only at the time of contract renewal. Landlords are not allowed to increase the rent more than 15 percent. If there is any dispute between the landlord and tenant, they have to file a case with the rent control committee of municipality
Real estate law no.7: Real estate law no.7 permits foreigners to own property for lease or rent. The tenure of the property lease is approximately 99 years for any property subject to the approval of the government of the state of the Dubai
Inheritance property law: compared to other Dubai property laws inheritance property law is more complex. If a deceased asset owner is a member of another country, the UAE inheritance law is also considers the law of the other country. Determining hereditary owners is more complicated if the landlord is dual citizen of two countries other than the United Arab Emirates. A valid will that meets all UAE and Dubai legal standards is needed to bequeath the estate to the legal beneficiaries. In the absence of legal will, it is up to an interstate court to decide how a property or land should be divided among the beneficiaries or the state that owes the property
New law on joint ownership of real estate in Dubai: as per law no. (6) Of 2019, the land department will put together a register for jointly owned real estate properties. It will feature all information to land owned by developers and real estate units intended for independent ownership. The register will also feature owner’s name, name of members of the owner’s committee and the building management chart describing the maintenance procedures in common areas created as per the rules and regulations of the lands department. This register shall include the share maintenance costs to pay by each owner, details of the facility management company responsible for managing the common areas and facilities of the joint property in accordance with this act, and information about the developers and operators project.
According to this law, all developers in Dubai must submit the require documents of jointly owned real estate projects with the date of completion and certificate of completion to Dubai land department (DLD) within 60 days of receiving the certificate of completion. The time limit of 60 days can be extended by another 30 days.
New joint ownership law of real estate in Dubai also applies to facility management service providers. They are needed to submit reports to RERA every 6 months regarding the management of property and public sector. Those who fail to present the documents face financial penalties of up to 1 million dirhams, which can be doubled to 2 million dirhams for repeated violation within a year.
With this new property law in Dubai, the government aims to increase investment in the real estate sector and protect the rights of all parties involved
The ‘Escrow act’, introduced in 2007, introduced protection for buyers’ money invested in off-plan sales in under construction developments, later supplemented by the creation of the interim real estate register, protecting buyers’ rights through the requirement to register. Plan sale agreements in the interim register maintained by the Dubai land department
In Dubai, the RERA (Real estate regulatory agency) has established crucial rules to govern the relationship between land owner and tenant. Article 4 or act no.33 of 2008 makes it compulsory for a land owner or tenant to register a tenancy agreement with RERA. This is to ensure that the same property is not rented twice at same time. RERA Rent rules govern the rights and responsibilities and the tenant. Rent increases for real estate in the Emirate of Dubai by Decree No.33 of 2013. The new order applies to both public and private sector land owners and includes all leases in Dubai, special development zones and fee zones such as the DIFC (Dubai International Financial Centre). Article 1 of the decree determine the maximum percentage of rent increase of the real property upon renewal of the lease as follows:
- If the existing rent is 40% below the average market rent, a maximum rent increase of 20% is allowed
- If the existing rent is between 31% and 40% above the average market, a maximum rent increase of 15% is allowed
- If the existing rent is 21% to 30% less than the average market rent , a maximum rent increase of 10% is allowed
- If the existing rent is 11% to 20% less than the average market rent, a maximum rent increase of 5 % is allowed
- If the exiting rent is 10% below the average market rent, no rent increase will be allowed
- Article 3 of the decree states that the average market rent rate is determined according to the property rent index of Emirate of Dubai approved by Real estate regulatory authority (RERA)
Another important piece of legislation enacted in April 2010 was the strata act. Nowadays, developers continue to work towards implementing compliant strata schemes, empowering property owners to jointly manage their communities and buildings, while preserving transparency and fairness on issues such as service charge levels, contracts with service providers and use of common areas and facilities
In May 2012, a draft law on protection of property investor in Dubai was circulated for consideration and comment, which seeks to introduce the concept of not keeping the investor in the reservation form. But be entitled to see and agree to the full sales and purchase agreement and allow some time to consider it before signing. In case the terms are not agreed upon, the buyer is entitled to refund of its deposit. At the time of printing, the draft law on the protection of property investors in Dubai remains in draft form and unpromulgated
The extent to which the development of its legislative structure has contributed to the recovery of real estate market of Dubai cannot be ascertained, but in our view, it is important contributing factor and a testament to the importance of the existence of strong legal frame work. To create protection, assurance and security.
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