ABU DHABI // The Dubai Land Department is planning to issue an amended property law that will determine refunds for investors who default on their payments based on construction progress of the project, according to lawyers briefed on the matter.
The move will bring clarity to the property market in Dubai, where a credit squeeze and the effects of the global financial crisis have led to defaults by home buyers. But some investors have criticised the amendment for being too heavily in favour of developers.
Lawyers say the amendment to article 11 of Dubai Law 13 of 2008 will stipulate that in cases where a buyer defaults and the developer has constructed at least 80 per cent of the project, the buyer loses all money paid to that point. The home can then be auctioned to compensate the developer for the rest of the cost.
If a developer has completed at least 60 per cent of the project and the buyer defaults, the developer is entitled to keep 40 per cent of the purchase price.
But if a developer has completed less than 60 per cent of the project, it can only keep 25 per cent of the purchase price.
If the developer has not been able to start construction "without any negligence or omission on the developer's part", the developer may keep 30 per cent of the money paid by the buyer to that point.
Developers would have to refund any money due to the purchaser within one year, or within 60 days of the resale of the home.
A legal briefing from the law firm Clyde & Co said the amendment "provides much anticipated clarification regarding the procedures required to be followed by developers in respect of defaulting purchasers, as well as the rights of developers to retain purchaser monies upon cancellation".
The original law specified that if a buyer defaulted on payments to the developer, the buyer would be able to recover 70 per cent of any money they had turned over to that point.
But when the property market started to face difficulties last autumn, the Real Estate Regulatory Agency (RERA) issued an interpretation of the law that said the developer could retain 30 per cent of the total price of the property. In some cases, this meant the developer could keep all payments a buyer had made to them.
Officials from RERA later admitted that the interpretation was an emergency measure intended to prevent a wave of defaults that would cripple the property sector.
The new amendment, called Dubai Law No. 9 of 2009, will not only provide more specific terms but be retroactive for all property contracts signed in Dubai. If a contract between a buyer and a developer has a contrary clause, it will be rendered void, according to the Clyde & Co briefing.
Emad Eldin Farouq, a senior legal counsel with the Dubai Land Department, told a panel last week that the amendment had been signed into law and would soon be published in the official gazette of Dubai, according to an article in Xpress, which first reported the story. The amendment would "maintain the confidence of investors and safeguard the real estate of Dubai", Mr Farouq said, according to Xpress.
But some investors said the amendment did not go far enough in protecting investors from developers who had delayed construction indefinitely.
"It is taking away our rights from the way the law was originally written," said Nigel Knight, a homebuyer and member of the Dubai Property Investors Group.
The investors' group handed the Land Department a petition last week asking for a meeting to discuss concerns it has with the amendment.
A Dubai Land Department spokesman could not be reached yesterday.
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The biog
Favourite books: 'Ruth Bader Ginsburg: A Life' by Jane D. Mathews and ‘The Moment of Lift’ by Melinda Gates
Favourite travel destination: Greece, a blend of ancient history and captivating nature. It always has given me a sense of joy, endless possibilities, positive energy and wonderful people that make you feel at home.
Favourite pastime: travelling and experiencing different cultures across the globe.
Favourite quote: “In the future, there will be no female leaders. There will just be leaders” - Sheryl Sandberg, COO of Facebook.
Favourite Movie: Mona Lisa Smile
Favourite Author: Kahlil Gibran
Favourite Artist: Meryl Streep
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
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The specs
AT4 Ultimate, as tested
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Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
How much sugar is in chocolate Easter eggs?
- The 169g Crunchie egg has 15.9g of sugar per 25g serving, working out at around 107g of sugar per egg
- The 190g Maltesers Teasers egg contains 58g of sugar per 100g for the egg and 19.6g of sugar in each of the two Teasers bars that come with it
- The 188g Smarties egg has 113g of sugar per egg and 22.8g in the tube of Smarties it contains
- The Milky Bar white chocolate Egg Hunt Pack contains eight eggs at 7.7g of sugar per egg
- The Cadbury Creme Egg contains 26g of sugar per 40g egg
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
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The specs: Lamborghini Aventador SVJ
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The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Multitasking pays off for money goals
Tackling money goals one at a time cost financial literacy expert Barbara O'Neill at least $1 million.
That's how much Ms O'Neill, a distinguished professor at Rutgers University in the US, figures she lost by starting saving for retirement only after she had created an emergency fund, bought a car with cash and purchased a home.
"I tell students that eventually, 30 years later, I hit the million-dollar mark, but I could've had $2 million," Ms O'Neill says.
Too often, financial experts say, people want to attack their money goals one at a time: "As soon as I pay off my credit card debt, then I'll start saving for a home," or, "As soon as I pay off my student loan debt, then I'll start saving for retirement"."
People do not realise how costly the words "as soon as" can be. Paying off debt is a worthy goal, but it should not come at the expense of other goals, particularly saving for retirement. The sooner money is contributed, the longer it can benefit from compounded returns. Compounded returns are when your investment gains earn their own gains, which can dramatically increase your balances over time.
"By putting off saving for the future, you are really inhibiting yourself from benefiting from that wonderful magic," says Kimberly Zimmerman Rand , an accredited financial counsellor and principal at Dragonfly Financial Solutions in Boston. "If you can start saving today ... you are going to have a lot more five years from now than if you decide to pay off debt for three years and start saving in year four."