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Dubai Property Investment News
Dubai introduces new law to protect property buyers
Investors in off plan property in Dubai are welcoming the new Law No 9 on ‘Guarantee Accounts’, which will grant them greater security during their transaction. The law means that buyers’ payments will now be held in special accounts by certified banks or financial institutions - rather than by the developers themselves – and released according to the stage of completion. This will allay the fear held by many buyers that their funds may be stolen by an untrustworthy developer, re-directed into an alternative project, or ‘lost’ in a development that never reaches completion.
As payments to the developer will now be made on agreed stages of completion, developers will have a strong incentive to meet the given targets on time. The law will also prevent the more extreme cases of criminality where funds are taken by developers who leave the country without beginning construction.
Small developers may be adversely affected by this law, since these are the companies that are less likely to be able to gather the necessary funds for their projects. However, despite some anticipated slow-down in new project activity over the short-term, the property market as a whole will inevitably benefit from increased stability, as the market is granted a level of legitimacy it did not have before. This encompasses the whole property market, since the new law applies to commercial as well as residential property.
The increased protection that buyers of off plan property will now have is extended by Article 13, whereby the account trustee is required to withhold from the developer 5% of the total payment for one year after the certification of completion has been acquired. Developers face a hefty fine or even imprisonment if this regulation is not met. Activities including false document submissions and property sales, embezzlements and activities relating to developments without licenses are covered by Article 13.
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