RAK clampdown on property developers

GETTING TOUGH: New rules have been introduced for developers in Ras Al Khaimah. (Getty Images)

The UAE emirate of Ras Al Khaimah has introduced tough new rules forcing developers to deposit investor funds in guarantee accounts in a move aimed at regulating the sheikhdom’s fast-growing real estate sector.

But state controlled RAK Properties, the largest real estate company in the emirate, will be exempted from the new law.

Developers will need to provide title deeds, contractual information, conceptual designs and financial statements relating to the project before they can register their projects, state news agency WAM reported on Monday.

The law is “intended to streamline property purchases in the emirate” by bringing in more transparency and would “help boost the confidence of real estate investors by securing their interests,” said Jihad Quzmar, a legal advisor to the government of Ras Al Khaimah.

Under the news rules, developers will not be allowed to advertise their projects in the media or participate in exhibitions unless they have obtained written consent from the government through the Ras Al Khaimah Investment Authority.

Cash deposited into the new guarantee accounts from the deposits of off-plan investors must be used for the real estate project and 5% of the funds will be kept in the account for a year after the building is finished to ensure it meets the required standards and wins a completion certificate.

The new law, called Amiri Decree No. 22 of 2008, is effective from July 3 2008.

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DEVELOPERS DEPOSIT
Posted by Gabriel, Beirut, Lebanon on Monday 14 July 2008 at 15:34 UAE time

These regulations adds additional cost to any construction project. A more comon practice is to request developer to take an insurance to cover post construction defects.

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