Real estate defaulters targeted by new law

PROPERTY LAW: Payment defaulters will be forced to forfeit 30 percent of sale price under the new law. (Getty Images)

New rules announced by the Dubai Land Department will force property buyers who breach contracts or default on payments to forfeit 30 per cent of the sale price to the developer.

The developer may also delay any payment until the property is resold to another buyer, the Land Department said in a statement.

The new rules, effective immediately, apply only to new contracts.

The Land Department said developers could offer a 30-day deadline to buyers in breach or default of a sale contract to meet obligations before cancelling the agreement and refunding only 70 per cent of the amount paid.

The Department said it has established an interpretation for article No. (11) of Law No. (13) for the year 2008 in regards to regulating the Interim Real Estate Register in Dubai.

The Land Department move comes after Arabian Business revealed that two of the largest British banks operating in the UAE announced new restrictions on lending to individuals.

Several local bank and finance companies have followed the lead of HSBC and Lloyds TSB and have reportedly also restricted lending, especially in the real estate market.

According to UAE daily Gulf News, Emirates NBD, the region's largest lender, has suspended retail credit facilities to expatriate employees working with a few real estate firms due to possible restructuring.

The paper said the bank had suspended banking services to employees of a dozen companies such as Tamweel, Amlak, Damac and its subsidiaries, Daman Investments, Emaar, Nakheel, Sama Dubai, Dubai Properties, Union Properties and KM Properties.

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