Real estate defaulters targeted by new law

Posted by: Tommy C Thursday, 13 November 2008 11:52 PM[UAE]

Dubai has lost all of it's appeal. Developers are abusing laws left and right leaving investors with a paper saying "Pay on time, or we take your money no matter what we do, and you can't do anything about it". Now is the real time for developers to step forward, sure it might have been a problem for them if everyone would take their loss (still leaving money enough for the developer to resell at more marketadjusted prices considering the current conditions) and keep the consumption and confidence up in the emirate. The offplan market will die, no developers have the equity they are now blaming real end-user investors for not having (investors without 100% equity is called flippers, making apx. 75% of investors flippers since they need mortgage to do 100% financing. What is the term for developers not having equity and still launching and making never-ending delays to projects to cover up their bad equity at the same time as they're basically forcing investors to default? All this before they finally cancel the projects years after they should've?). Point being, the developers now being able to extend their obligations and offer investors the protection the Land Department should have given them, will be the ones making business in the future.

Posted by: Ron Thursday, 13 November 2008 8:06 PM[UAE] - UAE

an earlier article said 70% of the paid price to be returned upon resale.. now this article says "to forfeit 30 per cent of the sale price to the developer" Secondly new contracts? as of now..any new ones? or existing 2008 ones? Coz im sure no ones gonna buy anything at the moment.

Posted by: nasir Thursday, 13 November 2008 4:26 PM[UAE] - UAE

what happens when the developer does not deliver on time? what about default by the developer, should the buyer not pay the 30% or recover 30% from the developer. the rules should be equal.

Posted by: Simon Thursday, 13 November 2008 4:07 PM[UAE]

This new law does nothing for the investor or potential home owner. It falls in the favour of the developer to protect them from people making a 'run' on the developers to get their money out of the real estate market much like we have witnessed investors taking their money out of banks in the US and Europe. But in actual fact it doesn't quite do that because if your contract pre-dates 31st August 2008 you are still entitled, in default, to 70% of the original amount paid to date...and if I am correct, I believe to a maximum of 30% of the original purchase price. So a 'run' on the developers could still occur...potentially. But coming back to the new law however, if I were looking to purchase property in Dubai, I'd have to really consider the consequences of not being able to carry the contract to the end. Why? Because in the new law... 1. The developer is the one to put in a cancellation notice to the lands dept and NOT the owner of the contract. Will the Developer do that in a timely manner? I don't think so. 2. The developer is the one to then market and resell your unit prior to you getting your refund back. Could you honestly trust any developer in Dubai to tell you when the unit has been sold? And trust them to give you your refund cheque in good time? I don't think so. Developers here at best are very slow payers. 3. If the Developer still has stock remaining on his books, is that developer seriously going to resell your unit before selling the last of what he has? I don't think so. Seriously, the developer will do everything to avoid paying a defaulter their money back. These few issues alone are enough to say DO NOT buy property until this law is reversed. The law put in place because of the very serious threat of a 'run' on the developers. If that had happened the market would have gone into real meltdown. No developer would have been safe. So to protect the developers they have alienated the 'buyer'! Not a good move at all.

Posted by: Susan Valerian Thursday, 13 November 2008 2:16 PM[UAE]

Dubai Land is so quick to implement any law that affects the emirate. But what about developers who have delayed projectors by more than one year, two years and even three years? When is DUbai Land going to pass any law to take care of us investors?