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Thu 31 Mar 2011 10:05 AM

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UAE bank cuts fees for homeowners in delayed projects

Dubai Bank adjusts profit rates and issues rebates, move could squeeze other Islamic banks

UAE bank cuts fees for homeowners in delayed projects
Dubai real estate, Dubai Marina, Dubai property

An Islamic finance house is thought to be the UAE’s first bank to waive hefty fees charged to mortgage customers due to delays in the completion of their properties.

Homeowners in the country have been hit hard by conventional banking rules, which state that mortgage holders must continue to pay profit rates to their banks, even if the handover date has passed and their properties have not been finished.

But Dubai Bank has said its Ijarah property finance customers who have been affected by late handovers will have their payment schedules readjusted with new rates, with many clients receiving refunds on the fees they have already been charged.

“Customers who took out Ijarah Property finance whose profit rates were calculated using a previous method, will see their profit rate retroactively revised to align with the applicable EIBOR plus  a margin however, subject to  the terms specifically stated in the Ijara property finance agreement,” the bank said in an emailed statement. 

“Dubai Bank will provide these customers with a rebate, as necessary. For existing clients who have Ijara facilities where the Ijarah rate is based upon the Dubai Bank Base Rate (DBBR), the applicable rate will also be reduced by 1%. This reduction will affect future profit rates and will not be applied retroactively.”

Dubai Bank has also undertaken to complete all adjustments and refunds by the end of May.

CEO Giel-Jan Van Der Tol said that the move had been approved by the bank’s Sharia board, and was “entirely in line with a commitment to share the risk with our customers.”

The move could put pressure on the UAE’s other Islamic lenders, such as Amlak, Tamweel and Dubai Islamic Bank to put similar measures in place.

Many projects in Dubai have stalled over the last two years due to oversupply and a collapse in the emirate’s property prices.

However, as few developments have been officially cancelled, many investors and potential homeowners have been forced to continue paying large sums to their banks for delayed projects

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worried sc customer 8 years ago

Does this include customers who have purchased skycourts ?

Skycourts investor 8 years ago

Today, Amlak has also offered to waive the 'Profit during construction' or Additional Rental Payment for the delayed period of a project. I am an investor in Skycourts (financed through Amlak) and I received a call from Amlak today advising me of this decision. However, no news on the profit rate calculation.

VIJAY 8 years ago

We have a loan from Amlak for the Bayswater Tower. Omniyat has delayed the handover by almost 21 months.
Amlak treatened us and we had no option but to agree to pay them the profit during construction amounting to almost AED 325000/- which is not a small amount by any standards. That
too, for no fault of ours.
To add insult to injury, Amlak is charging us 8.25% as interest/profit, which is way above the market rate.
If finance companies act greedy, how do you expect the market to revive?
There is no Central Bank controls over Amlak and Tamweel??
RERA has to ensure the laws are uniform for all.
We tried complaining to them, but they rejected our applications and asked us to go to court.
Going to court is an expensive affair, and have no option but to keep quiet for the time being, till we win some lottery :-)
Can somebody guide us. If Amlak is not charging profit during construction, will they refund the amount being claimed from us, for the profit during construction for Bayswater

Skycourts Customer 8 years ago

Well done Dubai Bank - great to see you have taken the right and fair steps for your customers. You should ensure that you maintain at the forefront of innovation and always keep customers at the heart of you policies and procedures.
All bank just about offers the same products but what will set you apart will be your fair dealings and customer service.
Ensure the customer gets a fair profit rate for the instalments.

Fair is the name of the game!

Name 8 years ago

Dear Skycourts investor,

Please provide more details on Amlak waiving the 'Profit on Construction' as I have not heard anything from Amlak or on the news.

Ganesh 8 years ago

Hello ALL, I am also Skycourt investor through Amlak Finance.
I did not get any such call for waiver of profit during construction. Looks AMLAK is not dealing to all customers with uniform terms and conditions.
Please let me know you have waived total profit during construction or only for the delayed period?

What we should ensure is "does Sharia finance in UAE will allow profit during construction"? and financing premium is allwoed by SHaria law?
Appreciate if any one can advise on above?