Everything About Dubai RERA and DLD Laws

Land is an essential commodity and an excellent investment. However, since it is so capital-intensive, there are quite a few risks associated with it. Also, all governments around the world enforce stringent land laws due to the sheer volume of capital people invest in it. As a result, every country has strict rules and regulations in place regarding building and development. The UAE, being a premier investment location, also has a lot of laws in place to ensure that construction and development are well-monitored. In this article, we will take a quick look at some crucial things investors need to know about the RERA and DLD.

What are the DLD and RERA?

The Dubai Land Department, better known as the DLD, came into force in 1960 to regulate the real estate sector in the Middle East. It is a subsidiary of the Dubai government that deals with the registration and documentation of real-estate related transactions and deals. It has several organisations working under and alongside it to ensure that the real estate infrastructure of the Middle East stays robust. Some of them include;

  • Real Estate Regulatory Agency, better known as the RERA, which acts as the regulatory arm
  • Real Estate Investment Management and Promotion Center, which helps with investment 
  • Dubai Real Estate Institute, which helps in educating the masses
  • Rental Dispute Center, which serves as the judicial arm

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What are Off-Plan Properties?

An off-plan property is one that remains unconstructed but was purchased from either a developer or first-owner directly. People buying such pieces of real estate enjoy generous benefits and subsidies in Dubai. As a result, a lot of investors prefer these types of properties over ready properties as they get them at discounted prices. The significant risks involved in buying an off-plan property is as follows;

  • Delays in completion
  • Cancellation of the project
  • Market fluctuations which lower the price later on
  • Quality may fall below expectations
  • Cannot sell such properties until the buyer pays a certain percentage of the total sale price.
  • Lack of immediate returns

Therefore, investors must carefully research and analyse the conditions and the plot before making an off-plan purchase. The Real Estate Regulatory Authority serves as the regulatory arm of the DLD and comes out with regulations to protect such buyers. The RERA demands developers to put all the money acquired as an advance for such sales in an escrow account they must register with the RERA. Furthermore, such developers can access these accounts only after a specific section of the development is complete. Hence, investors should make sure their developers are registered with the RERA and DLD before making such a purchase.

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Standard RERA Rules For Properties in Dubai

  1. A Dubai Free Hold area is a location wherein Non-GCC nationals have the option to buy property for themselves. Such sites came by through the direct order of the rules and were enforced through Law 7 of regulations regarding land registration in Dubai in 2006.
  2. When an individual buys a property in Dubai, they have full ownership of both the property and the land which it occupies.
  3. Owners can choose to rent, lease or sell the property they buy.
  4. Furthermore, as mentioned earlier, it isn’t just Dubai nationals who can buy properties in the UAE. Certain areas allow non-nationals to own property as well as leading to investment opportunities for foreigners.
  5. Developers who wish to sell units on an off-plan basis also need to register an escrow account with the RERA. Payments made by purchasers of these units will be deposited into the escrow account along with loans funded by investors for construction and project development. This allows the RERA to ensure that this amount is used solely for construction purposes. These escrow accounts are monitored, regulated and audited by a special Real Estate Escrow Account Division that works under RERA.
  6. Law 13, which came out in 2009 also makes it mandatory for developers to register all transactions related to off-plan units. These involve sales, leases, mortgages, musatahas and other disposals. 
  7. All investors must ensure that their project is being developed by someone registered with the Land Department. RERA laws require developers to get approvals from the concerned authorities before marketing and closing the sale of off-plan projects. In case they make sales before getting the required approvals, such sales will become void.

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Questions to Ask Before Buying an Off-Plan Project

  1. Has the real-estate project been registered with RERA?
  2. Does the project have an escrow account associated with it?
  3. What is the account number for the escrow account and who serves as the account agent?
  4. How much work is left, and when do the developers expect it to be completed?
  5. Are the developers registered with RERA?
  6. Is the land owned by the developers, or is the project based on a development agreement?
  7. Does the developer have all the required permits, regulations and approvals from both DLD and RERA?

Mortgage for Buying Off-Plan Properties

As per laws, the mortgages for properties that qualify as off-plan have a maximum loan-to-value ratio of 50%. Also, this may be done only after the buyer has paid off at least 50% of the value of the property. The banks and other financial institutions may also have their own conditions on what type of properties they want to finance. 

Selling Off-Plan Properties

All investors need to go through the developer’s conditions before making an off-plan purchase. This is because most developers have conditions regarding the payment to be made before a buyer can start looking for other buyers. In such cases, the investors will have to pay off a certain percentage before they try to sell the property.

For enquires call @ +971 45 570 204 / Email Us : support@kgrnaudit.com

How Can KGRN Help?

Now that you know about the RERA guidelines and why they are essential let us take a quick look at how KGRN can help you. KGRN Chartered Accountants is one of UAE’s most prominent business consultancy and audit firms. Our team of experts have the required experience and expertise to guide you on all matters concerning the RERA laws. They are well-versed with the laws and continually update themselves regarding amendments and changes. Hence, our experts will ensure that your investment stays safe and that you make the most well-informed decisions to avoid legal hassles and maintain 100% compliance. So, partner with us at KGRN and grow your real estate investment portfolio with ease!

For enquires call @ +971 45 570 204 / Email Us : support@kgrnaudit.com

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