Law 9 of 2009, which introduces a sliding scale to determine the refunds that property purchasers receive if they default on their purchases,
has been published in Dubai's official gazette.
The chart to the right is from an earlier report from the law firm
Lovell's. You can see it
here.
See the English version here:
Law No 9 of 2009 Amending Law No 13 of 2008.pdfAnd the Arabic version here:
Law No. 9 - Amendment to Law 13, Art 11-ARABIC.pdfThe law, which amends Law No. 8 of 2007, has already been a hot topic of discussion since it was
first reported two weeks ago. A group of people from the
Dubai Property Investors Group went over to meet with senior officials at the
Real Estate Regulatory Agency and
Land Department today to complain about what they describe as the law's developer bias. I was not at the meeting, but from what I've heard they provided some more clarity. Any members of the group, please comment and let us know what you found out.
Can you please advise what happens to an investor who has paid less than 25% on a reservation form and the project is less than 60%.
According to the new law, you will lose all the money you have paid up to 25 per cent of the purchase price. This situation falls under the third category in the chart - regarding "less than 60 per cent of construction".
Developer has not commenced construction = Purchaser forfeits 30% of monies paid to date...... sounds like yet another amnesty program for errant developers. Nice.
A number of developers have not started anything for 2-3 years, and no construction has begun while buyers have paid 30% or more of the purchase price...so now stand to loose it all.
Mind you, before we get worked up - I suppose none of the rules around refunds against any developer will be enforced....without a court order.
This is completely a one sided law favouring developers.
most of the projects are between 0 to 20% status which means excavation and piling stage and yet we stand to lose 25% of the contract value?? why?? just so that developers benefit? so many off plan projects are not viable in today's market condition. The developers will keep insisting that they have the funds. Owners/investors are not able to make payments especially for 0 to 30% projects. What happens to investors in that situation? why was a 0 to 30% slab not considered? and 30 to 40 then 40 to 60????
In the short run this appears to benefit the property industry by ensuring developers can keep a disproportionate portion of the investors' money as well as keep the property which will be sold later thereby ensuing in double gain for the developer.
In the long run, this is devastating for the property industry as no investor would purchase a property where all the developer had to do was to dig a hole in the ground 2-3 years after announcing the project (construction commenced!) and get to keep 25% of the contract value !
A saner approach would be to encourage developers to reduce their prices in line with the 70% reduction in construction material prices (as reported in The National a few weeks ago) and encourage investors to keep the properties to the end of construction. The overall reduction in both the purchase price and rentals would match and we would see more projects seeing fruition which in turn would bolster the property industry.
Does it apply if you bought off-plan with a mortgage and you forfeit?
Who is responsible for varifying the patent statement that comes from all developer that we'r on stage of less than 60% construction level.
Is this a land dept. who is responsible for producing any DOCUMENTORY EVIDENCE that construction had already been started & this developer falls under 3rd category of law, where it can forfeit our 20% or 25% of our paid amount. Please help in this matter as we are loosing huge amount in many projects.