Dubai is planning to enforce a new law in mid 2012 intended to protect property investors to prevent fresh crisis that jolted the local real estate market in the wake of the 2008 global fiscal distress, an official has said.
The new law will likely be enforced in June and will ban developers from selling property to investors before at least 20 per cent of the project is completed, said Sultan bin Mujrin, director of the Department of Land and Property in Dubai.
Quoted by the semi official daily Alittihad, he said the law is the first of its kind in the world, adding that it will organize the property market and regulate the relationship between developers and investors.
Under the new rules, measures will be taken to check the credit worthiness of developers before they embark on the project.
“The Department conducted a thorough study on the local property market and found that the existing legislations provide protection only to developers while there is not such protection to investors,” he said.
“The new law will ensure protection for property investors and regulate the relationship between them and the developers in all stages of the projects….we expect the law to be enforced at the end of June.“This law will achieve the required balance between the interests and rights of investors and developers in the local market…it will cover the whole process starting from planning for the project and ending in construction and delivery.”
Mujrin said the Department had polled both the developers and investors before deciding on issuing the “Law for the Protection of Property Investor.”
He said the law covers four specific phases including the need to issue accurate data on real estate projects, contracting with authorized developers for any new property investment, and delivery and maintenance of the property.
“The last stage covers the sale of the property or investing in it,” he said, adding that the law would focus on preventing violations.
“That is why the new law does not include specific penalties…it will concentrate on preventing offences or in other words it is a ‘pre-emptive protection law.”