A total of Dh1 billion has already been deposited by developers in escrow accounts with 10 of the 30 banks approved by the Dubai Real Estate Regulatory Agency (Rera).
Escrow accounts were mandated for most development projects starting in December to make sure investors’ funds are safeguarded.
The decision was also taken to encourage more investors to enter the market, according to Sheikh Juma bin Thani bin Juma Al Maktoum, chief of the escrow account team at Rera.
Rera’s new regulations also require property developers to register with the authority, and so far 567 firms have been approved.
“The agency also registered 1,305 real estate projects in the emirate to date – both announced projects and those under construction,” Al Maktoum said.
The Dh1bn deposited so far is related to 250 projects. As part of the new rules, Al Maktoum said real-estate brokers should not take payments from investors to book properties in the name of real estate companies, unless the property is owned by such a company.
“Brokers shouldn’t market any project unless they get the trust account number of the developer.
“The account should be under the name of the project, not the company,” Al Maktoum said.
To open an escrow account, paperwork is required to make certain the project has the proper backing.
Developers must submit the title deed of the plot being developed, approved architectural designs, a letter of approval from a master developer and a trade licence.
Al Maktoum added: “Developers must apply to the escrow account manager to release money after producing a certificate from a consultant that an agreed stage of construction has been reached.”
Rera keeps 10 per cent of the project value in reserve, he added, for a year after completion, and until all units are registered in the buyers’ names and the title deeds are issued.
Dh1 billion is deposited in escrow accounts