Legalities in the UAE real estate market

Property LegislatureSunil Thacker, Senior Partner, STA Law Firm

Purchasing or renting a property involves conducting due diligence, taking into account major considerations such as location, cost, return on investment, hidden charges, transportation network, and connectivity and proximity to the business districts, entertainment venues, leisure options, dining establishments, and healthcare and fitness facilities, among others.

But are you aware, or do you understand the legal implications of such transactions?

Sunil Thacker of STA Law Firm explains some of the common legal concerns any property owner or renter needs to be aware of.

Common real estate disputes in the UAE

Typically, the most common real estate disputes can be broadly categorized as: i) involving the sale and purchase of real property; and ii) rental disputes.

Other forms of real estate disputes that may invariably occur include disputes between contractors and developers, disputes between owners of land parcels and developer, and joint venture-related disputes, to name a few. Defects in property, delays in handover and potential disagreements between parties during the course of any transaction are also some of the common forms of real estate disputes within the UAE, leading to one party’s failure to perform in one way or another.

Property disputes can also arise with real estate agencies, and these include commission disputes, contract detail disputes, undisclosed property defects, real estate fraud, among others.

Strata law and its effects on homeowners and the property market in general

In simple terms, a strata title allows individuals to own part of a property and share ownership of the remaining areas. For instance, if you own or purchase an apartment, a townhouse, or a villa, you own a living space and share the ownership of the common areas such as walkways, gardens and land.

The cost of buying a unit within a strata-governed community is comparatively less than the cost of buying units in a non-strata building or community. This is because a single strata scheme controls multiple buildings, and planning requirements are relaxed.

Strata-governed properties also benefit from reduced costs by allowing larger buildings on smaller lots and shared services such as water, electricity and gas. In other words, the strata scheme allows property buyers to purchase better and affordable quality housing.

Effectively, strata properties benefit homeowners in terms of reduced purchase price, low maintenance, security, amenities and luxuries and a gated community environment.

The cost of developing, maintaining and operating strata-based communities is on a much lower side when compared to an average single family dwelling – all of which favors the property market.

The need for more property regulations to promote stability

Dubai’s legal system is an affluent tapestry of regulations, institutions, values and culture.

While Dubai has passed several laws in terms of regulatory development in the real estate sector, Dubai and the UAE in general are ready and willing to learn from the legal developments taking place. From a legal standpoint, coherent steps may need to be taken to curb speculative buying and selling (flipping) of properties.

Current rental regulations aim at regulating existing occupiers or tenants, and new regulations providing for rent caps for new tenants will deliver more stability to tenants. The escrow regulations have long been passed since 2007, and although the escrow law has served its primary objective of regulating off-plan investments, further directions are needed to protect the interests of off-plan property buyers.

Although the strata law and new guidelines have been issued, additional rules and policies to be ap-plied to homeowners associations are expected.

Strata properties’ benefits to occupiers
• Reduced property purchase price
• Low maintenance involved
• Amenities, facilities and luxuries such as swimming pools, gyms and other fitness facilities, recreational and sports facilities
• Security
• Gated community environment

Source: Ellen Joyce Soriano, Special to Freehold

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