Law No.8 of 2007 Concerning Real Estate Development Trust Accounts (Escrow Law)

• • The law specifies that the payment installments for off plan properties are to be paid directly into escrow accounts (also known as guarantee accounts or trust accounts). These are authorised by the Dubai Land Department along with an approved bank.
• • The capital in the account will be released to the developer when construction milestones are met.
  • Each development requires a separate escrow account.
• • Five percent of the total amount deposited in the account must be retained for one year after the completion certificate is received and all units are registered in the names of the buyers. This will ensure that developers correct any defects in construction that are discovered during this period.

Condominium Law on Ownership of Joint Properties in Dubai (No. 27 of 2007)

• • The Condominium Law relates to the management and maintenance of common property and shared facilities such as parking, fire services, air conditioning, lifts, pools, gyms, walkways, roadways and gardens; collectively referred to as ‘strata’ in some countries, in multiple owner developments.
  • The law clearly defines relations between real estate developers and owners, who are represented in Owners Associations.
  • Owners through their Owners Associations will be able to participate in the budgeting of the common property management processes.
  • The law helps remove ambiguities about the responsibilities for common property management and reduces scepticism among investors in Dubai.

Rent Cap Law

• • A decree issued on the 27 December 2007 and effective from the 1 January 2008, reduces the existing rent cap of 7% to 5%.
  • The law stipulates that rents cannot be increased by more than 5% and landlords who increased rental rates last year cannot make additional hikes this year. In addition, tenants who signed their first property contract in 2007 will not face any rental increase in 2008.

Real Estate Regulatory Authority (RERA)

• • As part of the Dubai Land Department, RERA formulates, regulates, manages and issues licenses for various real estate related activities in Dubai.
  • RERA has issued licenses for over 420 developers active in the Dubai market, and is responsible for implementing the escrow account law.
  • Palazzo Versace, D1 and Sunland’s upcoming Culture Village project have all been registered with RERA.