The Evolution of Off-plan – Law 13 and New Financing Strategies

Over the past few months, Law No. 13 of 2008 has been made official and new financing mechanisms have been spearheaded by Emaar.  These new developments represent an evolution in the off-plan market and are acutely relevant for those who are owners or prospective owners of off-plan property.

Law 13 governs the purchase of off-plan property and is essentially intended to foster greater security and transparency into the trade of such property.  The most important stipulation in Law 13 is that off-plan property must be registered with the Lands Department. Whereas before registration was not required, now any off-plan sale that is not recorded with the Lands Department will be legally invalid.

Further, under this law all developers will be required to report any buyers delinquent in their payments for off-plan property. After such a report is filed, a period of 30 days will be granted in which the buyer can repay the owed amount. Once the 30 day grace period expires, the developer has the option of cancelling the contract and must return 70% of the buyer’s payments.  The developer is thus allowed to keep 30% of the money so-far paid and can then put the unit back on the market. It is important to note that the 30% is of the total paid, not the total purchase price of the property (which would likely be a significantly higher amount).

Law 13 provides several substantial benefits to buyers.  Perhaps the most significant is that developers can no longer charge additional fees if a completed unit is larger than the original planned unit.  So, if a buyer buys a 2,000 sq. ft. apartment and the finished size is actually 2,100 sq. ft., the buyer is not liable to pay anything extra.  However, if the completed unit is actually smaller than the contracted size, the developer is obligated to pay for this discrepancy. Another benefit for buyers with the introduction of Law 13 is that they will no longer have to pay transfer fees to developers for off-plan sales.

Please visit the Dubai Lands Department here for more information.

http://www.dubailand.gov.ae/ld_website/english/English_Default.aspx

The other important piece of off-plan news is Emaar’s announcement of new financing opportunities for its properties.  Better Homes is an official, registered agent of Emaar Properties, and as such we’re pleased to present these new avenues for home ownership to our clients.

Focusing on the Downtown Dubai District, Emaar’s revolutionary new payment strategy allows buyers to pay only 5% down and obtain up to 70% financing.  However, the most unique feature of the plan is that 25% of the purchase price can be deferred until 1 year after completion of the property.  The 25% is then payable over the following five years.  In essence, this means that a AED 1,000,000 property would cost AED 750,000 now, so it will be easier for many buyers to get mortgages for this lower amount and they can wait several years until the property is finished before starting to pay the remainder.

Please speak with one of our Consultants for more information on Emaar’s new strategy for home ownership.

 
As with all legal matters, it is important to consult professional legal advice. Better Homes cannot be held liable for any misinformation, or misunderstanding of information, presented herein.

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