Defaulters set to lose 30%
Defaulters set to lose 30%
By Saifur Rahman, Business Editor, Land Departmen
Published: November 12, 2008, 23:42
Dubai: Dubai Land Department on Wednesday said property buyers will lose 30 per cent of the sum paid for any property in case of cancellation, default in payment or breach of purchase contract, in what is seen by analysts as a desperate move to protect the developers as well as punishing the speculators.
“This is a desperate move to support the developers. However, this is also a way to encourage the matured investors to enter and remain in the market,” Sudhir Kumar, managing director of Realtors’ International, a property consultancy.
“The speculators and fly-by-night operators who have been inflating the prices by buying and selling properties at higher sum will not be able to play around with the market any more as this new clause will override the exit clauses. This is, in a way, good for the market,” he added.
The Land Department yesterday included the 30 per cent sum in an interpretation of Article 11 of Law No.13 of 2008 in regards to Regulating the Interim Real Estate Register in Dubai.
Sultan Butti Bin Mijrin, director-general of the Land department, said, based on Article 11 of Law No. 13 of 2008, the developer should inform the Land Department if a buyer breaches the property contract, the Department will then notify the purchaser in person or by registered mail or email, and give him/her 30 days to fulfill their contractual obligations.
“In case of passing the term, the developer will then hold the right to cancel the contract and refund the sum paid by the buyer after deducting an amount not exceeding 30 per cent of the total paid amount,” he said in a statement.
“The request of contract cancellation should be presented by the developer, not the property buyer. But in case of contract cancellation the developer has the right to keep 30 per cent of the contract value, and a (30 to 70 per cent) of the paid amount is implemented on the amount that exceeds 30 per cent.”
From today
In case of cancelling the contract, the developer has the right to keep the money paid by the purchaser up to the date of the sale of the real estate unit, and in this case the buyer could go to the real estate court if he/she would like to cancel the contract. The Land Department said it will implement the article from today.
Analysts say Dubai’s property market is maturing. “The market is washing itself up from inflation, Ali Al Shihabi, founder and chief executive of Rasmala Investments, said. “The market is correcting itself, which is good. However, the government should strengthen regulation.”