The Dubai Land Department has started to seize titles from buyers who are behind on payments for off-plan real estate projects that are more than 80 percent complete. In addition, the government has moved towards stronger enforcement of property registration laws to crackdown on owners trying to avoid housing fees. See the following article from Property Wire for more on this.
The online registration of residential properties in Dubai, both rented and privately owned is soon to become mandatory as officials crackdown on those who evade housing fees. Dubai Municipality (DM) plans to compile details of all housing facilities within the next six months including those owned by foreigners and expats.
All housing units, including those in Dubai’s gated communities and freehold properties, will be issued with a notice to register their details and if they don’t register within a month they we will be charged anyway based on an estimate.
Meanwhile the Dubai Land Department has started to deregister properties, which strips buyers of their title, of those who are behind with payments for off-plan real estate project that are 80% or more complete.
New rules allow developers to repossess the properties and retain 40% of their value. But not all investors are willing to pay up, according to officials. Mohammed Sultan Thani, the assistant director general of the Dubai Land Department, said one developer, which he declined to name, had issued about 225 notices, out of which 200 investors were willing to have their contracts canceled.
Seized properties will be auctioned by the Land Department, with the funds going to the developer unless the sales generate a surplus, which will be passed on to the original buyers. Thani said that no properties had yet been put up for auction.
But many investors are unhappy and believe that the rules are favorable to the developers. They point out that some who have fallen behind with payments because of the economic downturn have been trying to re-negotiate a payment plan and could fall foul of the law even though they want to continue with the property.
Nabil Ahmed, the head of research for the region at Deutsche Bank, said the move to cancel contracts and repossess properties was a last resort for developers whose profits had dwindled since the financial crisis took hold.
During the property boom many developers depended on the off plan model, in which projects were financed by selling units before construction actually started. The practice fueled speculative buying and inflated prices, which have fallen by as much as 50% since the end of 2008 after soaring 78% in 2007.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.