Dubai property authorities to clarify default rules

A new real estate law amendment is to be introduced in Dubai to clarify what happens when a property buyers defaults on payments.

At present Article 11, Law 13, states that if a buyer defaults on a sales contract the developer can cancel the contract and return the buyer's money minus 30%. But there has been confusion over whether the law applies to 30% of the money paid to date or 30% of the total amount due.

The Dubai Land Department is expected to release an amended Article 11 this month introducing new provisions for the cancellation of contracts. 'We will release an amendment to Article 11 in the coming weeks. It is something good for the market as it is more comprehensive and detailed,' said the department's Director General, Sultan Butti bin Mejren

'The revised article will set new grades for properties and developers. It will be more than the 30-70 rule which is now applicable,' he added.

Meanwhile the Real Estate Regulatory Authority has clarified confusion over its new rental index. A spokesman denied reports that it was not going to be issued in April and confirmed it will be published this month and will reflect falling rent values.

It is expected to include lower rental values to take into account the current slowdown in the property market.

In a statement Mohammed Khalifa bin Hammad, the director of Real Estate Relationship Regulation at Rera, said the index was being updated as a result of data collected through the online rental contract registration programme.