High Demand for Dubai Property: Legal Challenges and Solutions

Introduction:

Dubai’s real estate market has displayed a remarkable recovery post the pandemic, marked by property demand. However, within this positive backdrop, certain landlords have attempted to impose substantial increases in annual rents. Further, there are many other issues.

• Increased risk of fraud: As more and more people are looking to invest in Dubai properties, there is an increased risk of fraud. Unscrupulous developers or real estate agents may try to take advantage of investors by making false promises or selling properties that do not exist.
• Disputes over contracts: Real estate contracts can be complex and difficult to understand. This can lead to disputes between buyers and sellers, especially if there are any changes to the terms of the contract or if there are delays in delivering the property.
• Disputes over rental payments: There is an increase in disputes between landlords and tenants over rental payments. This is because landlords are often trying to increase rents to take advantage of the rising demand.
• Disputes over property ownership: There is an increase in disputes over property ownership. This is because there is a lack of transparency in the Dubai property market and it can be difficult to verify the ownership of a property.

This article examines the legal complexities posed by the rising demand for Dubai properties and explores the solutions facilitated by the Real Estate Regulatory Agency (RERA).

Real Estate Regulatory Agency, Role, and Regulations

1. Licensing and Approval: One of RERA’s fundamental responsibilities, as outlined in Article 5 of Dubai Law No. 4/2019, is to license and approve various entities operating within the real estate sector.

The particular criteria set for obtaining licenses ensure that only reputable individuals and companies participate in the market. This licensing process acts as a safeguard against unprincipled practices and strengthens the credibility of the real estate market.

2. Regulatory Framework: At the bottom of RERA’s efforts is the establishment and enforcement of a comprehensive regulatory framework governing property sales, rentals, disputes, contracts, and more.

This framework provides landlords and tenants with clear guidelines, minimizing uncertainty and disputes.

It also addresses different aspects such as rental increases, eviction procedures, and other facets of property transactions, ensuring informed decisions and safeguarding all parties involved.

3. Rent Disputes Settlement Centre (RDSC): RDSC is addressing conflicts between landlords and tenants, particularly if landlords attempt to impose significant rental hikes, tenants can seek an alternative through this centre.

This specialized tribunal, established in line with Dubai Law No. 4/2019, offers an essential platform for conflict resolution.

If tenants find themselves facing unlawful eviction or violations of their rights, they can file complaints with the RDSC at the Dubai Land Department.

The Different Approaches of RDSC

• Mediation and Resolution: Initially, the RDSC tries to mediate and resolve disputes amicably between the parties through negotiation and settlement.
• Formal Hearing: If mediation fails, the dispute is taken to the next stage, a formal hearing where both parties present their arguments and evidence. The RDSC then extracts a judgment based on the law and evidence.
• The RDSC may order compensation for damages suffered by tenants in case of unlawful eviction or rights violation. Additionally, if tenants have paid rent beyond the eviction date, landlords might be required to refund the unused portion.

4. Rental Increase Regulation: To control arbitrary rental increases, RERA has instituted regulations and tools, including the rental increase calculator. This tool permits landlords and tenants to calculate permissible rental adjustments based on market conditions and regulations.

RERA’s proactive engagement in market research and analysis allows it to monitor trends, supply-demand dynamics, and pricing fluctuations, enabling timely adjustments to regulations.

5. The Rental Valuation of Certificate: This certificate is issued by RERA, which is an essential document that determines the fair rental value of a property in Dubai. The rent valuation service, according to the Dubai Land Department, allows customers to request a rental valuation for a real estate unit. Landlords and tenants can request the service online
6. Transparency and Accountability: RERA’s commitment to transparency and ethical practices is a keystone of its approach within the real estate sector. Detailed contracts outlining rights and responsibilities for both landlords and tenants are mandated. This transparency ensures tenants are safeguarded against potential exploitation, creating an equitable environment.
7. Consumer Protection: Consumer protection forms the essence of preventing landlords from taking advantage of heightened property demand. By enforcing ethical standards among real estate professionals and taking corrective actions against violations, RERA guarantees fair treatment for all consumers, be they landlords or tenants.
8. Online Services and Accessibility: RERA provides accessibility through various online services. Landlords and tenants can register rental contracts, access rental calculators, and submit complaints and inquiries through the digital platform. This online accessibility expedites communication and prompts issue resolution.
9. Escrow accounts: Developers must deposit all buyer funds into escrow accounts. This helps to protect buyers from fraud and ensures that their money is safe.
10. Standard contracts: RERA has developed standard contracts for the sale and rental of properties. These contracts are fair and balanced and protect the rights of both buyers and sellers.
11. Dispute resolution center: RERA has established a dispute resolution center to resolve disputes between buyers and sellers. The center offers a quick and efficient way to resolve disputes without having to go to court.

RERA has also taken a number of other steps to protect the rights of investors, such as:

• Raising awareness of consumer rights: RERA has launched a number of awareness campaigns to educate investors about their rights and how to protect themselves from fraud.
• Enforcing regulations: RERA has a team of inspectors who monitor the Dubai property market to ensure that developers and real estate agents are complying with RERA regulations.
• Taking action against violators: RERA can take action against developers and real estate agents who violate its regulations. This includes imposing fines and revoking licenses.

Overall, RERA has played a significant role in addressing the legal complexities posed by the rising demand for Dubai properties. RERA’s regulations and initiatives have helped to protect the rights of both buyers and sellers and to make the Dubai property market more transparent and efficient.