DUBAI’S NEW LETTINGS LEGISLATION – IS IT TOUGH ENOUGH?

When it comes to property legislation, Dubai has to be one of the most tweaked and tinkered with jurisdictions on the global stage – arguably a lot of which is down to its relative ‘newness’ as an investment destination.  The latest piece of fine tuning are the new rental contracts being introduced to make disputes less likely with officials in tandem with a top down sweep of unregistered real estate brokers in the sales and leasing markets.

At present, property sales and leases in the emirate must be carried out by registered brokers with officials from the Dubai Land Department (DLD) stressing that they will crack down on those who are not accredited and licensed with official cards issued by the department.

Quite right too, as it’s big business. There are currently 5,993 active brokers in Dubai and last year they carried out 32,932 transactions amounting AED 1.52 billion, the latest DLD figures show.

Few would disagree that dealing with registered and certified real estate brokers is central to achieving a secure and sustainable real estate environment in the emirate. That said, to ensure individual rights are upheld, the onus is still largely on individual investors to do their due diligence in verifying the accuracy of ownership data for all property before entering into buying, selling and leasing activities. Easier said than done for the uninitiated.

Since the beginning of March all rental leases must use the DLD’s standard form tenancy contract which provides safeguards for tenants and landlords. This should provide greater certainty, particularly with forms of lease currently used in Dubai which may not be particularly well drafted or conflict with existing laws. But is it enough?

The new form contains a number of standard clauses. There is however the option to register additional terms or an addendum to the standard form. This is likely to be of particular relevance to leases of commercial property which often have to cater for more complex, commercial arrangements.

The DLD is also working on a new rental security deposit form that should be rolled out soon and will make it easier for tenants to be refunded at the end of their tenancy. At present, it’s only covered by mutual agreements with landlords. If all beds down as it should - the new form should hopefully speed up the process and mean that landlords will have to return a deposit within a more reasonable timescale.

As always, it remains to be seen if this latest round of rigour will make the sector more transparent and accountable. But best intentions at least make for a good starting point…