Abu Dhabi drafts new property laws

The laws relate to five key sectors of the emirate's real estate market, and are specifically designed to tighten regulation in the industry.

The proposed legislation covers a strata law, an escrow law, a mortgage law and a clarification of the permits needed by developers prior to launching sales on a project.

The fifth proposed legislation covers the creation of a regulatory body to monitor the UAE capital's property market.

As Abu Dhabi's real estate market only opened up to foreign investors in 2006, some four years after Dubai's, the emirate has yet to put in place similar regulatory guidelines for asserting control over the industry - although the supply of units onto the market is much more strictly controlled than in other regional cities.

The strata law, which would regulate the role of property owners in apartment buildings, and the issuance and monitoring of the necessary developer permits prior to sale, would come under the banner of enforcement of a newly-created Municipality department.

Developers would also have to acquire legal possession of the land before selling off-plan properties.

Real estate regulatory body

A separate regulatory body would then cover dealings between developers, investors, end users and property associations.

The escrow law would be to monitor the use of investor payments by the developer, working along the lines of monitored trust accounts, with approved trustees, agreements and regulations for use of the finances. Developers would have to be registered prior to offering units for sale, and the money would only be able to be used for the specified project.

The mortgage law would be used to set up precedents for banks and financial providers in the event of payment defaults and eventual foreclosures, as well as specifying those who are allowed to apply for financing.

The Department of Municipal Affairs is also compiling a database on the city's real estate sector, including levels of supply and demand, which will help the government to strategise in line with the Plan Abu Dhabi 2030. Plans are also being put in place to facilitate access to financing for end user buyers, and for the city's smaller developers to ensure project continuation.

Decisions on visa terms or allowances for property owners would still be legislated at the federal level.

See also:
Sorouh to aid sub developers 'if necessary'
Abu Dhabi 'able to finance' all current real estate projects
Abu Dhabi developers change focus to suit financial constraints