Dubai Land Department (DLD) has issued a new set of rules governing how brokers can sell overseas properties in the emirate in a bid to prevent potential investors from being ripped off.
DLD’s new rules require a broker selling properties outside the UAE to gain a permit for marketing them in Dubai. In order to do so, they need access to the property’s title deed, a letter from the country in question describing the method of foreign property ownership, an agreement between the owner and the broker representing them, and a copy of the property certification from the UAE Embassy and the Foreign Ministry that has been translated into Arabic by a legal translator.
Ali Abdullah Al Ali, the director of the licensing department at DLD’s regulatory arm, Rera, said the new rules were "intended to protect residents who are interested in making real estate investments outside of the country".
"It encourages real estate brokers to be accurate and cautious in any campaigns that promote properties abroad and advises everyone to follow the correct legal procedures, " he said.
The new rules follow an earlier scheme introduced in October forcing brokers marketing properties locally to gain permits before advertising homes.
David Godchaux, the chief executive of CORE, said better regulation of the market should be welcomed. He said there were brokers who were abusing their position by "selling international properties that may not exist, or may not exist in the form that they are selling them".
However, he warned that investors still needed to do their homework before buying homes overseas.
"I’m afraid that to a certain degree, this kind of regulation will give artificial confidence to buyers that they can’t be cheated. And that’s not true. Even if you have all of the documents in place, it’s not going to stop some brokers or developers selling really bad deals."
Robert Pearce, the head of residential development and investment at Chestertons in London, said: "I think this is a great move by the Land Department, and a move in the right direction towards a more mature regulatory environment in the real estate industry in the UAE. As we’ve seen in many global markets, the lack of regulation only encourages unscrupulous entities to try and use loopholes to get away with what most people would class as bad business practice."
He argued that the aim of this legislation was not to cover properties sold in mature markets such as the United Kingdom, the United States and Australia where even overseas buyers are well-protected by the law, but "to protect consumers who are buying in markets which offer less favourable legal frameworks".
"There’s plenty of those countries out there, and a lot of that property stock gets advertised in the UAE," Mr. Pearce said.