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Rera sets new rules
Rera is working overtime to promote transparency and boost investor confidence in Dubai’s real estate market. Is it working?
May 17, 2009 12:22 by Parinaaz Navdar
New property agreements will now be signed between the Real Estate Regulatory Agency (Rera) and Rera-approved banks, or account trustees, reports Emirates Business. Agreements were previously signed by the account trustees – also known as escrow banks – and the Dubai Land Department (DLD).
The trustee banks will now pay yearly charges to Rera, as mentioned in the new agreements, titled Guarantee Account Trustee Agreements, according to Khalid Al Mutaiwai, Rera’s trust account administration director.
The agreement will also have information on how to shift escrow funds from one bank to another, something that was not clarified previously.
Furthermore, under the new guidelines, banks are not allowed to invest trust account funds in any form of investment or deposit scheme; in short, the money must be kept in current accounts.
“Hence, no interest or profit is payable to funds in trust accounts,” said Moinuddin Malim, head of corporate and investment banking for Badr Al Islami.
“It will be the responsibility of the bank to protect the investor’s money. The main condition is that the funds have to be protected and should be available to be liquidated anytime,” said Al Mutaiwai.
Rera is expected to distribute the new agreement to the account trustees in a few weeks.
Trust accounts are separately held accounts where buyers’ payments towards off-plan properties are divided and issued in accordance with actual work and costs related to the construction of the property they have purchased. Funds can be withdrawn toward payment of the following: land, construction, project management and sales and marketing.
The announcement is part of the Rera’s regulations to strengthen market transparency and boost investor confidence in Dubai’s property sector.
The authority recently amended Law No 9, which offers buyers who can no longer afford to pay installments on their properties legal ways out of binding contracts.