Dubai's Real Estate Regulatory Agency will assume responsibility for overseeing escrow accounts held by developers and will also accredit the financial institutions qualified to manage them, according to a law issued by the Dubai government on Sunday.
The regulation restructures the legal provisions granted to the agency. Rera will govern the development, brokerage and management of real estate with a view to providing "a secure environment to protect the rights of developers and investors", the Dubai Media Office said.
Under the law, Rera's chief executive will be appointed directly by the chairman of the Executive Council of Dubai and Crown Prince, Sheikh Hamdan bin Mohammed. Rera will be responsible for monitoring the accuracy of property advertisements published in the media and will work with the Dubai Real Estate Institute to educate the public about their rights. It will also formulate policies to balance supply and demand.
The Dubai Land Department will replace Rera in registering rental contracts and regulating the relationship between property owners and tenants.
The law is introduced as Dubai takes measures to boost the real estate market, which slowed in the wake of a drop in oil prices, as well as ongoing concerns about an oversupply of properties.
Earlier this month, Dubai formed a higher committee for real estate, headed by a Deputy Ruler Sheikh Maktoum bin Mohammed and senior property developers. It will look at restoring balance between supply and demand in the sector.
A total of 20,978 residential units were completed in the first half of the year, according to Property Finder estimates. An additional 38,426 residential units within 152 projects have a completion status of at least 85 per cent as of July and are scheduled to be delivered by the end of the year.
Sachin Kerur, managing partner at Reed Smith said said "the reforms put forward seem laudable enough".
“However the trick for any blueprint for change will be to prioritise and ensure such reforms respect local conditions. So while laws and regulations in the UK and Australia are worth studying, they cannot be replicated wholesale.
"We here have a very fragmented industry, different licensing regimes and different levels of training and development. Cash flow is the main hindrance to successful project delivery at present, so I would definitely start and concentrate on that for now," he said.
