Homefront: 'Can I claim compensation for a delayed property handover?'

Developers are allowed a delay of up to 12 months from expected completion to actual handover

The law is clear that a developer owes compensation to investors or buyers for delayed projects. AFP
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I have been a resident of Abu Dhabi for eight years. I bought an off-plan property in Dubai a few years ago, and it should have been ready for handover in May 2021. The expected handover date is now in the second quarter of 2023.

When I asked the seller about the delay and the possibility of a financial accommodation in the form of a discount for me, my questions were ignored.

I have read many times about the fines that companies can incur when handovers are delayed. I am now starting to look around to investigate this subject further and wonder what my legal rights are. FR, Abu Dhabi

The development you refer to was already subject to a stalled plan from many years ago, when the developer bought the plot from another developer. This project was/is very ambitious as it involves numerous towers that would take considerable time to construct.

There were procedural delays with the appointed contractor, which meant that work did not start on time; add into the mix the pandemic that obviously caused a further delay. This now means you are facing the long delay to 2023.

One way or another, any developer is allowed a delay of up to 12 months from the expected completion date to actual handover. Having said this, it is very difficult for any person to fight these cases of compensation through the courts if the handover goes beyond the allowed 12 months.

This is not to say you do not have any redress but remember that it is quite time-consuming and a costly exercise to take a developer to court to claim compensation. Therefore, this needs careful consideration on your part as to what to do next.

The developer will obviously cite situations and circumstances to justify the delay and there is always the possibility that the judge will take all of these into consideration. I am not suggesting it is a waste of your time to go down this road; what I am saying is to consider the time and effort involved in seeking any justice against the potential compensation.

It is quite time-consuming and a costly exercise to take a developer to court in order to claim compensation
Mario Volpi, sales and leasing manager, Engel & Volkers

While the law is clear that the developer will owe compensation to any investors or buyers for delayed projects, the reality is that in practice, it is not quite so straightforward.

Our landlord recently moved to increase the rent on the property we live in. He has given us the proper notice, so we have no issues with that.

However, I was wondering if it was possible to sign a longer tenancy agreement to lock in a stable rent payment for perhaps two to three years rather than facing the risk of rising rents every 12 months.

Is this possible in the UAE or are all tenancy contracts for one year only and are there limitations on how often a landlord can raise the rent? DB, Dubai

Signing a longer tenancy period is a matter between two parties, the landlord and tenant, so if you want to have a two or three-year rental contract, this can be done as long as all parties are in agreement.

Different emirates adopt alternate ways of locking in the rental contract to protect tenants from exorbitant rental increases. Sharjah, for example, adopted a law in 2007, which allows the landlord to increase the rent only after a period of three years has elapsed.

It is also important to note that this increase has no limit, although any increases should be in line with similar properties in the area. After this period, the rent can only be increased every two years going forward.

In Dubai, it was mooted for a tenancy contract to have a duration of up to three years and for the rent to be fixed during this time. This was never ratified and we are waiting for further information from the concerned authorities to clarify any changes to the existing structure of a one-year renewable tenancy contract (subject to certain conditions) and in line with the Real Estate Regulatory Agency rental calculator.

Mario Volpi is the sales and leasing manager at Engel & Volkers. He has worked in the property sector for more than 35 years in London and Dubai. The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario.volpi@engelvoelkers.com

Updated: December 23, 2021, 4:00 AM