I purchased an off-plan property in 2016 with a 20 per cent down payment and paid 4 per cent in Dubai Land Department charges. The construction of the property was completed almost a year late but it is now ready for handover.
I then approached a bank for a mortgage and they assigned a third-party agency to value the property. However, the valuation report came with a value that was 20 per cent less than the amount stated on the Sales and Purchasing Agreement. Is it possible to negotiate with the builder and reconsider the current valuation price? Is there any legal way this can be done? DS, Dubai
Property prices have been declining to a greater or lesser degree since the summer of 2014 until now. There is speculation among property consultants as to whether the current market has reached the bottom or if there is still more downward pressure to come. This is because of the inventory coming to the market this year.
The valuation carried out for the bank on your behalf by the independent valuer for mortgage purposes, can only price the property based on today’s prices so I’m not surprised that the value given was lower than your purchase price from 2016. This lower valuation I'm sure will now leave you short by quite a sum given that banks only lend 50 per cent loan to value on off-plan properties, as per government regulations.
Of course you should organise a meeting with the developer to try to agree a lower purchase price, however, I would be extremely surprised if they would agree to this. This is because you presumably signed the SPA at the time of sale and that will state all the terms and conditions going forward including the purchase price.
Your other alternative could be to approach a different bank to gain mortgage finance. A new bank will most likely use a different valuer company, so there is a chance that the other valuer may come in at a different valuation. This new valuation could of course be even lower, so the best solution lies with having a meeting with the developer to explain your financial position and request what, if anything, can be done going forward.
Mario Volpi is the sales and leasing manager at Engel & Volkers. He has worked in the property sector for 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 email@example.com