Law allows homebuyers to sue over design shifts

Homebuyers in Dubai will be able to seek compensation against developers that change a project's design during construction, as part of the new strata regulations.

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Under guidelines issued by Dubai's Real Estate Regulatory Agency (RERA) and seen by The National, developers will have to give buyers a "disclosure statement" with full information on the property, surrounding development and facilities that will be provided before a contract is signed.

It must also include the estimated service and maintenance charges for the development and a date for the property's completion. It must contain a "statutory warranty" from the developer, meaning homebuyers will be entitled to seek compensation if changes are made to a development or the final product differs from its description in the disclosure document. Buyers will also be able to sue a developer that hands over incomplete properties - for example, homes that do not have electricity and water connected.

The moves could help to revive consumer confidence that has been dented by the cancellation or delay of hundreds of projects. "During the boom you just had developers providing contracts with incorrect information about the property," said Duane Keighran, the head of property for Dubai at the law firm Simmons and Simmons. "But now they're required to be a lot more transparent when selling units, which is great. We were expecting the strata law to contain an element of consumer protection but this is really prescriptive."

One of the most significant elements of the strata law is that homeowners will be allowed to appoint their own service management companies for the first time. This could mean they save a total of millions of dirhams in service charges as developers lose control of the lucrative maintenance market. Homeowner associations will also have the right to seek an order from the Dubai Court to sell the properties of those who default on their service fees, a clause in the law states.

"But it's unlikely a court is going to make that order unless the owner has been seriously in default for a long time and is, most likely, unable to be found," said Stephen Kelly, a strata title specialist with the law firm Clyde and Company. "Still, you have to be able to eventually sell someone's unit if they haven't paid service charges for years." The Dubai strata law has been long anticipated by the property market and is seen as a tool to aid recovery. It was enacted in 2007 but has since undergone several modifications.

"One of the reasons behind bringing in strata was to stop developers making a profit out of it," said Ron Hinchey, a partner at the property consultancy Cluttons. "That's the whole point of it, to give the market confidence that it's being properly regulated." @Email:agiuffrida@thenational.ae