Property regulator introduces card system

The Dubai property regulator starts issuing identity cards to brokers as part of its clean-up of the sector.

The Dubai property regulator has started issuing identity cards to brokers as part of its clean-up of the sector. The system will see agents that are registered with the Real Estate Regulatory Agency (RERA) given one of four types of colour-coded cards, which will allow them to sell a particular type of property in a specified area. It is part of a plan to improve the property industry's regulation by giving RERA greater control and reinforcing investor confidence in a sector hurt by falling prices, fraud and contractual disputes.

"This initiative is the next major landmark in the process of safeguarding property buyers, owners and investors' interests by consolidating the rigour, accountability and transparency that is so crucial to the market," said Yousef al Hashemi, the director of licensing at RERA. Agents carrying a blue card will be allowed to conduct all types of property sales activities and operate throughout Dubai. These agents can also operate within free zones if permitted to do so by the relevant authority.

A yellow card will be given to those licensed by a free zone authority to only conduct sales within freehold areas owned by the authority. Holders of green cards will only be able to sell property on behalf of specific developers, while red cards will be issued to brokers of timeshare properties. "Previously, RERA had recommended that only brokers registered with the authority should be used and had taken steps to ensure they were properly qualified to carry out their duties professionally," said Mr al Hashemi.

"Today, we have moved to the next stage. Now, only brokers with the appropriate licences will be able to act as agents in buying and selling specific types of property. This is a huge step in the right direction." Duane Keighran, the managing associate and deputy head of property at the law firm Simmons and Simmons, said while the move was good at the regulation level he doubted whether prospective buyers would ask to see an identity card, allowing for the possibility of unauthorised agents slipping through the net.

"I'm not sure many people actually undertaking a transaction will actually ask to see the card," Mr Keighran said. RERA has been swift to react to the effects of the economic downturn. At the start of the year, it introduced a regulation banning freelance brokers from operating in the emirate. Disputes over long-delayed projects have been exacerbated by the downturn, leaving hundreds of investors struggling to cancel contracts and receive refunds on instalments already paid.

To try to stem a rush of cancellations by buyers, RERA issued an interpretation of an existing law that introduced a sliding scale of refunds for buyers who defaulted on their purchase plans for property in off-plan developments. The authority also moved to freeze the escrow accounts of some property developers as it awaited assurances that construction would progress and that all homes sold were registered with the Dubai Land Department.

RERA is also closely monitoring the progress of construction across hundreds of Dubai projects. In preliminary data released last week, it said almost three quarters of property developments in Dubai had made progress, despite the slowdown. Of 552 projects, more than 72 per cent showed some construction progress, while 17 per cent were "stalled" and 11 per cent were "delayed". [e-mail]