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Developers, lenders hail mortgage law
DUBAI - Real estate developers and mortgage lenders on Wednesday welcomed the new mortgage law announced by the Government of Dubai as a landmark legislation that will have a positive impact on the booming property sector.
The 35-article law decreed by His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, reaffirms Dubai's resolve to press ahead with reforms to ensure higher transparency and corporate governance, they said.
Property investors said the law would help enhance transparency in property transactions, as it requires both the borrower and lender to present full financial documents when the mortgage is registered. “It not only gives more confidence to the lender and gives more security for banks but also enhances transparency and boosts investor confidence,” they said.
Arif Alharmi, Chief Executive Officer, Amlak Finance, said: "We welcome this new directive issued by Shaikh Mohammed. This is a positive move to secure the interest of all parties involved in the sale and purchase of property within Dubai. The mortgage sector in Dubai is expanding at a rapid rate and this new law will help regulate the lending procedure as well as boost the investors’ and lenders’ confidence in the market."
Sivaprasad, Managing Director of Dubai-based Condor Properties, said the legislation is a positive development that would keep at bay speculators and protect the interest of end-user by enabling them with more cost-effective options to buy homes.
“It will, no doubt, go a long way in better regulating Dubai’s real estate sector, and enhancing investor confidence. It also once again demonstrates the role-model leadership of Dubai, which kicked off the property boom in the region in 2002 by allowing foreign investors to own freehold properties for the first time.”
Standard Chartered Bank said in a statement that the new law was a positive step forward for Dubai. “This law is a first step towards regulating the mortgage market as it will protect both buyers and lenders.
“The mortgage market is an embryonic market in the region, but in the light of the property boom and the recent housing market blunders in the US and the UK, regulations are necessary to prevent any potential problems."
Ashley Painter, a partner at the legal firm Clyde & Co in Dubai, said: "The new mortgage law is very cute; it creates more certainty for the creditors and investors."
Usama Kalyar, chief operating officer, Goldcrest Properties, said the mortgage law was yet another move by the government, which will lead to more transparency and protect the rights of the developer, lender and the buyer. “It will also help in establishing an accurate real estate price index for ready and under-development properties."
Vyas Jayabhanu, head of operations, Al Dhafra Financial Brokerage, said: "The new decree from the Dubai government will provide robustness to the real-estate sector. From the stock market perspective, insurance companies will be the biggest beneficiaries and we feel that investors would like to buy insurance company shares."
Savitha Shetty, manager, New Age Insurance Brokers, said the latest initiative was going to give a fillip to the insurance industry. “It comes close on the heels of the visa-related health insurance directive. Globally, property mortgages are linked to insurance - that is, without an insurance policy, mortgage companies would not lend.
“Over here, there were some property deals that were not happening in conjunction with mortgage insurance but now, there is no way out. It's good for all parties involved: developers, lenders and buyers as well as Dubai emirate."
Jitendra Gianchandani, chairman, JCA Real Estate, said: "We are very happy with the Dubai government's decision. The move will bring in transparency in the real estate sector, strengthen the financial sector and ensure that the legal rights of the lenders are protected.
“The law will help eliminate risks and encourage greater lending. It will also help boost the confidence levels of investors and encourage more investments in Dubai."
Christina Cabading, president, BSEL Realty Infrastructure FZE, hailed the law as a good move from the Dubai government. “The new law will help pump in more investments into the booming real estate market, and also increase the risk-taking appetite of lenders, since their rights will be secured and shielded. As developers, we pledge our full support to this move."
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