Opinion | Editorials
Mortgage law will plug loopholes
The widely expected move could not have come at a better time.
- Gulf News
- Published: 23:32 August 19, 2008
Dubai Government has issued the Mortgage Law that will help regulate the emirate's growing property sector. The 35-article decree issued by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of the UAE, comes after a series of laws and bylaws. It is expected to reshape the sector and ensure best practices in property and mortgage transactions. The law, which comes into effect 60 days after its publication in the official gazette, stipulates that mortgage contracts be registered with the land department, specifying the size of the loan, the repayment period and the value of the property to which the loan is linked.
The law requires that mortgages taken out on properties in Dubai be sold by registered financial institutions, and be insured. The law also requires the borrower and the lender to present full financial documents when the mortgage is registered. However, property granted by the government to nationals is exempt. Dubai spearheaded the Gulf's property boom in 2002 by opening the sector to foreign ownership. As a result massive liquidity began to penetrate the emirate's vast sand dunes to transform them into master planned communities - in the absence of a proper law. However, in 2006 the government issued the first freehold property law, which legalised the freehold and leasehold property ownership in designated areas.
The widely expected move couldn't have come at a better time, especially amid a crackdown by the Dubai government on corruption, with executives in major real estate and financial firms facing investigation.
In the absence of the regulations, however, a number of players were taking advantage of that setting by duping investors and giving the sector a bad name. A good number of investors have burnt their fingers in the property sector. The law will help the government to straighten things up.
Opinion Editor's choice
-
Russia, China complicit in Syria carnage
By Fawaz Turki, Special to Gulf News
By their double veto at the UN, they have chosen to back the Al Assad regime that is already wet spaghetti
-
Two prime ministers in trouble
By Kuldip Nayar, Special to Gulf News
Gilani faces contempt of court charge while Singh encounters moral responsibility in 2G scam case
-
Moving towards honest democracy
By Vladimir Putin, Prime Minister of Russia
Russia needs to unbundle power and property and separate executive power from system of checks over it
Your turn
