The Dubai Land Department is cleaning out unscrupulous real estate agents and greedy landlords in a bid to polish the emirate’s reputation as a transparent property market attractive to investors across the world.
In an exclusive interview with Arabian Business, Ali Abdulla Al Ali, director of the Dubai Land Department’s (DLD) real estate licensing division, says several new initiatives introduced this year are already showing benefits.
Al Ali says the new Trakheesi system, which makes it mandatory for all real estate industry players to obtain a permit number for each property listing, will be fully integrated into various online platforms by mid-December.
This month, the DLD also made it mandatory for property owners to sign a ‘Form A’, which gives only one real estate agent exclusive rights to sell their property — eradicating the former practice where homeowners would allow multiple agents to sell a property, often confusing potential buyers.
The shake-up comes as Dubai attempts to be recognised as a top transparent real estate market. Earlier this year, consultant JLL described the emirate as “semi-transparent”, alongside countries such as Brazil, Russia, India and China. That places it in only the third of five tiers in JLL’s biennial Global Real Estate Transparency Index and means Dubai has a way to go when it comes to providing open data and a trustworthy market.
In 2016, the emirate moved up one notch to forty-eighth position in the list of 109 markets. Comparatively, Qatar plummeted from 58 to 74 between 2014 and 2016.
Al Ali says the new regulations will make Dubai’s property market even more attractive to buyers. The automatic Trakheesi permit system should prevent real estate companies from flouting the regulations, while agents listing a property also will need to e-sign a disclaimer that says they are aware of penalties for uploading misleading content.
DLD licensing director Ali Abdulla Al Ali.
“There are a number of fake listings on many websites, which misguide people as prices and rents quoted are not realistic. These listings are just aimed at attracting customers. Our system ensures only registered brokers can market the properties and all the information submitted is authentic,” Al Ali says.
More than 1,500 permits already have been issued to real estate brokerage firms, property management companies and developers including Emaar Properties and Dubai Properties, since Trakheesi was launched in October, according to DLD.
But warnings are also being issued each day, Al Ali says, adding that inspection teams are constantly monitoring listings both in print and online. While the process is still being ironed out, violators are warned to get permit numbers or remove their listings immediately. Repeated offenders face fines of $13,624 (AED50,000).
Though the regulation will lower the number of ads on property listing portals, the industry welcomes the move.
Propertyfinder.com says reduced listings will not have any impact on its revenues.
“We do not expect an impact on our revenues. Neither our traffic will reduce nor will the 200,000 leads per month that we send to our agents and developers. Instead we will see an improvement in a consumer and professional brokers’ experience,” Propertyfinder.com chief operating officer Paul Stewart-Smith says.
“The Trakheesi system is very similar to our verified listing service which we’ve been running free to agents for the past two years. For an agent to obtain a verified listing, they need to submit documents to us to prove that they have the necessary authority to advertise the property in question. Each day we manually check hundreds of title deeds and Form As. This was our approach to encourage agents to follow Real Estate Regulatory Agency’s laws and guidelines.”
The portal hosts nearly 90,000 sales and rental listings for Dubai but Stewart-Smith says exclusive listings are still the exception rather than the rule, despite new regulations demanding a pre-approved contract between a seller and a broker.
“But exclusive listings today are far more common than they were just a few years ago. The very best agents in today’s market refuse to work with owners who won’t sign ‘Form A’. Unfortunately, there seems to be many who will and this leads to the illegitimate duplicates,” Stewart-Smith says.
“If this system is properly enforced it will force all owners to sign ‘Form A’ with agents. Agents want these forms signed as it guarantees their commission post-handover. The problem lies with some owners who flatly refuse to sign any paperwork with the mistaken belief that it gives them greater flexibility and a chance for a better price. It doesn’t; the opposite is true. The best agents won’t work with owners who won’t sign the relevant paperwork, and the best agents get the best prices.”
As the market matures, Al Ali says DLD will implement phase two of Trakheesi, which applies to property owners rather than brokers.
“Owners are currently not allowed to list their properties through our system. They have to complete the process through a registered broker, but we are working to allow them to list their units in the coming months,” he reveals.
Another thorny issue is also being addressed. Al Ali reveals a little known fact in Dubai: tenants facing arbitrary rental hikes can seek direct assistance from DLD’s rent inspection service.
Tenants can file complaints with the Dubai Rental Dispute Settlement Centre in cases where landlords don’t follow regulations set by Dubai’s official rent decree. When a complaint is filed, the department sends its inspectors to review the premise or the building. A report is generated and submitted to a DLD committee that decides whether the hike is justifiable. Primarily, the inspection reveals whether the landlord has the right to increase the rent according to the official rent index, which limits increases to between 5 and 20 percent if the leased unit’s rent is 10 to 40 percent lower than the average market rent.
“Though we cannot force the landlord to reduce the rent, we can, however, block any unjustifiable increase,” says DLD rental affairs deputy CEO Mohammed Ahmed.
Yahya is cracking down on high rent hikes.
The rental index was previously updated three times a year but since 2015 it is only revised annually. Yahya says the less frequent movement of the index helps to stabilise prices.
“We are not running a stock market, and so we don’t want to change it more than once a year,” he says. “Markets will go up and down, but updating it annually helps us to stabilise the market.”
The department is also working on a new law to reduce disputes between landlords and tenants.
“There are gaps in the existing laws and we are working to close them,” Yahya says.
Ruling out changes in the existing rental decree, Yahya says the current rent index will be revamped only after the building classification survey is completed next year.
“The exercise of evaluating each and every building in Dubai has commenced. We will assign star ratings to these buildings on the facilities it offers.”
Mohamad Khodr Al Dah, senior director of DLD technical affairs department.
Senior director of DLD technical affairs department, Mohamad Khodr Al Dah, says the classification survey will be completed by the end of 2017.
In order to make residents cognisant of their rights, the department will be holding awareness campaigns next year.
“There are owners and tenants who have no idea what their rights are. So, next year we will launch campaigns to help them understand their rights and duties under the law,” Yahya says.