Mohammed issues law on leasing in Dubai International Financial Centre

The Vice President and Prime Minister of the United Arab Emirates, His Highness Sheikh Mohammed Bin Rashid Al Maktoum, in his capacity as Ruler of Dubai, has issued Law No. 1 of 2020 pertaining to leasing in the Dubai International Financial Centre (DIFC).

The law will enhance the DIFC’s property market and reflects the centre’s commitment to maintaining a legal and regulatory framework aligned with international best practices. It introduces areas of protection and assurance to lessors and lessees entering into leases at properties based in the dynamic financial ecosystem of the DIFC.

The law will address specific factors relating to real property within the DIFC, including the requirement to provide an appropriate regulatory environment aligned with common law jurisdictions and onshore Dubai practices due to the DIFC’s status as an offshore jurisdiction within the UAE by: introducing general requirements for leases and general obligations for lessees and lessors; introducing a tenancy deposit scheme for residential leases to be administered by the Registrar of Real Property; requiring the production of condition reports in the format required by the Leasing Law by residential lessors; imposing a maximum limit on security deposits collected by residential lessors and further specific provisions for residential leases; and introducing clearer provisions relating to the termination of leases and the disposal of goods and chattels at the property following the termination or liquidation of the lessee.

Regarding the new law, Essa Kazim, Governor of DIFC, said, “Enacting the new DIFC Leasing Law will not only provide clearer guidance for thousands of landlords and tenants at the DIFC, but advancing our legislation also represents a key step for delivering on our landmark expansion plan that will transform the future of finance.”

Moreover, His Highness Sheikh Mohammed Bin Rashid Al Maktoum, in his capacity as the Ruler of Dubai, has already issued the Dubai Law No. (4) of 2019 (New Law) pertaining to the Real Estate Regulatory Agency (RERA) initially established by law No. (16) of 2007 as predominantly the regulatory arm of the Dubai Land Department (DLD).

The New Law provides for a reorganisation of RERA’s legal capabilities and capacities and defines a set of important objectives for RERA, including the contribution to the advancement of the real estate sector through an integrated system of regulatory and control measures which shall enhance its role in the overall economic development of Dubai, provide an assuring and supportive environment for the real estate development projects to safeguard the rights of both real estate developers and investors, keep pace with the steady growth of the real estate sector and all related activities, enhance the role of UAE nationals in this sector and implement programs that will enable them to participate in real estate activities, as well as to develop the codes of principles and ethics required for practicing real estate activities.

The New Law confirms that RERA will continue to exercise certain powers established under the previous law, including the organisation and supervision of real estate development escrow accounts, approving qualified banking and financial institutions to manage these accounts, and the adoption of rules governing practitioners of the real estate development activity, the sale and rental of real estate, real estate brokers, real estate assessment and joint ownership of real estate property.

The New Law came with a number of key modifications and additions to RERA’s functions and specialties broadening thereby its scope of authority over real estate activities in the Emirate. The newly introduced powers include that RERA shall now be responsible for organizing and licensing real estate activities and supervising the practitioners of these activities in order to ensure their compliance with the laws and regulation governing the real estate sector. RERA will also be responsible for the supervision and inspection of the management, operation and maintenance of joint real estate properties, proposing the necessary legislations to regulate the work of real estate practitioners, and issuing the necessary regulations for the training and qualification of employees in the organizations licensed to practice real estate activities through the Dubai Real Estate Institute (“DREI”), in addition to the registration and issuance of identification cards to practitioners of real estate industry.

By virtue of the New Law, RERA shall now consider and decide on complaints brought against real estate practitioners and take the appropriate actions in this regard, study and approve real estate development projects in the Emirate and supervise their execution and issuing the necessary decisions and recommendations in this respect.

In addition to the power to control and monitor real estate advertisements, RERA shall now have the right to issue the necessary approvals for the content of such advertisements in the Emirate of Dubai, and in this regard will now also include special development zones and free zones (such as the DIFC) in coordination with their competent authorities.

In coordination with the DREI, RERA will conduct educational and awareness programs on the rights and duties of the parties involved in the real estate sector, in addition to preparing and updating policies and studies to achieve a balance between supply and demand in the real estate market.

Agencies