RERA: Regulator of Dubai’s Real Estate Market

Dubai is often referred to as one big building site. Indeed, large-scale construction is constantly going on in the emirate, new buildings keep appearing, and the real estate market is regularly replenished with new properties. This all requires effective management: developing, implementing and monitoring the observance of the rules and the paperwork, settling disputes that arise between market participants. The Real Estate Regulatory Agency (RERA) is the body  that handles all of this in Dubai.

• What Is RERA?
• RERA for Tenants and Landlords
  
• RERA for Developers
  
• RERA for Brokers
  
• RERA Forms
  

What Is RERA?

The Real Estate Regulatory Agency, or RERA, was established in 2007 as part of the Dubai Land Department and remains one of its units. RERA sets policies and develops plans to stimulate foreign investments in the real estate sector. The agency regulates the activities of brokers and developers, and helps to settle disputes between tenants and landlords. RERA has full administrative independence and the legal authority to regulate the real estate sector in Dubai.

In 2019, the ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum expanded RERA’s mandate. Today, this organisation is responsible for supervision in the field of management, operation and maintenance of real estate. It also registers and issues ID-cards for real estate professionals. In addition, RERA deals with all complaints filed against such professionals, makes the rulings and takes the necessary measures in this regard.

Dubai’s development projects now are also within RERA’s remit. The agency monitors their implementation and makes relevant decisions and recommendations. RERA also received an expanded mandate for controlling real estate advertising. The agency now issues permits for placing such advertisements in Dubai.

RERA for Tenants and Landlords

RERA organised and streamlined the rental market in Dubai. Today, all property management companies, as well as all brokers and landlords who rent out their real estate short-term, have to register with RERA and get a licence. Without this licence all further transactions are invalid. Thus, RERA not only ensures the safety of tenants, but also becomes their major and, more importantly, most trusted source of information.

The government of Dubai has transferred to this body the right to draft the laws that regulate the relationships between the landlord and the tenant. The result is that tenancy contracts have become clearer and both parties know their rights and responsibilities. Before signing the contract, the parties discuss all conditions and include them in the contract.

The tenancy contract contains a great deal of mandatory clauses. It specifies almost all the conditions for renting a property: which utility bills must be paid by the tenant, and which by the owner; conditions of early eviction, contract renewal and eventual increase of the housing cost, and many other issues. Finally, the contract stipulates that, according to Section 4 of the Law No. 33 of 2008, both the tenant and the landlord must register with RERA via the Ejari system.

Ejari (meaning “my rent” in Arabic) is an online registration system initiated by RERA to comply with legal requirements, as well as to regulate the rental market in Dubai and protect the rights of all participants. A tenancy agreement is invalid without registration or renewal in Ejari, and neither party will be able to defend their rights in court in case of a dispute.

After registration in the system, the agreement becomes a legally binding document. The tenant can now connect all the necessary DEWA services, as well as other utilities.

Article 7 of the RERA tenancy law in Dubai states that valid tenancy agreements cannot be unilaterally terminated, unless it is agreed by both parties. If the tenant wants to terminate the contract ahead of time, they must comply with the terms of the early termination clause in the contract. If such a clause is missing in the contract, the landlord has the right to claim compensation.

RERA for Developers

RERA also regulates the activities of developers in Dubai. In December 2020, Dubai authorities issued a resolution relating to cancelled and unfinished construction projects. This document gives powers to RERA to review and resolve all disputes and complaints.

If the project is passed from one developer to another, the RERA tribunal has the power to define the rights and responsibilities of each developer. If RERA cancels the project, the tribunal takes care of its liquidation and ensures the settlement of all relevant rights. This resolution protects the rights of investors and property buyers.

RERA only allows companies registered with the Dubai Department of Economic Development (Dubai DED) to work in the emirate. The developer must have a licence that lists their construction activities. Any construction company must be 100% owned by UAE citizens or by companies employing UAE citizens.

RERA gets most of its revenue from the registration fees of construction companies. The fees are collected by the Dubai DED. The fee is 37,000 AED ($10,100) plus 5% of the annual office rent in Dubai. RERA receives 25,000 AED ($6800) of this amount as the developer's registration fee.

According to RERA requirements, the land which the developer intends to use for the project must be paid for in full. The title deed must be issued in the name of the owner. In some cases, RERA allows the land owner to sign a contract for construction of the property with one of the registered developers. However, such a contract only comes into effect after approval from the DLD Senior Counsel and the authorisation from RERA.

For selling off-plan property (besides registration) the developer must apply to RERA for an escrow account. As soon as the developer submits all the necessary documents to RERA, they receive a No-Objection Certificate, or NOC. After that, the developer can open an escrow account with an authorised bank in the UAE. All these measures ensure that the funds received from the buyers on the escrow account will be spent exclusively on the construction of the property.

RERA also introduced the rule that every developer in Dubai is liable for construction defects detected by the buyers for a period of five years. The developer must eliminate these defects at their own expense or compensate buyers adequately.

RERA for Brokers

RERA also oversees brokers dealing with the sale and rent of apartments, houses, land plots, and commercial properties.

Firstly, you need a licence to practise as a broker. Before receiving this licence, you must complete professional training in the RERA Agent Registration Training Centre or online.

This training programme was developed by the Dubai Real Estate Institute (DREI) in collaboration with the RERA Real Estate Licensing Department. DREI is an educational unit of the Dubai Land Department (DLD). The training includes legislation, ethics, and document flow, and the procedures of property transfer.

Completion of the course and passing the exam with at least a 70% score is a mandatory requirement for obtaining or renewal of the broker licence. Those with a lower score may need to take the course again.

In addition, RERA obliges brokers to register all new ads about the sale and rent of properties in Dubai in the Trakheesi system. Everything is done online, so it takes just five minutes to process the documents. With Trakheesi, agents and residents can apply for licences and residence cards, as well as permits for property management services.

RERA Forms

To ensure the transparency of a real estate transaction, RERA has developed a system of documentation that includes the following forms:

• Form A. Agreement between seller and broker.

• Form B. Agreement between property buyer and broker.

• Form F. Agreement between buyer and seller of the property.

• Form I. Agreement between two brokers.

• Form U. Agreement termination notice.

Form А applies if the owner wants to sell the property. A signed Form A is a must. Without it the property sale is illegal.

This document contains a detailed description of the property, financial aspects, such as payment schedules, mortgage status and service charges. Form A also specifies all the details regarding the process of property advertising and its sale.

After agreeing on the details, Form A must be registered and approved by Trakheesi system, which issues the sales permit and allots a unique number to the real estate ad.

According to RERA law, a property owner can only complete three Form A’s at a time and deal with a maximum of three brokers who simultaneously advertise the same property.

Form B applies directly to the property purchase, when the buyer has already chosen a broker or real estate agency. After the signing of Form B, the agent deals with the selection of property units that match the buyer’s requirements and budget, collects all the necessary papers and negotiates with the seller’s agent, but only if it is stated in the relevant contract (Form I). 

Form F, also known as the Memorandum of Understanding, is one of the most important forms in Dubai’s real estate market. This is the sales contract which you sign after you have chosen the property and agreed on the price with the seller. This document contains all the important details of the sale, including the description of the property, payment schedules, financing (if applicable), and agent commissions.

The Memorandum of Understanding becomes valid only after it has been signed by both parties, the buyer and the seller. Their agents must witness the signatures.

Form I applies if two agents work in collaboration to sell or rent out a property. The agreement must be signed by both parties and it guarantees that all transactions are conducted openly. It also protects the interests of each agent. This document clearly indicates the distribution of all obligations and commissions.

Form U is used when the buyer or the seller wants to terminate their agreement with the agent. You need to notify your agent at least seven days in advance, stating the reason for termination, and pay the compensation stated in the agreement. The process is completed with Form U, which formally terminates the Form A or Form B agreement.

In a Nutshell

Since its foundation, RERA has developed and adjusted the mechanisms for regulating the real estate market in Dubai in such a way that the risks for all participants are minimised. The RERA rules protect the interests of buyers and tenants, as well as sellers and landlords.

Cover photo: pxhere