Where Do We Begin?

Congratulations! At long last, your property in Dubai is ready to be handed over from the developer and you can soon start to see some return on your investment after many years of waiting.

But what now? Unfortunately, what should be a happy and momentous occasion for property investors often becomes a major headache with very little in terms of support or customer service from the developers themselves coupled with complicated procedures and hidden charges that are either unexplained or misunderstood.

The Handover process itself is not rocket science however things can become much more difficult and unclear if you do not know the processes in Dubai and of course if you do not receive the property guidance. Unfortunately, more often than not, Dubai based property developers will simply send out the completion notice and demand that you take Handover within 30 days or risk penalties being levied.   All of this can cause considerable stress to investors, especially those based overseas, and especially given that the same investors have often waited for years for the completion due to repeated delays in construction.

Having seen this on many occasions over the last few years and having helped 100+ property owners with their Handovers as Power of Attorney in Dubai, we hope that Your POA can be of some assistance to you in this regard. In our latest guide, we aim to answer any questions you may have when it comes to taking Handover of your property as well as to guide you through all the processes and procedures that are involved before you can finally receive the keys to your new home. If you have any additional questions, please drop us an email to [email protected] and we would be happy to assist.

Completion Notice

As soon as the building is completed and the relevant completion certificates have been issued, you are likely to receive a 30 day notice of completion from your developer. During this period, you will need to clear any outstanding payments on the property price as well as various others fees in order to take possession of the unit as the new owner. You will need to fulfil certain obligations before you can do so and before you can obtain the keys to your property.

Unfortunately this is often to the frustration of many investors who have waited for months or even years to get to this point and are now given only 30 days to stump up the final payments. In addition to this, many property investors are based overseas so making payments within this time short timeframe and/or coming to Dubai to carry out the final formalities is not always easy. More often than not, the developers will give some leeway on this provided that there is some evidence that payment will arrive soon and that the Handover will be completed in the not too distant future. That being said, it is very important that you do act as quickly as possible as risk of penalties and indeed termination are unfortunately real threats.

Final Payments

Within the completion notice from your developer, you should also receive a Handover pack and/or details of your completion/account statement with the developer. This should outline clearly what you have paid and also what is pending and required in order for you to take possession of your property. These do vary occasionally from developer to developer but on the most part, the closing costs are standard across the board. I have made a note below of the main ones with an explanation of each:

Final Installments

At this stage, you will need to pay off any final amounts pending on the purchase price of the property. This is required according to the terms and conditions of your sales contract with the developer. If payment is not forthcoming, penalties can be levied on the account and if still no payment, the developer can even apply to the Dubai Land Department for termination of the unit based on breach of the sales agreement between you and the developer.

It is something that has happened and will happen if payment is not forthcoming as based on your contract with the developer, you must make payment within this time or risk losing the unit altogether. Unfortunately, harsh as it is, this is the reality of the matter and we have seen this happen on a number of unfortunate investors. Our advice, take Handover as soon as you practically can to avoid any further legal issues and to finally start to make some return on your investment, either in renting or selling the unit post-Handover.

It is worth adding here that if you are not in the financial position to make the final payments, you may still be able to find a way to get around this. There are still buyers in the market who may consider clearing this liability to the developer on your behalf, with you simply receiving any balance on the date of sale. This is a little more tricky than a normal sale post-Handover however we can certainly provide some guidance on this if need be.

Oqood Fees

Oqood is the Arabic word for “contract” and this is the pre-registration of your property with the Dubai Land Department. It is mandatory in Dubai that all offplan sales are registered with the Dubai Land Department. This is regulated under Law 13 of 2008 – Regulating the Interim Real Estate Register. All developers are required to register sale and purchase agreements on an Interim Real Estate Register and in practice, the Oqood system is used to record such registrations.   The Oqood system aims to ease the registering of contracts between developers and buyers and allows developers to manage offplan properties. It protects buyers too as it safeguards their interests by ensuring that their property is registered properly.

The current Oqood fee is AED 1,000 along with a knowledge fee of AED 20. There will also be standard unit registration fees of 4% of the purchase price (see below).

Registration Fees

All owners will also have to pay registration fees on the property of 4% of the purchase price plus AED 580 Title Deed issuance fee. This is again mandatory and is to be paid by manager’s cheque to the Dubai Land Department. If you are a non-resident with no access to an UAE bank account in order to prepare your manager’s cheques, we can again assist you with this if need be.

If you purchased your property a long time ago, you may have been advised by the developer that your unit registration fees were 2% and this may even form part of your original sales and purchase agreement. Unfortunately in late 2013, the Dubai Land Department increased all registration fees from 2% to 4% (the same applies for transfer fees for re-sale properties). The registration fees are payable by the buyer of the unit and must be paid in order to take Handover and obtain your Title Deed on the property. In most cases, it is very difficult (and indeed costly) to dispute this increase in fees and most buyers are left to foot the difference rather than the developers.

It is worth noting that previously buyers of offplan units could defer payment until Handover or re-sale however most developers are now taking this payment upfront at the time of the purchase. On this basis, you may have already paid this fee. Again, if you do not pay, penalties may be levied with constant rumours circulating in Dubai of 8% fees for not paying by certain specified dates. This is yet to be seen but it is best to avoid this issue and ensure that payment is made as ultimately the property will not be yours until you have paid to register it in your name.

Service Charges

Service charges or maintenance fees are charges that all property owners pay annually to cover the upkeep of the common areas of the building. This includes any swimming pools, gyms, lifts, parking, security, gardens etc. They are calculated on a per square foot basis on the net area of the property. The developer initially sets the charges but they are now governed by RERA (Real Estate Regulatory Agency), the regulatory arm of the Dubai Land Department.

In order to take Handover, the service charges must be paid in advance to the developer, normally on a quarterly basis.

Administrative Fees

Most developers charge some sort of admin fee for the completion of the paperwork for the Handover process. These fees are normally between AED 500-AED 1000 depending on developer. According to Law 13 of 2008, a developer is not permitted to charge transfer fees for the sale or re-sale unless such fees are administrative in nature. As such, most developers charge “administrative fees” when conducting Handovers and transfers of title to new owners.

Utility Registration Fees

You will also need to register the utilities in your name in advance of the Handover. This includes the water and electricity connections (DEWA) and air conditioning (Empower, Emicool or Palm District Cooling). The utilities are initially connected in the developer’s name (when carrying out tests on the building etc) but must be changed over to the new owner upon Handover. Most developers require that this is carried out before the keys are handed over to ensure that they utilities are no longer in their name and so that the bills become the responsibility of the new owner. This is again standard practice.

DEWA registration fees are AED 2,110 – AED 2,000 is a refundable deposit (upon the sale of the unit) and an AED 110 non-refundable connection fee.

Empower registration fees are AED 5,000 for a first time registration – AED 2,000 refundable deposit, AED 2,000 non-refundable meter connection fee and AED 1,000 non-refundable admin fee. Emicool and PDC registration fees depend on the number of bedrooms but range from AED 1,000-AED 3,000.

Once the utilities are registered under the new owner’s name, the receipts must be provided to the developer as part of the Handover process.

Summary Of Payments

The above figures are just a guideline and you should receive a full breakdown and instructions in your Handover pack from the developer.  This will detail exactly what you have and have not paid and what is required from you in order to take possession of your property. If you have received a completion statement and there are any additional charges that you do not understand, please send us a copy and our Handover team would be happy to have a look over this for you.

Property Inspection & Snagging

Before taking possession of your new property, you will of course first want to carry out a detailed inspection of the property to ensure that there are not any major defects or maintenance issues. Again, it is not uncommon for developers to rush owners through this stage as their main focus is normally to get their money in as quickly as possible. It is a good idea to carry out your property inspection and snagging report prior to signing any Handover paperwork as getting any repairs or amendments made after this will be difficult and may involve a lot of follow up calls and emails.

Your developer will give you an appointment to carry out the snagging before you collect the keys. Go through the property carefully and note down any defects or problems that you notice. Check the locks, doors, windows, fittings, paintwork, ceilings, grouting, sinks/taps, tiling, work surfaces, electrical/air con, appliances etc. Note down as much as possible and take a copy of the snag report before you leave so that you have a record of this for any subsequent follow ups.

The developer should then have the contractors repair any issues. Unfortunately this can often take time given the volume of new units normally being released by the developer at any given time. If there are only very minor issues that can be easily rectified, it may be worthwhile simply proceeding with the Handover as the delays in waiting for the developer may lead to even further financial loss in terms of rental income for example. There is also a Defect Liability Period on the property that will cover such circumstances in any event (see below).

Defect Liability Period

By law, there is a Defect Liability Period on all new properties in Dubai. This is a one year period from the date of completion of the building. The developer has a responsibility to repair or amend any defects that you report within this period. Please note that the liability period is one year from the date of completion of the building rather than from the date of your individual Handover. After this date, it is worth opting to take out some building insurance to cover your property as this is the new owner’s responsibility. The building itself is covered however the individual units are not so we always recommend to our clients to take out appropriate insurance coverage.

At Your POA, we have a great deal of experience in dealing with property inspections and snag reports. We can attend the inspection along-with property owners or even represent you as Power of Attorney in Dubai to take care of all of this for you. Property inspections and snagging are part of our full Handover service but we can also carry out individual snag reports if required. We are experienced in carrying out these site inspections and know what to look out for as potential problem areas. We will carry out a complete walkthrough of the property, taking details notes on any issues or faults that are found, however minor. We will carry out an inspection of each and every room in the property as well as testing all doors, fitting and appliances. We will take photographs and videos of the property for your reference as well as sending you a signed copy of the snag report before submission to the developer. Constant follow ups will also take place until the work is rectified by the developer. We will carry this work out to the same level as you would yourself if you were carrying this out personally.

Final Handover

Once you are happy with the above and have made all payments to the developer, you will finally be in a position to take Handover of your property and receive the keys/access cards. The developer will give you an appointment to sign the final paperwork to take possession of the property.

All owners will need to be present personally to sign the Handover papers or alternatively they must be represented by a legally appointed Power of Attorney. You or the appointed POA must bring all original documents (including passports, sales & purchase agreements, utility receipts, payment receipts etc) to the appointment. The developer will prepare all of the paperwork, you will sign and then receive your Payment Clearance Certificate, Key Release Forms, keys/access cards etc.

Appointing a Power of Attorney

If you can be present in Dubai to carry out all of the necessary formalities for the Handover or perhaps the above just sounds like a massive inconvenience, you may benefit from appointing a Power of Attorney to take care of this for you.

At Your POA, we specialise this work so that you do not have to. Our Handover services includes every aspect of the process; reviewing the completion/final account statements, completing the utility registrations, carrying out detailed property inspections and snag reports, dealing with developers and/or making any final payments, completing the Handover and collecting the keys to the property.

As a complimentary service, we will also follow up on your Title Deed application at the Dubai Land Department, sign any rental/management contracts on your behalf, recommend insurance providers, wills, banks, trust accounts etc as well as referral to one of our recommended real estate brokers. We are happy to provide you with advice, assistance and guidance long after the Handover process is completed (see below for more information).

For some more benefits of appointing a Power of Attorney in Dubai, please also read our article – https://www.yourpoadubai.com/the-definitive-guide-to-choosing-the-right-power-of-attorney-in-dubai/ .

Post-Handover

Congratulations, the property is now yours to move into, rent or perhaps re-sell. At long last, you are in a position to enjoy your property or start making some return on your investment.

Should I Rent Or Sell?

Deciding whether to rent or sell really depends on the market at that specific time as well of course your particular circumstances. There is a great deal of coverage surrounding the Dubai real estate market presently so much information can be found on this in any of the local newspapers such as Gulf News (http://gulfnews.com/business/property), The National (http://www.thenational.ae/business/property) or Emirates 24/7 (http://www.emirates247.com/property) . You can also check out our previous article here with our own thoughts and views on this – https://www.yourpoadubai.com/the-dubai-property-market-what-is-happening/ .

Knowledge, Skills, Experience & Network!

At Your POA, we can certainly give you some advice based on our knowledge and experience within the Dubai property market so that you can make an informed decision based on your individual needs. We also work with a large number of recommended real estate brokers who would be happy to help in either capacity. We only work with the best so you can be assured that whoever is representing you will have the necessary knowledge and experience to ensure that your best interests are taken into consideration. We can work alongside the broker to give you some indication on the expected rental/selling prices as well as supporting you through all of the processes involved. Whichever route you decide to take, we can assist as Power of Attorney.

Tenancy Support Services

If you also need someone to manage the property for you, we can put you in touch with the right people here too. Property management is an important area for many owners, particularly those based overseas, and it is of course one that needs to be done correctly. Our recommended property management teams can ensure that your property is looked after properly throughout. This will cover everything from preparing tenancy contracts/renewals to banking to any maintenance issues or repairs. We want you to have peace of mind from the day you receive the keys until the day you decide to sell the property.

Selling Your Property

Finally, if you decide to cash in on your investment by selling, we can also assist. One of our core services at Your POA is representing clients as Power of Attorney for property sales so that they are again not required to be present at all. This will include all legal aspects of the sale process from start to finish. Further details of our services can be found here – https://www.yourpoadubai.com/salepurchasegft/ . We can also recommend some excellent sales brokers who will find a buyer for you very quickly and at the best possible return to you financially.

Your POA offer an all-encompassing service throughout the property process!