Host
Here are a couple of the major stories out this week. UAE consumers spent $278 billion on housing in 2016. The latest data from Euromonitor International reveals that total accommodation spend was twice the projected cost of Business Bay’s 200 towers. This total includes housing maintenance, repair, and utility costs and accounts for nearly half of consumers’ total expenditures for the year.
New research from HSBC reveals that 82% of people in the UAE who don’t currently own a home expect to do so within five years. This is despite a complex market environment and low salary growth. Barriers to home ownership include the need for higher salaries and saving more for a deposit. Among those who purchased property recently, nearly seven in ten spent more than they had initially budgeted.
The most common reasons for overspending include broker fees (cited by about 60% of respondents), legal fees, and renovation costs. HSBC suggests that these costs could be avoided with a well-structured financial plan.
Meanwhile, residential real estate prices in Dubai saw a marginal drop in February compared to the previous month. This is according to the ValueStrat Price Index, which provides a comprehensive weighted sample of residential property types across the city.
ValueStrat Research Manager Haider Twaima commented that although capital values have fallen slightly in some prime locations, he expects mid-market areas to drive a soft recovery in the overall residential market.
Host
Property on Drive Live. Ludmila Yamalova is here. She’s the Managing Partner of HPL Yamalova & Plewka Legal Consultants. Nice to see you back, Ludmila.
لودميلا يامالوفا
Good to be here. How are you?
Host
So far, so good, thank you. First of all, do you agree with the finding that happiness in life is just down to relationships?
لودميلا يامالوفا
Absolutely.
Host
100%?
لودميلا يامالوفا
Yes, 100%.
Host
Okay. We’ll get your thoughts on that as we go through, but let’s start with this story here. I think it’s quite important. It’s not only Dubai property that can now be included in a DIFC will.
لودميلا يامالوفا
Correct.
Host
This DIFC Will, if we can set the scene, was introduced nearly two years ago in May 2015 for non-Muslims with assets in Dubai to have the freedom to decide what happens to their assets after their death. Now, non-Muslims can include property not just in Dubai but in Ras Al Khaimah as well. Is that right?
لودميلا يامالوفا
Correct. This is quite significant because a lot of foreigners here own properties in Ras Al Khaimah and Dubai. Until recently—at least until this amendment—they could not include their Ras Al Khaimah properties in the Dubai DIFC will unless those properties were owned by a Dubai-based company.
In fact, we’ve seen a trend where people owning properties in Ras Al Khaimah in their personal capacity would restructure the ownership of those properties into the name of a Dubai company. This would then allow them to include their Ras Al Khaimah assets in the DIFC will. This process was not only more expensive but also more complicated.
With this amendment, such restructuring is no longer necessary. This is a very welcome change, and I wouldn’t be surprised if we see the DIFC Wills and Probate Registry expand further to include more emirates in the future.
Host
Were you surprised by the statistic today? More than 2,000 UAE residents have already registered DIFC wills.
لودميلا يامالوفا
It’s impressive, but not entirely surprising. DIFC wills have become a convenient option for non-Muslims who want to ensure clarity and efficiency in distributing their assets.
Host
It’s not cheap, though. It costs around AED 20,000, right?
لودميلا يامالوفا
Correct. The fees depend on whether you’re registering a single will, mutual wills, or wills that include guardianship provisions. These are just the DIFC will and probate registry fees. If you hire a lawyer to draft the will, you’ll have to account for those costs as well.
Many people feel that the cost is high, but it’s important to consider the value it offers. You’re essentially setting up a structure for your loved ones to manage your life’s work without complications.
Host
Especially given that without a DIFC will, Sharia law applies by default.
لودميلا يامالوفا
Exactly. Without a DIFC will, your estate would be distributed according to Sharia law, which may not align with your wishes. Additionally, the process of navigating local courts, especially in Arabic, can be daunting for families already coping with loss.
The DIFC Wills and Probate Registry was introduced with this in mind. While it does come with costs, it offers a clear, efficient, and legally recognized solution for estate planning in the UAE.
Host
Let’s take some listener questions now. Max writes in:
“I’m a Muslim expat in the UAE, and I own multiple properties. Do I even need a will?”
لودميلا يامالوفا
No, as a Muslim expat, you cannot register a DIFC will because Sharia law will automatically apply. Sharia law dictates the distribution of your estate, so there’s no need for a DIFC will. However, under Sharia, you can will up to one-third of your estate to non-heirs if you choose to.
Host
Thank you for that clarification. Let’s move on to another question from Abdul, who asks:
“Who is responsible for Ejari registration and payment—the tenant or the landlord?”
لودميلا يامالوفا
The law is not explicit about this, but it’s generally understood that tenants are responsible for the cost of Ejari registration. Practically speaking, it’s in the tenant’s best interest to ensure the tenancy is registered with Ejari.
Tenants need the Ejari certificate for essential processes like DEWA registration and visa renewals. However, parties are free to agree otherwise in the lease agreement.
Host
Great advice. We’ll take more questions after the break. Stay tuned to Understanding Property with Ludmila Yamalova on Drive Live.
Host:
مرحباً بعودتك إلى Understanding Property on Drive Live. Ludmila Yamalova is here to answer your legal property questions. Let’s dive back into the text line.
Julie writes:
“My husband and I are separated but not divorced. We own an apartment jointly that is currently rented to tenants. Do both our names need to be on the tenancy agreement? Is there any way I can prevent my husband from renting the apartment without my knowledge and receiving the rental income?”
Ludmila Yamalova:
Excellent question. Technically, if both your names are on the title deed, then both of you are co-owners of the property. Legally, any tenancy agreement should include the signatures of all owners or their authorized representatives. If only one signature is present, it might not be enforceable, and the other co-owner can challenge it.
To ensure that your husband cannot lease the property without your consent, you should:
- Insist on Joint Signatures: Make it clear to tenants or agents that both co-owners must sign any tenancy agreement.
- Use Power of Attorney (POA): If one party is handling matters on behalf of both owners, they need a valid POA explicitly granting them that authority.
Additionally, Ejari registration can help reinforce this requirement, as it often demands documentation showing both owners’ involvement or authorization.
Host:
That’s great advice. Here’s another question, this time from Karen:
“Can I ask my landlord for a rent reduction? They’re digging up all the driveways outside my villa, causing major traffic issues and leaving us with nowhere to park.”
Ludmila Yamalova:
Yes, you can certainly ask for a rent reduction. While the landlord is under no legal obligation to agree, this is a reasonable request given the disruption to your enjoyment of the property.
If the landlord refuses, you could consider filing a case with the Rental Dispute Center (RDC) to seek a reduction or even terminate the lease early. The RDC may rule in your favor if they find that the construction has significantly impacted your use of the property. Be prepared to provide evidence, such as photos and details of the disruptions.
Host:
This next question comes from Anisha:
“We’re looking for a villa in the AED 3 million range. Is it smarter to buy an existing property or go for a new or off-plan property?”
Ludmila Yamalova:
Great question, and the answer depends on your priorities. Let’s break it down:
- Existing Properties: You can inspect the property before buying, which means fewer surprises. You’ll also have clarity on the condition of the property, facilities, and community infrastructure. However, older properties may have higher maintenance costs.
- New Properties: These are often brand-new but may come with the typical “settling-in” issues during the first year or two. Facilities may not be fully operational at handover, and the surrounding community might still be under development.
- Off-Plan Properties: These are usually more affordable due to staggered payment plans, but they carry more risk. You’re buying based on promises and plans, which may not always align with the final product.
Ultimately, it comes down to your financial situation and appetite for risk. If you want peace of mind and immediate use, existing properties are a safer bet. If you’re looking for affordability and flexibility in payments, off-plan could be a good choice—but make sure to work with a reputable developer.
Host:
Let’s move on to Esan, who’s on the phone. Esan, what’s your question?
Esan:
Hi, thanks for taking my call. I live in Sharjah, and my tenancy agreement ended last week. I informed the property manager that I didn’t want to renew because of the busy roads, but they said I needed to give two months’ notice. Am I bound by this?
Ludmila Yamalova:
Good question, Esan. The answer depends on the terms of your tenancy contract.
- If the contract includes a clause requiring two months’ notice to terminate, then you’re bound by that condition. Failure to provide notice could result in penalties, such as paying two months’ rent.
- If there’s no such clause, you have a stronger legal argument that the contract automatically ended when the lease expired, and you are not liable for additional rent.
In practice, you may still need the landlord’s cooperation for final paperwork and deposit refunds, so it’s worth negotiating with them to reach an amicable solution.
Host:
Good luck, Esan. Let us know how it goes. Our next question is from Owen:
“Approximately how much does it cost for a landlord to get an eviction order for a non-paying tenant?”
Ludmila Yamalova:
The cost of filing a case with the Rental Dispute Center (RDC) is 5% of the claimed amount, with a minimum fee of AED 500 and a maximum of AED 20,000. If you’re handling the case yourself, this is your primary cost, along with translation fees for any documents. Hiring a lawyer would add to the expenses but could simplify the process.
Host:
Thanks, Ludmila. Let’s wrap up with this final question from Anon:
“Our community management agent charges us for allowing service providers like cleaners and maintenance staff to enter our apartment. Is this legal?”
Ludmila Yamalova:
This is a bit of a gray area. While there’s no specific law prohibiting such charges, it’s not standard practice. If these charges are not outlined in your community’s terms or your lease agreement, you can argue that they are unreasonable.
However, enforcing this argument may require filing a complaint with the appropriate regulatory authority or even legal action, which might not be worth the hassle for smaller fees.
Host:
That’s all we have time for today. If we didn’t get to your question, please send it in early next week. Ludmila, as always, thank you for your insights.
Ludmila Yamalova:
Thank you! Looking forward to next week.
Host:
This has been Understanding Property on Drive Live. Stay tuned for more!
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