Dubai Land Department Overview

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Questions and Answers

In which year was the Real Estate Regulatory Agency (RERA) established?

2009

2005

2010

2007 (correct)

What is the primary purpose of the Dubai Land Department (DLD)?

To oversee lands and properties in Dubai (correct)

To regulate real estate agents

To provide loans for real estate purchases

To manage real estate companies

Which of the following is NOT a role of the Real Estate Regulatory Agency (RERA)?

Providing mortgages to buyers (correct)

Organizing real estate advertisements

Managing rental agreements

Licensing real estate activities

What is one of the main missions of the Dubai Land Department (DLD)?

To attract investments in real estate Signup and view all the answers

Which regulatory body is supported by the Dubai Land Department for managing brokers and developers?

Real Estate Regulatory Agency Signup and view all the answers

What is the goal of the Dubai Land Department's vision?

To be the global leader in real estate environment Signup and view all the answers

Which aspect of real estate does RERA NOT regulate?

Commercial leases Signup and view all the answers

What does the Dubai Land Department emphasize to safeguard people's rights?

Clear and transparent real estate regulations Signup and view all the answers

What is the maximum duration for a usufruct agreement typically?

50 years Signup and view all the answers

Which of the following rights allows a holder to develop the leased property?

Musataha Rights Signup and view all the answers

What is a requirement for long-term leases to be valid in Dubai?

They must be registered in the Real Property Register Signup and view all the answers

In which areas are foreign nationals permitted to own freehold property?

In designated areas approved by the Ruler Signup and view all the answers

What happens if a musataha holder defaults on payment for two years?

The musataha is considered terminated Signup and view all the answers

Which of the following best describes a credit bureau's role?

They collect and supply credit information to creditors Signup and view all the answers

Which statement is true concerning the Tenancy Laws and long-term leases in Dubai?

They do not apply to long-term leases over 10 years. Signup and view all the answers

Which real estate interest can foreign nationals acquire in Dubai?

Musataha and usufruct rights in designated areas Signup and view all the answers

What is the minimum experience required for a UAE national to become a licensed mortgage broker?

2 years Signup and view all the answers

Which of the following is NOT a requirement for expatriates applying for a mortgage broker license?

2 years of experience in Real Estate Signup and view all the answers

What fee must be paid annually for RERA licensing?

AED 5000 Signup and view all the answers

What must a foreign company branch do to operate in Dubai?

Possess a UAE trade license Signup and view all the answers

Which of the following is a characteristic of being a truly independent mortgage broker?

Full product disclosure Signup and view all the answers

In lead management, what is crucial for clear communication?

Clear verbal and written communication Signup and view all the answers

What is the role of a local service agent for a foreign company branch?

To act as a representative for official dealings Signup and view all the answers

What should an independent broker focus on to understand the mortgage market better?

Understanding bank policies and products Signup and view all the answers

Which documentation is required for RERA licensing?

Documents translated into Arabic Signup and view all the answers

What is the primary objective of selling data at an artificially high price?

To generate profit exceeding the data's actual worth Signup and view all the answers

What is a recommended follow-up marketing activity for brokers?

Offering gifts after securing a deal Signup and view all the answers

Which of the following is considered a statutory offence under data protection laws?

Publication of private matters Signup and view all the answers

Which mortgage product is primarily offered in the UAE?

Vanilla mortgage products Signup and view all the answers

What is the maximum tenure for commercial mortgages?

10-18 years Signup and view all the answers

Which factor does NOT influence a bank's lending policy?

Celebrity endorsements Signup and view all the answers

What major event caused financing for under-construction properties to stop in 2009?

Market correction Signup and view all the answers

What do banks use to calculate affordability in relation to Debt Burden Ratio (DBR)?

Headline rate or market rate Signup and view all the answers

What must lenders build into their calculations according to Central Bank Regulation?

A stress test rate of 2-4% above current rate Signup and view all the answers

Which segment is explicitly mentioned as restricted when obtaining a mortgage?

Non-resident applicants Signup and view all the answers

Which condition must banks adhere to when offering equity release?

Not all banks are willing to provide equity release Signup and view all the answers

What is one reason for the dominance of refinance (buy-outs) in the mortgage market since 2013?

Decline in interest rates Signup and view all the answers

Which type of interest rate option typically varies from 1-5 years?

Fixed rates Signup and view all the answers

What is not typically included in the criteria for mortgage qualifying?

Mobile phone model Signup and view all the answers

Which type of mortgages allows borrowers to pay only interest during the construction period?

Interest-only plans for under construction Signup and view all the answers

How is ethics defined in the context of professional conduct?

As the study of principles indicating how we should behave. Signup and view all the answers

What is mortgage fraud primarily characterized by?

Concealment or misrepresentation of material facts. Signup and view all the answers

Which of the following is NOT a role of borrowers in mortgage fraud schemes?

Providing accurate income data. Signup and view all the answers

What often leads mortgage advisors to commit fraud?

Profit motives and incentives. Signup and view all the answers

Which practice is most closely associated with appraisal fraud?

Manipulating appraisal reports to reflect higher property values. Signup and view all the answers

What does mortgage fraud for profit generally involve?

Cooperation among multiple insiders in the industry. Signup and view all the answers

Which of the following actions is indicative of potential mortgage fraud?

Documentation with inconsistencies and errors. Signup and view all the answers

Which attribute best describes borrowers involved in fraud for property?

Knowledge of their typically weak loan applications. Signup and view all the answers

What can the concealment of material facts lead to in mortgage scenarios?

Improper influence of loan underwriting. Signup and view all the answers

Why might accountants engage in mortgage fraud?

For financial gain through falsified documents. Signup and view all the answers

What ethical principle is NOT associated with professional conduct?

Profit maximization at all costs Signup and view all the answers

Which of the following statements regarding ethics and values is accurate?

Ethics pertain to fairness and justice, while values reflect personal importance. Signup and view all the answers

How can banks contribute to mortgage fraud?

By falsifying documents and applications. Signup and view all the answers

What might motivate a real estate broker to engage in fraudulent practices?

Higher commissions and profit incentives. Signup and view all the answers

Study Notes

Dubai Land Department (DLD)

Established in 1960 to oversee land and property affairs in Dubai
Aims to register lands and properties systematically, safeguarding rights
Vision: to become the global leading real estate environment to attract investments
Mission: to create a real estate environment applying international best practice standards to guarantee all stakeholders rights and contribute to societal development

Real Estate Regulatory Agency (RERA)

Established in 2007 by Sheikh Mohammed bin Rashid Al Maktoum
Supported by the Dubai Land Department, RERA plays a key role in regulating Dubai's real estate scene
Registered all real estate development and brokerage companies in Dubai
RERA's role: licensing all real estate activities, managing developer trust accounts, licensing and organizing real estate agents, regulating rental agreements, and supervising the owners associations
RERA also regulates real estate advertisements in the media
Foreign nationals can own freehold property in designated areas approved by the Ruler of Dubai
Currently, there are over 24 designated areas approved for foreign ownership.

Usufruct Rights

Owner of a building, unit or plot can enter into a usufruct agreement with a tenant, allowing the tenant to use the leased property in its original condition, subject to fair wear and tear
Usufruct is typically terminated upon expiry of 50 years unless otherwise agreed
Other termination grounds include destruction of the leased property, waiver by the usufructuary, termination by a court order due to misuse

Musataha Rights

Similar to usufruct but grants the musataha holder an additional development right.
Maximum term is 50 years unless otherwise agreed
Either party has the right to terminate the musataha by two years prior notice
Payment default over a period of two years can also lead to termination

Long Term Lease (Leasehold)

Lease period is more than 10 years and up to 99 years
Cannot exceed 99 years and must be registered with the Dubai Land Department
Tenancy Laws don't apply to long term leases and the Rental Dispute Settlement Centre has no jurisdiction

Rules on Real Estate Ownership

UAE and GCC nationals and wholly owned companies can acquire all types of real estate interests anywhere in Dubai
Foreign nationals can own freehold and all other types of interests including Musataha, usufruct, and Leasehold in the specific “Designated areas” for foreign ownership

Credit Bureau

Collects credit information on individuals and supplies it to creditors
Collects and synthesizes information about an individual's credit score
Credit bureaus do not decide the decision to lend

Licensing Requirements (Consultants and Brokers)

Licensed by the Real Estate Regulatory Agency
UAE or GCC nationals:
- Certified Mortgage Broker course
- Bachelors degree in Economics, Finance or Accounting
- 2 years experience in Real Estate
- Certificate of good conduct from Dubai Police
Expatriates:
- Certified Mortgage Broker course
- Bachelors degree in Economics, Finance or Accounting
- 3 years experience in Real Estate
- Residency under same company
- Certificate of good conduct from Dubai Police

Foreign Company Branch

Copy of trade license
Parent company must be in business for more than 2 years
Corporate Articles of Organization
Board resolution to open a branch and name a branch manager
Branch manager must meet license requirements
Local service agent required
Branch activity must be similar to parent

RERA License

Documents should be notarized by the UAE embassy overseas, ministry of foreign affairs in Dubai and translated into Arabic
Activity fee of AED 5000 per annum

Licensing

Issued by Dubai Government, Department of Economic Development (DED)
Renewed annually
Regulated by RERA
Increasing regulation
Must have own business premises
Staff must have work visas

Being Truly Independent

Broad range of banks & products
Understanding the whole mortgage market
Following “best advice” principles
Full product disclosure
Impartial and not bank or real estate biased
Client suitability, not commission biased

Knowledge of Banks & Products

Understand bank policies, products & product parameters
Qualification criteria - Income, LTVs & restrictions
Documentation requirements
Package requirements - originals, email scans
Turnaround times
Individual bank quirks
Drill down on top 3-4 banks – 90% of your business
Knowledge of the whole market
Create a bank & product matrix

Potential Business Sources

Website
Advertising - Internet, Events, Media & Flyers
Public Relations
Referral Sources - Real Estate Agencies, Developers & IFAs
Customer get Customer
Word of Mouth

Follow Up Marketing

Email
Thank you/closing gifts
Ask for feedback & referrals
Become their “go-to” person
Get testimonials
Act upon negative feedback
Lead Management
- Introduction
- Prequalification & KYC
- Research
- Clear communication (verbal & written)
- Contracting
- Agree next action & contact
- Gaining commitment to meet
- Send a proposal

Case Study 1a - Fact Finding - Mr Barlow

Emirates Airline Captain of 4 years
Aged 40 and single
No liabilities, earns 30k per month
Buying in Shoreline for 2.8m
Has 25% deposit + fees

Case Study 1a – Mr Barlow Profile

Ethics are NOT feelings
Ethics are NOT compliance
Ethics are similar to but NOT the same as values
- Ethics refer to honesty, fairness and justice
- Values refer to what’s important to you

Ethics is…

The study of principles which indicate:
- How we should behave
- Our moral duties and virtues
- Ability to discern right from wrong

Professional Conduct

Avoid using others for profit through coercion or deception
Use your business practices to contribute to the development of rational and moral capabilities
Are you willing to put your career on the line to ‘do the right thing’? Sometimes being ethical means taking a calculated risk

Parting Thoughts on Ethics…

There is no “right” way to do the wrong thing!

What is Mortgage Fraud?

The misrepresentation or concealment of material facts to improperly influence mortgage loan underwriting
Concealment of material facts could include:
- Material misstatement
- Misrepresentation
- Omission

Borrower’s Role in Mortgage Fraud Schemes

Knowingly supply false information on the loan application
Partnering with industry professionals
Altering or falsifying income and employment information
Hiding debt
Misrepresenting sources of down payment

Module 1: SAFE Ethics - Introduction to Mortgage Fraud

Attributes of Fraud for Property
- Borrower misrepresentations
- Intends for loan application to appear strong
- Borrower usually does not qualify
- Borrower intends to pay
- Purpose is to obtain a loan

Mortgage Advisors

Falsify documents to secure client loans
Knowingly assist fraudulent applicants
Actively encourage clients to omit or misrepresent
Influence bank personnel and appraisers
Fraud for profit
Can be the biggest initiators of mortgage fraud

Banks

Falsifying applications and documents
“Turning a blind eye”
Influencing appraisers
Taking bribes
Assisting borrowers in taking advantage of loop-holes in policy or processing
Deceiving clients by misrepresentation of product

Appraisers/Valuers

Overvalue properties to allow cash-out deals
Adjust sales price to equal appraised value
Commit fraud for the promise of additional work
Substantiate reports that improvements were made

Inflated Appraisals/Appraisal Fraud

Intentionally appraised with a higher-than-market value
Appraisers, brokers and borrowers may act in collusion
Brokers & Banks use only one appraiser

Accountants

Falsify documents required by lenders to qualify loans
Rewarded with profits or promised continued business

Real Estate Brokers

Falsifying documents
Creating multiple sales contracts
Hiding charges and commissions
Paying POAs
Influencing appraisers

Key Indicators of Mortgage Fraud

Higher-than-typical commissions and bonuses paid to mortgage brokers and appraisers
Fraudulent loan applications & documentation
Higher than market appraisals

Mortgage Fraud

Fraud for property - where the borrower commits fraud to obtain a property they might not otherwise qualify for - Borrower intends to make the payments
Fraud for profit usually involves more than one industry insider. Goal is profit from artificially high price by selling for more than it is worth

Data Protection

Laws in “infancy” stage
Legislation only enacted in DIFC (based on UK)
A number of Government initiatives aimed at developing greater regulation
Statutory offence for:
- Publication of private matters
- Disclosure of private information
Various sectors, such as telecoms implementing data protection methods

Misuse of Data

Buying or selling company data
Downloading and taking data from your company
Passing client details without their consent
Cold calling
Email-blasting
Discussing client information with third parties

Module 2

Module 3

Mortgage Products & Bank Policy
Module 3 Content:
- UAE Mortgage Products
- Interest Rate Options
- Bank Policy
- Debt Burden Ratio (DBR)
- Restricted Segments
- Mortgage Documents & Process
- Insurance

UAE Mortgage Products

Mainly “Vanilla” mortgage products:
- Capital & Interest
- Interest Only
Banks & Lenders offering:
- Islamic Finance
- Conventional Mortgages
- Both

New Purchase

Secondary Market Purchases
Primary Market Purchases
- Valuation may not be required
Completed Properties
Under Construction Properties

Commercial Mortgages

Limited number of properties:
- Retail, Office & Warehouses
Higher rates
Higher costs
Maximum tenure of 10-18 years
Offered in personal or company name

Under Construction Properties

Financing stopped in 2009 (post correction)
Banks have re-opened this segment
Mainly Emaar and other Master Developers
Payment Plans:
- Buyer has to pay first 50%
- Banks offer interest-only plans during construction

Refinance (Buy-outs)

Dominating the mortgage market from 2013
Reasons Why:
- Interest rate decline - encourages refinance
- More lenders
- Slower property sales
- Increased value of properties from 2010
- Lenders can see a borrowers track-record
- Credit history (AL-Ittihad Bureau)
- Central Bank Mortgage Regulation

Equity Release

Release gains made since 2010
Make capital work harder
Use equity to upgrade
Business expansion
Buy investment property
Not all banks willing to provide Equity Release

Interest Rate Options

Bank Variable
EIBOR-Linked Variable
Fixed Rates – vary from 1-5 years
Conventional & Islamic versions

Bank Policy

All Banks have different lending policies
Greater alignment since CB Mortgage Regulation
Policy influenced by bank strategy & appetite to lend
Banks do not share full policy details
Innovation is key

Policy Factors

Target Segments
Restricted Segments
Qualifying Criteria
Documentation
Process
Properties
Type of loans
Risk Management
Pricing

Interpretation of Regulations

Banks interpretation of regulations differ:
- % of income used for eligibility calculations
- % of rent used for eligibility calculations
- Variable pay
- Stress-test rate
- Early Settlement Fees
- Use of Credit Bureau
- Providing loans for fees

Debt Burden Ratio (DBR) Rates

Banks use different rates to calculate affordability
Some use the offer or headline rate
Others build in a margin of 2%
This will effect the amount your client can borrow
Central Bank Regulation states:
- In arriving at DBR lenders must stress test the rate by 2-4% above current rate, depending at what level interest rates are in the cycle

Case Study 2 - Employed Calculating DBR & Affordability

Guaranteed Monthly Income:
- Basic salary
- Fixed Allowances (paid)
- Rental income (in UAE)
- 2 applicants?

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Description

Explore the key roles and functions of the Dubai Land Department (DLD) and the Real Estate Regulatory Agency (RERA). This quiz covers their establishment, vision, mission, and impact on the real estate environment in Dubai. Test your knowledge about real estate regulations and property affairs in this dynamic city.