With confusion persisting over a change in mortgage laws, expats in Dubai are rushing to sell their homes and get the best bargain. The increase in number of expat-owned properties is being witnessed after a decision by the UAE Central Bank placed a 50 percent lending cap for them. The mortgage ceiling for UAE citizens has been placed at 70 percent.
The expats have been stressed as they are unsure whether lenders will honor existing pre-approved mortgage deals. Real estate professionals expect the lenders to honor the pre-approved contracts, while some other institutions may wait for further direction from the central bank. Executives of UAE’s largest banks will be meeting with Central Bank officials in Abu Dhabi to discuss the new policy and review its implications.
According to Sam Wani, general manager at Dubai-based mortgage brokerage Independent Finance, “the pre-approvals should be used as soon as possible. [Authorities] haven’t said [deals must be finalized] by the end of this week, but the normal pre-approval life is 30 days. If they don’t use pre-approvals they cannot be extended”.
However, some experts also warn that mortgage agreements have a force majeure clause and any changes in rules by the central bank could be covered under it. In such situation, the financial institutions may have the right to revoke pre-approved mortgage agreements.
The confusing scenario is likely to benefit landlords who may earn a premium of up to one-third the value of their property. Expats, with pre-approved mortgage agreements, are also in a hurry to buy their dream home. The UAE, boasting a population of over 8 million, has attracted significant investment from foreigners in its real estate market. With little guidance over the changes in regulation, it is expected that investor confidence in the UAE real estate market may get hurt as it lacks practicality.