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'Off-plan developers cannot impose extra costs on investors after sale', declares RERA chief

Real estate developers are not allowed to raise the cost of off-plan units on handover even if they increased in size during construction, Dubai’s Real Estate Regulatory Authority (RERA) said this week.

RERA moved to clarify the legal position on off-plan transactions after Arabian Business revealed that a Dubai-based developer called ACW Holdings had imposed substantial extra costs on investors in its Hanover Square residential scheme in Jumeirah Village, in some cases increased the cost of the properties they had agreed to buy by more than 50 percent.

One investor said this month: “In my particular case, the size increase of my apartment is 51 percent, which works out to an additional AED477,000.

“Needless to say, I cannot afford this. Instead of looking forward to an asset and retirement income I am now faced with the real possibility of a material loss.”

The original sales and purchase agreement (SPA) between ACW and investors included a clause stating: “If the floor area is increased by more than 3 percent the seller shall be entitled to increase the purchase price in accordance with the size increase.”

The contract, seen by Arabian Business, added: “The purchaser acknowledges and agrees that all plans, specifications and finishes are subject to the above variations and the purchaser will have no claim against the seller for any such variations.”

However, following negotiations between ACW and RERA confirmed by the regulator on Wednesday, investors do not have to pay the extra costs.

In a statement to Arabian Business, RERA CEO Marwan Bin Ghulaita said: “Two weeks ago the Real Estate Regulatory Agency (RERA) the regulatory arm of Dubai Land Department held a meeting with ACW Holdings to discuss the issue they have with the investors.

“In a friendly manner, we have managed to solve the issue between the investors and the developer following the laws and regulations issued by Dubai Executive Council, and based on Executive Council Resolution No (6) of 2010 Approving the Executive Regulation of Law No (13) of 2008 Concerning the Regulation of the Interim Real Estate Register in the Emirate of Dubai. Clause (2) of article (13) states that any area in excess of the net area of the sold Real Property unit may not be taken into consideration.

“Unless otherwise agreed, the developer may not claim the value of such extra area. Based on what is mentioned above, the developer is not allowed to ask for an increase and there will be no extra charges on the investors.”

Investors said they had received calls from ACW in the past week advising them they do not have to pay.

However, some of them admitted they are holding off from signing revisions to their SPAs sent to them by ACW this week until they have confirmed their positions and rights in the matter.

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