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Abu Dhabi, UAETuesday 11 December 2018

Homefront: Dubai developer backtracks on 'no VAT' deal

The buyer took advantage of the deal in January and is now confused by the new demands

The buyer was notified of a 2 per cent discount and VAT exemption if they paid 80 per cent of the balance the same day. Pawan Singh / The National 
The buyer was notified of a 2 per cent discount and VAT exemption if they paid 80 per cent of the balance the same day. Pawan Singh / The National 

I booked an off-plan serviced apartment unit in 2016, paid the Oqood and registered with the Dubai Land Department the same year. As per the agreement, the unit was supposed to be handed over in December 2017 but there was a delay. In January the builder notified us of a 2 per cent discount and VAT exemption if we paid 80 per cent of the balance the same day - which we did. The property is ready and all other dues paid off but they are now insisting on us paying the VAT. Is this legal, can they do this? Also since the apartment will be used by my daughter as her residence, on a general basis does VAT apply? DM, Dubai

VAT was introduced into the UAE on January 1. All commercial sales and rentals attract the tax. Serviced apartments are treated in the same vein as hotel apartments and these too are subject to VAT.

What baffles me is why the developer is now reneging on the deal? If they made the offer to effectively waive your VAT charge if you paid the remainder of the full amount by the certain date, why are they now requesting the payment?

I assume their VAT waiver offer was put in writing and of course you must have confirmation of your payment in the form of a receipt. Unless there is a mistake here, I suggest you arrange a meeting with the developer's higher management to seek the answers to this situation.

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Read more:

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Homefront: 'My rent cheque will bounce, as I lost my job. Will my landlord wait for payment?'

Homefront: 'Rents are coming down, so how can I get my landlord to budge?'

'We negotiated our rent down in Abu Dhabi'

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I have found a lovely villa in the ideal spot on the lake in a community I want to move into. There is just one problem, the landlord is demanding Dh30,000 more than other villas in the area. The interior is no better than other nearby homes and while this spot is perfect for me (due to proximity to close friends), again it is no better than other similar villas. How do I encourage the landlord to negotiate? The agent says the landlord is not interested in dropping the price and as a result the property has been on the letting market for eight months. NB, Dubai

This problem is actually quite common and due to the fact that some landlords are not up-to-date with the current property market. That said, it is also their right to ask whatever rent they wish for their property.

I always advise prospective tenants to do their homework, to research the areas and price ranges of available properties. Despite all the statistics at our disposal, I must say that if the landlord is not interested or more importantly, not listening to any of the facts based on the market, then you will be wasting your time.

My advice would be to make a sensible offer, a price that you are prepared to pay for this specific villa. This may still be a bit over the average price for the area but by offering this, will show willing to the landlord. Present this offer at a face-to-face meeting with the landlord. At this meeting, commit to a single payment (if you are able to) and show the rental cheque already filled out and payable to the landlord. This is a surefire way to get a better deal.

In addition, present other villa options to the landlord showing what alternatives are available to you as a tenant. It would be helpful if you can also get a written character reference from a previous landlord or current employer, this will help explain you are a great tenant.

The Rera rental calculator and online property portals demonstrate what ought to be quoted as rental prices but they are only a guide. We live in a free market society where there are willing landlords and tenants, but doing agreeable deals can sometimes be difficult.

Ultimately, if the landlord does not want to drop the rent down to the going rate and you will not meet his price, a deal will clearly not be made. In this scenario, I would suggest you look for another suitable property.

Mario Volpi is the sales and leasing manager at Engel & Volkers. He has worked in the property sector for 34 years in London and Dubai.

The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario.volpi@engelvoelkers.com