RERA warns against 'illegal groups' calling for investors to stop payments to some development projects.
Regulator warns against 'illegal' property groups
Dubai's property market regulator is warning homebuyers to ignore e-mails from investor groups encouraging them to halt payments on certain developments. The Real Estate Regulatory Authority says "illegal groups" are trying to "hurt the sector" by sending mass e-mails to buyers advising them to stop paying financial instalments on certain real estate projects. They are targeting buyers through online property forums in an attempt to induce distressed sales, send property prices spiralling downwards and snap up cheap homes, the authority said in a statement yesterday.
Officials refused to identify which developers had been named and did not release examples of the e-mails. The issue is complicated, however, by the fact that there appear to be two different types of groups sending the e-mails: speculators hoping to drive down prices and consumer advocates trying to protect property buyers from investing in projects that may never be completed. The authority said groups were spreading "false information" through the real estate community and "misinterpreting property laws". The implications of a mass cancellation of payments to the property market could be severe, said Marwan bin Ghalita, the regulator's chief executive, warning that anyone who does stop payments could lose their whole investment.
Speculating on the motivation behind the e-mails, Mr Ghalita, said: "They want to hurt the sector." With the flow of money towards a project suddenly halted, its long-term viability could be threatened. "We've had so many phone calls from investors saying they received e-mails telling them to stop making payments towards a certain development," said Mr Ghalita. "But if you follow up any rumours or you join these groups by stopping the payments, you will end up in trouble and could lose your investment."
Mr Ghalita said the authority's rules state that any investor who has paid 20 per cent or more of a property's total value can halt their payments if building on the project has not started. However, he said the "illegal groups" were telling investors in projects already under construction to stop paying. "This will directly cause investors to lose money if they do not thoroughly read their contracts and seek proper legal advice," the authority said.
Mr Ghalita urged people not to "follow the crowd" and to seek professional advice, either from registered estate agents and consultants or from the regulator itself at the website www.rpdubai.com. One online group, the Dubai Property Investors group, has been urging investors with certain developers to halt their payments. However, the group stressed that buyers should only take this course if construction on their homes had yet to begin.
"Many investors have already paid 20 per cent to 50 per cent in projects which haven't even started, hence they stopped payments in order to avoid further losses caused by possible bankruptcy of the developer," said Tommy Carlsson, one of the group's organisers. email@example.com