Dubai Real Estate Terminology Guide

A

Approved Builders: A list of certain builders / developers whose properties and projects are approved for financing.

Asset: A thing of value belonging to a person or organization which may be used for the payment of debts.

B

Benefits: Facilities or value-additions provided to customers.

BUA: An abbreviation for built up area, this is the gross floor space of a building. It is the total construction area on the land.

C

Commitment: An agreement or promise, often in writing, between a lender and a borrower to provide financing at a future date, subject to the completion of paperwork or compliance with stated conditions.

D

Deferred Payment: A payment that not made immediately.

Disbursal: Actual pay-out of the financing amount to the customer.

Down Payment: An amount of money that is paid at the time of purchase, but which is a part of the total cost. The remaining amount is usually paid over a period of time.

E

EIBOR: It stands for Emirates Interbank Offer Rate. The rate that the most creditworthy banks in the Emirates charge each other for financing. It is usually the base rate used by companies as a benchmark for calculating their profit rate.

Ejari: An arm of the Real Estate Regulatory Agency, Ejari provides a facility for Landlords and Tenants to register their tenancy agreement with the local authorities. This registration is a must prior to any disputes being heard or settled by the Rent Committee.

Equated Monthly Installment: Also known as EMI Monthly instalments, that are of equal amounts, i.e. the amount to be paid each month will remain the same.

Equity: The value of a property after any mortgage or other charges relating to it have been paid in full.

Escrow: This is a separate bank account where funds are held in trust and are safeguarded by a RERA approved third party. Property developers in Dubai are now all required to be escrow compliant when receiving investor funds.

F

Facility Offer Letter: A letter given to the buyer, by the company, as an offer for financing of property.

Financed Amount: A sum of money that is provided to the customer, by the finance company, for the purchase of the property.

Financier: An individual or company that provides financing to another entity.

Financing Repayments: Installments that are repaid to the financier periodically. Fixed Rate A profit rate that is fixed for the full length of the financing term.

Flexible / Floating Rate: A profit rate that changes periodically throughout the financing term. The profit rate is a fixed percentage linked to a base index which changes periodically.

Flip: When an investor purchases a property aiming to sell it at a profit

Freehold: A freehold property is a property which gives full legal rights to the owners to live and use the property. He is the owner of the property until he further on sells the property to someone else.

H

Home Financing: Financing that is provided for the purpose of purchasing property, and is repaid in instalments.

I

Islamic Financing Techniques: Islam outlines certain principles based on which financial transactions are carried out. These are in compliance with the Sharia'a.

J

Joint Borrowers: Two borrowers who jointly avail financing, where the financing contract would usually be in the names of both individuals.

L

Lease Period: The time period during which the lease has to be repaid in full.

Leasehold: A leasehold property is a property which only gives the Buyer a right to live in the property or use it for commercial purposes for a specific period. The full ownership of the property is not transferred to the Buyer and a leasehold term is normally for 99 years and is further extend-able.

Lessee: The individual or recipient who is availing the lease and is under obligation to make the lease repayments.

M

Maturity of Financing: The end of the financing term, when the financing has been repaid in full.

Mortgage: An agreement that allows an individual to borrow money from a bank or similar organization, especially in order to buy property.

Mortgage Advisors: Representatives who can advise customers about their financing needs and help them apply for financing.

Mortgage Charges: Charges that are required by the Dubai Land Department.

MOU: An abbreviation for Memorandum of Understanding this is a document printed in triplicate and is commonly used in Dubai as confirmation of a sale and purchase between Buyer and Seller confirming price, terms and conditions and the payment schedule. This document can be referred to as a SPA – Sale and Purchase Agreement or a Contract of Sale.

O

Operating Lease: It is a rental agreement where there are no risks associated with ownership and no residual value liability.

Oqood: Oqood is a standard centralisation of off-plan sales. Introduced by the Dubai Land Department and the RERA this online service allows Buyers and Sellers to log on and process property transactions transparently and in compliance with the local authorities. Property ownership can be registered by Oqood prior to Title Deed issuance.

Outstanding Balance: The balance amount that still remains to be paid.

P

Periodic Repayments: Repayments that are made periodically e.g. monthly, quarterly, annually, etc.

POA: An abbreviation for Power of Attorney. This is a legal appointment from one person to another to act on their behalf in their absence. The appointee legally then has permission to make decisions and sign legal documents. All Power of Attorney’s need to have valid notarisation and attestations as required for UAE legalisation process.

Post-dated Cheques: Cheques that are dated for a later date in the future. Principal The financing amount, excluding the profit portion.

Processing, Arrangement and Management Fees: A flat, one-time fee that is charged in respect of managing the entire financing process.

R

Registration Fee: The fee charged by the Dubai Land Department upon purchase of property.

Rent Committee: Formalised by the Dubai Municipality this committee adjudicates disputes and law violations between Landlords and Tenants.

RERA: The Real Estate Regulatory Agency is a government agency founded on 31st July 2007 to regulate the real estate sector in Dubai. RERA is a part of the Dubai Land Department and has its own financial and administrative independence with full legal authority to form and set policy and provide legal framework for the real estate industry to work within.

S

Sellable Area: This is the gross square foot of a floor space excluding any common and community areas such as corridors, staircases, lifts, foyers.

Sharia'a-compliant: Products or services that are structured along the lines of Islamic financing concepts. They conform to the guidelines issue by the Shari'a board for the financing of products and services.

T

Title Deed Registration: Recognised and registered by the Dubai Lands Department, a title deed provides a property owner with proof of ownership and registers a property with local authorities.

Title Papers: Documents that relate to property that is in the name of a particular individual.

U

Unconditional Offer: An offer that is not restricted by any terms and conditions.