Dubai Bank unveils package of solutions to help customers affected by property completion delays

In line with its commitment to support the needs of customers, Dubai Bank today announced a package of solutions designed to help Ijarah property finance end users affected by delays to the delivery date of their properties. As part of a number of measures that will save customers time and money, the bank has revamped its Property Services Centre to expedite decision making, introduced a “stop date” that will see profit rates waived or refunded for eligible end users, and revised profit rates.  

A consequence of the downturn in the real estate sector, the delivery date of some developments has been delayed beyond that stated in the Sale Purchase Agreement. End users affected by delays have been liable to pay profit rates, as set out in the terms of the Ijarah property finance agreement. As a Sharia compliant, ethically focussed institution, Dubai Bank has consulted with Ijarah property finance customers to develop a number of solutions to resolve the issue and ensure end users are treated in a fair and equitable manner. 

With endorsement of its Sharia board, Dubai Bank finalised a solution for its Ijarah property finance customers, who have experienced a delay beyond the “expected date of delivery” (completion date plus extension period) of their property, which originally caused an accumulation of a large profit payment to the bank. The implementation of the new solution will result in waiving all profit accumulated due to the developer handing the projects beyond the expected date of delivery (anticipated completion date plus extension period), regardless of how long the period of time between the stop date and handover. This is in contrast to conventional banking principles which would see the end user continue to pay profit rates, regardless of the length of time to the handover date. 

Furthermore, all Dubai Bank Ijarah property finance customers who are affected by the same will have their payment schedules redeveloped with new rates, with some eligible customers receiving refunds or adjustments to their existing finance amounts. Customers who took out Ijarah Property finance whose profit rates were calculated using a previous method, will see their profit rate retroactively revised to align with the applicable EIBOR (Emirates Interbank Offered Rate) plus  a margin however, subject to  the terms specifically stated in the Ijara property finance agreement. Dubai Bank will provide these customers with a rebate, as necessary. For existing clients who have Ijara facilities where the Ijarah rate is based upon the Dubai Bank Base Rate (DBBR), the applicable rate will also be reduced by 1%. This reduction will affect future profit rates and will not be applied retroactively. 

Mr. Giel-Jan Van Der Tol, CEO of Dubai Bank, said: “We have made it a priority to identify solutions to help end users affected by delays to the delivery of their properties. Being a Sharia Compliant Bank, which runs under ethical principles inherited from Sharia rules the solutions we have developed are entirely in line with commitment to share the risk with our customers. We thank all our customers for their feedback and look forward to continuing to meet their property finance needs.”  

Mr Hisham Hamoud, Head of Retail and Chief Operating Officer of Dubai Bank stated that:”The process of dealing with customer cases is anticipated to take several weeks, with the bank committed to ensuring all necessary adjustments and refunds are completed by May 31, 2011.” 

To expedite the process Dubai Bank has revamped its Property Services Centre. Encompassing a cross-functional team, the centre will house all relevant decision makers in one place, including representatives from the legal, Sharia and finance departments. Consequently, decisions on the revision of profit rates, rescheduling or restructuring of finance facilities, and calculation and payment of any rebates owed to the end user will all be made quickly and efficiently from one centralised location and as per Sharia rules and principle.