Dubai's architectural ambition is visible across its skyline and real estate remains one of the Emirate's most dynamic and globally attractive sectors. However, the increasing scale and complexity of construction projects have brought with them new risks: delayed completions, inconsistent quality, and poorly coordinated site execution. These risks are often amplified by one factor rarely addressed in investor contracts but common behind construction site walls: the extensive and sometimes uncontrolled layering of subcontractors.
To address these challenges and enhance investor protection particularly in the off-plan property market, Dubai introduced Law No. 7 of 2025 regulating the practice of contracting activities. This Law aims not only to professionalise the sector but also to ensure that investors are shielded from risks related to both unreliable contractors and the unchecked delegation of project work to under-qualified subcontractors.
The new law is scheduled to enter into force in early January 2026.
The Subcontracting Dilemma
In modern construction, subcontracting is widely used to enhance efficiency, access specialised expertise, and reduce overhead. However, when poorly regulated, it opens the door to serious project vulnerabilities. Key concerns include:
- Decreased control over quality, where multiple subcontracting layers dilute accountability.
- Delays caused by mismanaged hand-offs between subcontractors or supplier backlogs.
- Inconsistency in execution, particularly where workforce standards and technical checks differ between teams.
- Difficulty assigning blame or responsibility, especially when defects or delivery failures emerge post-handover.
For off-plan property buyers (who invest upfront and rely entirely on the promise of future completion) the consequences of these problems can be severe. They risk possession delays, increased maintenance costs, or ultimately reduced property value stemming from undetected workmanship flaws.
Safeguards Under Law No. 7 of 2025
Dubai Law No. 7 of 2025 introduces clear, enforceable rules that elevate standards for contractors and substantially tighten controls around subcontracting. These measures work collectively to reinforce investor protection across all project phases, from inception to delivery.
1. Mandatory Contractor Registration and Classification
All contractors working in the Emirate, including those within free zones and special development areas, must:
- Hold a valid commercial license;
- Register in the official contractor register maintained by Dubai Municipality;
- Be classified into a performance category based on experience, capacity, and technical capability (Articles 5, 10, 14).
New entrants may begin only in lower categories and are limited to project scopes that match their capability and category. This prevents unqualified entities from overpromising on large-scale or technically intense projects.
2. Qualified Delegation: Clear Limits on Subcontracting
Crucially, Law No. 7 does not ban subcontracting but strictly regulates it.
A contractor may only assign part of their contractual works to another contractor if:
- The subcontractor is licensed, registered, and classified appropriately;
- The nature of the work allows for such delegation (i.e., it is not required to be executed solely by the main contractor);
- The subcontracted work is clearly defined and approved by the Competent Authority;
- Full supervision and centralised accountability remains with the main contractor (Articles 16–17).
By embedding oversight into subcontracting, the Law ensures that delegation doesn't mean abdication. For investors, this means greater visibility, tighter quality controls, and assurance that the “qualified contractor” on paper remains responsible throughout delivery.
3. Technical Oversight and Performance Audits
Contractors must maintain minimum technical staff standards, and those technical staff members are themselves subject to registration and licensing requirements, including the issuance of a Professional Competency Certificate (Articles 2, 6, 20).
Across all levels, the contractor must:
- Retain project plans, records, technical documents, subcontractor data, and staff registers;
- Allow government inspectors access to project sites for checks and audits;
- Notify the Competent Authority of any performance issues, changes in project requirements, or observed violations;
All data must be retained for at least 10 years from the project's completion. This is a critical protection for buyers seeking to raise post-handover complaints or warranty claims.
Support for Off-Plan Property Buyers
Law No. 7 complements broader protections for investors purchasing off-plan units in Dubai:
1. Escrow-Based Fund Releases
Buyers' payments must be held in regulated escrow accounts, which disburse funds to contractors and developers only once construction milestones have been verified by licensed consultants. This reduces the risk that investor money is used prematurely or misapplied due to delays from unregulated subcontractors.
- Project Suspension and Continuity Guarantees
Should a contractor be delisted, suspended, or found in violation, authorities can intervene through the Regulation and Development Committee. This is a permanent body formed under the new Law that oversees project continuity mechanisms and contractor replacement procedures (Article 9).
Investors thus benefit from a safety net: if a contractor (main or subcontractor) fails to meet its obligations, Dubai's regulatory bodies now have frameworks in place to enforce recovery or reassignment measures to preserve the project.
2. Dispute Resolution and Grievance Handling
Law No. 7 also provides a structured grievance mechanism. Investors or interested parties can escalate actions, decisions, or penalties through a formal administrative review process, ensuring that delays, defects, or classification issues are not left unresolved or without recourse (Article 24).
3. Enforcement and Penalty
Contractors who violate the Law by exceeding classification limits, underperforming subcontracting responsibilities, or failing to comply with technical standards face graduated penalties, including:
- Fines up to AED 200,000;
- Classification downgrades;
- Temporary suspension or permanent deregistration from the official Register;
- Cancellation of Professional Competency Certificates for technical staff involved in violations (Article 22).
These consequences reinforce a zero-tolerance policy toward negligence or mismanagement within the construction process, a significant win for investors who previously bore the costs of slow justice or unaccountable project teams.
A Structured Path to Transparency and Trust
By introducing capacity-based classifications, transparent contractor registration, and enforceable subcontractor oversight, the new contracting Law equips the Emirate's contracting sector with a far more sustainable and investor-centric structure.
For off-plan buyers, the Law restores much-needed visibility and trust: it defines exactly who is building your property, what they are allowed to build, and how they are held accountable if quality or timeline expectations are not met.
As Dubai aims to lead the region in real estate governance, such legal reforms serve not only to minimise risk today, but to build systemic confidence for long-term investment in the future.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
