Off-Plan Payment Plans Explained

An off-plan payment plan is the schedule the developer sets for paying the purchase price in instalments while the project is built, and sometimes after handover. It becomes binding when it is written into your sales and purchase agreement (SPA). Every payment towards the price goes into the project’s escrow account. This guide is part of our overview of off-plan in Dubai. Understanding the plan matters as much as the price, because it decides when you need cash, how much you have committed if something goes wrong, and whether a mortgage can fill the gap at completion.

What a payment plan is and who sets it

The developer designs the payment plan for each project, and sometimes offers more than one plan for the same project. The plan you choose is set out in the SPA, usually as a table of instalments with an amount and a trigger for each one: a date, a construction stage, or an event such as handover.

Because the plan is part of the contract, it carries the same legal weight as the price. Under the interim register law, if you do not pay an instalment on time, the developer can start a formal process through DLD that can end with the contract being terminated. Equally, the implementing bylaw lets a buyer go to court to end the contract if the developer declines to link payments to the construction milestones proposed by RERA. A payment plan is therefore not a marketing detail. It is a set of obligations on both sides.

Before you compare plans, ask for each one in writing as it will appear in the SPA, including any conditions attached to a lower price or a longer schedule.

Common structures

The labels below describe how instalments are triggered. Many real plans combine them, for example a booking payment, then construction-linked instalments, then a final payment at handover. Percentages vary by developer and project, so we do not quote them here. Use the payment plan calculator to test any split against your own cash flow.

Construction-linked plans

Instalments fall due when the project reaches set stages of completion, such as the end of foundations or the structure reaching a certain floor. The advantage is that your payments track real progress. If construction slows, your instalments slow too, although the total you owe does not change.

The weak point is the definition of each stage. Read how the SPA describes the milestones and who certifies them. A stage described as “completion of the structure” is clearer than one tied to a vague event. If a milestone is unclear, ask the developer to define it in writing before you sign.

When a developer asks for a payment linked to a stage of completion, DLD’s guidance says you are entitled to know the current completion percentage, confirmed by a letter from the project consultant. You can also follow progress yourself in the Dubai REST app, which shows the percentage of completion and the payments due on your unit.

Time-based (date-linked) plans

Instalments fall due on fixed dates, whatever stage construction has reached. They are easy to plan around because you know every date in advance. The trade-off is that you may pay ahead of progress if the project runs behind, which increases how much you have committed before the building exists. If you are offered a date-based plan, compare its dates with the planned construction stages.

Post-handover plans

Part of the price is paid after you receive the keys, in instalments over a period set by the developer. This can make the amount due at handover smaller and lets you use or let the unit while you are still paying.

Read the details carefully. DLD’s guidance describes fully paid units being transferred from the interim register to the title register at completion, so ask how and when your title deed will be issued under a post-handover plan, what security the developer keeps until you have paid in full, and what happens if you want to sell before the plan ends. Remember that from handover you will also pay service charges, and possibly a mortgage, alongside the remaining instalments.

Monthly instalment plans

Some plans break the price, or part of it, into regular monthly payments. They can suit buyers who prefer to pay from income rather than savings. Check whether the monthly payments are linked to dates or to progress, whether they continue after handover, and how a missed month is treated under the contract.

What you pay at booking besides the first instalment

The first instalment is not the only payment at the start. Plan for these as well:

• DLD registration fees. The developer registers the sale in the interim register through the Oqood portal. DLD lists these fees for it: 4% of the sale value (2% from the seller and 2% from the buyer), an AED 10 knowledge fee and an AED 10 innovation fee, and AED 1,000 when the developer registers the sale in Oqood itself. The main fee, 4% of the property value, is listed as shared between seller and buyer, but it is paid as the parties agree. Check your booking form and SPA for exactly what you are asked to pay and when.
• Administration charges. Some developers list administration or processing charges. Ask for a written breakdown of every amount and what it covers. DLD’s fee list for off-plan registration has no separate “Oqood fee” beyond the items above.
• Costs later in the plan. If you will use a mortgage, there are registration and bank costs at completion, and service charges start at handover.

Our guide to the full cost of buying off-plan lists each cost with its official source.

How instalments flow into escrow

Every instalment towards the price is paid into the project’s escrow account. Under Dubai Law No. 8 of 2007 on escrow accounts, that account is opened in the project’s name with an escrow agent accredited by DLD, it may be used only for building that project, and the developer’s creditors cannot attach the money in it.

Money does not flow straight from your instalment to the developer. DLD’s guidance explains that the agreement between the developer and the escrow agent sets out the main construction stages. When a stage is complete, the developer asks for payment to its contractors or consultants, the escrow agent’s engineer checks the site, and only then is the payment released. Not every developer expense can be paid from escrow.

What this means for you:

• pay only into the project escrow account named in your SPA;
• check that the account number matches the one shown for the project in the Dubai REST app;
• keep every receipt, with the date, the amount and the account paid into.

Brokers must pay off-plan buyer money straight into the project escrow account, without deducting commission. Our guide to escrow accounts and buyer protection explains what escrow protects and what it does not.

Payment plans and mortgages: when a bank can step in

A mortgage and a payment plan can work together, but only within the Central Bank’s limits and each bank’s own criteria.

• The cap. For property bought off-plan, the Central Bank limits the loan to 50% of the property value, whatever the buyer’s status or the property’s value. Lenders may set a lower limit.
• Affordability. Banks also apply the Central Bank’s limit on how much of your income can go on debt repayments. Debt repayments can take up to 50% of gross salary and regular income.
• Timing. Whether a bank will lend during construction or only near completion depends on the bank. If you plan to borrow at completion, the bank decides then, based on its own valuation of the finished unit and your circumstances at that time.

When a sale is financed, DLD has a service for the developer to register the sale and the mortgage together, and mortgage registration costs 0.25% of the mortgage value, plus other fees DLD lists. DLD’s guidance says the bank’s payments are deposited into the project escrow account, just like yours.

The main risk is a gap. If you expect a mortgage to cover the completion payment and the bank offers less, or declines, you must find the difference. Build that scenario into your plan before you sign. Our guide to mortgages for off-plan property explains the lending rules in more detail.

What happens if you miss an instalment

The rules for a buyer who stops paying are set by Dubai Law No. 13 of 2008 on the interim real estate register, as amended in 2020, and they apply whatever the contract says:

1. The developer notifies DLD that you are in breach.
2. DLD gives you a notice period to pay what is due.
3. If you do not pay, the developer may act, depending on the stage of construction certified by DLD. It may terminate the contract and keep up to 40% of the unit price if the project is 60% or more complete, or up to 25% if works have started but are below 60%. Near completion, it may instead keep the contract and claim the balance, or ask DLD to sell the unit at auction.
4. Any amount the developer holds above what it may keep must be refunded to you within the period the law sets.

If the developer never started work for reasons beyond its control, or RERA cancels the project, the law requires a refund of all payments instead. The developer’s formal route is DLD’s service for terminating an initial registration, which requires, among other things, proof that you received the developer’s warning and that the amount claimed matches DLD’s notice.

If you think you may miss a payment, speak to the developer early. A rescheduled plan agreed in writing is usually easier to manage than a formal default. Before you call, work out what you can pay and when, so that you can propose a realistic schedule. Ask for any agreement to be signed by the developer and to state clearly that it replaces the original instalment dates, and keep it with your SPA.

How to compare two payment plans

Comparing plans on the size of the first payment, or the headline split, can be misleading. Use three views instead.

Cash flow. Lay out every payment by month, including registration fees, administration charges and the completion payment. Mark where each payment will come from. A plan with a small booking payment but heavy instalments during construction may be harder to fund than it looks.

Total paid by handover. Add up everything you will have paid before you receive the keys. This is your exposure if the project is delayed, and the amount you need to have available, from savings or a mortgage, by completion.

Currency and transfers. If your income or savings are in another currency, each instalment is exposed to exchange rate movements between today and its due date. International transfers can also take several working days. Build a margin into each payment, and plan to send money early enough to arrive before the due date, always to the project escrow account.

Flexibility. Check what each plan allows if your circumstances change: can you pay early, reschedule, or sell before handover, and at what cost? Check the penalty for a late payment and whether a post-handover plan limits a sale.

Copy the table and fill it in from the two draft contracts. The payment plan calculator does the arithmetic once you have the schedule.

Questions to ask the developer about the plan

• Is every instalment, and every fee, shown in the SPA? Is anything payable outside it?
• Are instalments linked to dates, to construction stages, or to both?
• How will I be shown the completion percentage when a stage payment falls due?
• Is the price different for a shorter plan or a full payment?
• What is the penalty for a late payment, and is there a grace period?
• Can I pay early, and is there any benefit to doing so?
• Under a post-handover plan, when is the title deed issued, and what security do you keep?
• What do I need to have paid before you will issue a no objection certificate for a resale?
• Which escrow account will I pay into, and does it match the account shown in Dubai REST?

If you would like help modelling a plan against your income, or comparing two offers, our payment plan and mortgage guidance service does exactly that. Every consultation is free, with no obligation.