- Broker Directory
- My Tools
- News & Advice
- Market Trends
- Other GN Sites
Several innovative payment plans and legal safeguards for homeowners are attracting property end-users and investors to opt for off-plan real estate in the UAE.
One of the finance schemes includes the homebuyer needing to pay 30 per cent at the time of construction while the remaining 70 per cent is paid after handover of the project after two to three years.
In some cases, developers offer the option of paying the monthly installments of the mortgaged amount after one takes possession of the house. If a homeowner shells out 70 to 80 per cent of the property price during the time of booking through his savings and bank mortgage, he is burdened with paying both home rents and monthly installments for the next couple of years before the project is handed over.
Even some luxury off-plan properties are being offered in staged payments of 10 to 15 per cent semi-annually during project construction that is usually completed in three to four years.
There are also off-plan properties available in the secondary market where the seller either wants to disburse the property before possession if he is assured of a substantial gain, or if he is unable to make future payments to the developer. The cost of an off-plan property closer to handover is significantly higher.
Some of the legal safeguards which have instilled confidence to the homeowners opting for off-plan properties include the escrow law and the Oqood. Oqood, which is the Arabic word for “contracts,” ensures that all properties that have been launched in the market and are under construction are registered with the Dubai Land Department.
All under-construction projects need to have an escrow account with a bank where money collected from the buyers and project financers is deposited. Funds from the account will only be used to pay for the land, insurance, contractors, consultants and project-related marketing and promotions. This is to prevent developers from diverting the project money for other purposes.
• The Oqood system has been made mandatory to register off-plan projects
• The escrow law was introduced to prevent developers from diverting funds
• Property developers and lending institutions offer innovative payment plans
Source: S. Dhar, Special to Properties
The writer is a freelancer