When you start the process of deciding which off-plan property to buy, conduct thorough research of the developer’s track record. It is also worth visiting the developer’s completed projects to check for quality and deliverables.
With all developers, you should also be sure to check the show homes. Make sure all deliverables are signed on official papers as proof of your agreement.
Ensure the Developer has an Escrow account and the project is registered at the Dubai Land Department.
The major Developers in Dubai are:
The process is brief is as follows:
- Source the property through an Agent is best as they have access to most of the Developers inventory instead of going directly to one as you will get more options and find the best offers. You do not need to pay the Agent commission on the purchase.
- Pay a 10-15% deposit of the sale value which is cashable at the time of purchase, generally this is done in the Developers office.
- Sign a Sales Purchase Agreement and pay the 4% Dubai Land Department the registration Fee (most developers are waiving this fee during promotions)
- Receive an Oqood Registration of your ownership of the property
- Provide payment details or post-dated cheques to the Developer for the installments agreed.
- Pay the installments as and when due, late payments could result in penalties by the Developer. Instalments are usually set in line with the construction progression of the project.
- Once the project is completed you will be required to take handover from the Developer and register your name as the owner with DEWA (Dubai Electricity and Water Authority).
- Once you have the keys to the apartment a Title Deed will replace the Oqood Certificate.
The biggest advantage of buying off-plan is that you can stagger the payments as per the progress of the construction. One option to help with your purchase is to take out a bank loan. The maximum loan-to-value (LTV) ratio during construction period is 50 per cent, so you need to pay at least half the value before a bank can finance the property. Be mindful that you might already be paying rent or a mortgage on the current property that you live in.
Some off-plan properties in the UAE also offer a structure of paying a certain amount of the down payment first and paying the majority of the balance payment upon handover of the property. Also, be sure to double check that all payments are directed towards the project’s escrow account and not directly to the developer.
Handover and Completion Date
The most common issue that a lot of buyers face when buying off-plan property is the delay in the handover. Therefore, real estate authorities in the UAE have introduced strict regulations that must be met by a developer before selling units in a project. These include complete ownership of the land the property is built on, a 20 % payment as bank guarantee, a deposit of 20 % in escrow or to reach 20 per cent of construction — this depends on the emirate in which the property is located in.
Your off-plan sale and purchase agreement should mention the project’s expected completion date, along with how the developer will address and compensate you for any delay, which is often expected.
Off-plan properties are a very attractive for buyers. There is no right or wrong in doing this — it mainly depends on the buyer’s preference. Be patient because you will not see immediate returns on your investment. However, the positive aspects include attractive price and financing offers and the ability to decide how much you can afford monthly as payment if you have taken a bank loan.
Selling Before Completion
Some buyers may need to sell the off plan property before its completion for a number of reasons, this can be done by transfer of Oqood ownership. Each Developer has its own regulations and some may restrict sale until 40% of construction.