Reading an Off-Plan Payment Schedule: What We Check Before You Commit

When a buyer brings us two brochures for similar off-plan units, the headline prices are rarely the most useful numbers on the page. What matters just as much is the calendar behind each price. A plan that lets you hold on to your cash for longer is worth something, and a slightly higher price can be fair if the instalments arrive later. Below is the routine we follow on every schedule we review.

First, we confirm where your money goes

Dubai Law 8 of 2007 requires off-plan payments to be paid into an escrow account set up for that specific project. The developer may draw from it only as construction progresses. After completion, 5% of the funds remain held for twelve months to cover defects.

Before the first instalment, most buyers also face two upfront items:

• a booking payment, commonly somewhere between 10% and 20% of the price; and
• the 4% DLD fee, paid at the outset.

We list both on the timeline from day one so nobody is surprised by the opening cash requirement.

Next, we identify which kind of plan it is

Developers use loose labels, so we always ask for the full dated schedule rather than relying on a name. In practice, most plans fall into one of five families.

Cash or near-cash. Nearly everything is paid early, and sometimes the developer offers a discount in return. This tends to suit savers chasing the keenest possible price.

Construction-linked, such as 60/40, 70/30 or 80/20. The first figure is spread over the build; the second falls due at handover. This is the shape we see most often. You need either the funds or a mortgage ready for that large final payment when the keys are released.

Handover-heavy, such as 30/70 or 20/80. Only a small share is paid while the tower rises, and the bulk lands at completion. Buyers who plan to finance through a bank at that point often prefer this.

Post-handover, for example 60/40 with the 40% falling once keys are released. A portion of the price is settled once you already hold the unit, typically across two to five years. This appeals to people who want to occupy or let the home before clearing the balance.

"1% a month". Fixed small monthly instalments that frequently run beyond handover, for those who like a predictable monthly figure.

How post-handover credit really behaves

When a developer lets you settle part of the price after completion, it is acting as your lender, usually without charging interest. A few points follow from that, and we raise each one with the developer before you sign:

• Reselling before the balance is cleared depends on your contract and the developer's own policy. We ask for the exact procedure in writing.
• Refinancing is common. Many owners refinance with a bank after completion to settle what they still owe the developer.
• Default still carries consequences once you have moved in. We read the default clause with you so the penalties are clear.

The worked comparison we run

To show why timing matters, here is the illustration we use. Take a AED 1,000,000 apartment, a three-year build and bank interest at 5% annually.

• Plan A: 75% across construction, with the final 25% due on handover. Discounted back to today, that last quarter is worth roughly AED 216,000.
• Plan B: the same 75% during the build, but the remaining 25% spread over four years after handover, at 6.25% of the price each year. Discounted to today, that quarter comes to about AED 191,000.

The gap is around AED 25,000, which is roughly 2.5% of the price in Plan B's favour. Put the other way round: if Plan B carries a price tag more than about 2.5% above Plan A's, Plan A becomes the better buy. These are illustrative figures, and your own result depends on your numbers.

Testing the "rent covers it" pitch

Buyers are often told that tenants will fund the post-handover instalments. Using the same example, Plan B needs AED 62,500 a year once the keys are handed over. Rental income might meet that, but frequently it falls short after service charges, and there can be empty months between tenancies. We run this check with you rather than taking the pitch on trust.

Our pre-signing checklist

Before you commit, we go through the following together:

1. Every instalment and its due date, including the booking payment and the 4% fee.
2. A side-by-side comparison of the plans on a present-value basis, not on the sticker price.
3. A quote for the same unit on a shorter plan, so the cost of extra time is visible.
4. For post-handover plans: how the title deed will be issued, the rules on early resale, and what happens if a payment is missed.
5. Whether you can meet every instalment even if finding a tenant takes longer than expected.

How we help

When you are weighing up a launch, we lay out the full dated schedule, put competing plans on the same footing and raise the contract questions above with the developer for you. You decide; we make sure the comparison is a fair one.

*Sources: Dubai Law 8 of 2007 (escrow accounts, 5% retained for one year); Dubai Land Department. Plan types reflect common market practice and vary by developer. Figures are illustrative.*

General information, not legal, tax or financial advice. Check current rules with DLD/RERA before acting.