The real estate market in the United Arab Emirates is one of the biggest in the world and is well known for offering profitable investment possibilities. Property investors have a wide range of options, from ready-to-move houses to off-plan properties. However, off-plan properties have quickly become popular with both buyers and investors. The rise in off-plan property investment is mostly attributable to the simple payment schedules and profitability following project completion.
Let’s look more closely at the procedures, actions, and other requirements needed to think about buying off-plan property in the UAE.
WHAT IS AN OFF-PLAN PROPERTY?
Off-plan property is any property bought straight from the developer while it is still being built. The building may not yet exist or may only be in the planning phases. Despite this, buyers of off-plan property must rely on the developer’s provided blueprint or floorplan.
The down payment for buying is often a set proportion of the total property value. The remaining money, however, might be made in installments or according to what the parties have mutually agreed upon.
HOW TO BUY PROPERTY OFF PLAN
Here are all the steps that investors must take before buying off-plan property in the UAE.
DRAFT YOUR BUDGET
Preparing a budget is the first step in buying an off-plan property in Dubai or another Emirates. The costs of buying an off-the-plan house may be conveniently broken down into three categories: the down payment, monthly payments, and legal fees.
Prior to executing the sales and purchase agreement, the down payment is paid. 10% to 20% of the entire purchase price might be used as the down payment amount. Keep in mind that banks won’t give mortgages for the down payment, so buyers must save the money on their own.
The following financial expense is made up of installments and legal expenses. However, you can choose the off-plan project if your monthly income is sufficient to pay all of your debts and household expenses.
ASSISTANCE OF A REAL ESTATE AGENT
Consultation with a real estate agent is the next stage in buying an off-plan property. Hiring a real estate agent has a number of advantages since they have the skills, experience, and information to help you through the procedure.
A real estate professional can provide you insightful information about the project and can forecast the property’s market worth after it is finished. Additionally, they may be able to negotiate the final price and the number of installments thanks to their connections with the developers.
GET ALL THE DETAILS ABOUT THE PROJECT
A long-term commitment, buying an off-the-plan property depends only on the floor plan before it is made. Having stated that, it is essential to gather and validate every relevant detail about the project. This should contain the developer’s standing in the marketplace, earlier projects and the date they were completed, legal disputes, and property leases. A comprehensive check will save you trouble in the future.
SELECT A PAYMENT PLAN.
The payment plan must be finalized as the procedure’ finishing step. The developer provides the investor with a variety of payment schemes. Depending on the amount remaining to be paid after the down payment, the payment schedule varies from buyer to buyer.
Choose a strategy based on the budget you established. Before signing the contract, double-check the interest rate, due date, and additional fees.
COMPLETE THE LEGISLATION
Buyers must take the following legal actions after closing the contract with the developer.
1. OBTAIN A RESERVATION FORM
The reservation form is the first formal step after confirming the purchase of an off-plan residence. It is a legal document that comprises the buyers’ personal information, the kind of property, the payment plan, and the amount of downpayment. Prior to proceeding to the next step, both pirates must sign the form.
2. AGREE TO AN SPA (SALES AND PURCHASE AGREEMENT)
One of the most important procedures in buying an off-plan home in the UAE is signing an SPA. The SPA agreement contains information about the property valuation, the layout of the property unit, the handover date, and the payment schedule.
Read the agreement carefully because it serves as a formal agreement between the parties. Make sure there aren’t any unstated fees or unfavorable terms.
Additionally, confirm the name, contact information, and all other information pertaining to the developer. Keep in mind that the agreement must be registered with governmental organizations like TAMM in Abu Dhabi or DLD in Dubai.
3. ESTABLISH A DEPOSIT IN AN ESCROW ACCOUNT
It’s time to send the developer the down payment after you’ve signed the contract. Developers are needed to provide you access to an escrow account where the money will be placed for this reason.
You may examine an escrow account’s validity by going to the official website of the relevant government agency in your Emirate. To verify the escrow account, for instance, Dubai residents can go to the DLD.
Transfer the money to the escrow account after you have validated the account. You have two payment options: credit card or wire transfer.
4. COMMISSION FOR PAY BROKERAGE
If you used a real estate agent, the brokerage commission must be paid once the money has been transferred. The commission fee varies and is often based on the total property value.
5. TRANSFER OF PROPERTY
Seven days prior to the scheduled handover date, buyers are advised to come and check the completed property. Buyers can attest if the finished property lives up to developer promises during the inspection. Additionally, buyers need to look at the interiors, paint, finishing, and materials used for consumption. Customers can ask the developer to change a piece if there is a discrepancy.
DOCUMENTS NEEDED FOR OFF-PLAN PROPERTY BUYING
The collection of documentation needed to buy off-plan property in the UAE is listed below.
- Emirates ID (Copy)
- Passport (Copy)
- Sales and Purchase Agreement (SPA)
- Reservation form
- Mortgage contract (If applicable)
It’s important to keep in mind that the documents mentioned above are only guidelines, and the buyer’s Emirate may or may not require additional paperwork.
REQUIREMENTS BEFORE BUYING AN OFF-PLAN PROPERTY
The investment return and profit margin of the off-plan home make it highly popular. However, before choosing a project, buyers should consider the following asks when buying off-plan property in the UAE.
1. SELECT A REPUTABLE DEVELOPER
Since the buyer must pay the balance in installments, investing in an off-plan property is a long-term commitment. Therefore, research the developer’s standing in the market before making an investment in an off-plan property. The first approach is to limit investment to properties built by registered, licensed developers.
To check the developer, buyers can go to the relevant authorities’ official website. RERA, DLD, and the Dubai Rest App are accessible for digital verification, and Dubai residents may validate the developer in person. The off-plan project must also be registered with TAMM if it is located in Abu Dhabi.
2. ANALYZE THE PROJECT
It is advised to personally visit the property site after selecting the investment project. Understanding the area and layout of the property unit will be made easier by physically seeing the property. Additionally, buyers can look into the project’s development and the caliber of the building materials.
3. PREDICT THE ROI
The most important factor to think about when investing in an off-plan project is ROI. The location, kind of property, track record of the developer, and unit’s rental potential are just a few of the variables that affect ROI. As a result, these considerations must be taken into account while choosing the property.
4. PICK LOCATION OVER FINANCE
When searching for an off-the-plan property, location is among the most important considerations to take into account. It is advised to prioritize location over price when buying real estate. Despite the fact that off-plan developments in desirable locations are pricey, they often have better ROIs that are advantageous over the long term.
Projects near the coast or in freshly emerging neighborhoods are typically seen to be perfect. However, if you choose a project in a developed area, check to see if there are nearby bus or metro stations.
5. TALK ABOUT A PAYMENT PLAN
Developers provide a variety of payment arrangements in order to make it easier for investors. Before choosing a plan, weigh the advantages and disadvantages of each one. Negotiate the terms, conditions, and payment plan installments to fit the buyers’ budget and convenience. Keep in mind that failing to pay your installments on time might result in you being declared in default. In some situations, investors may also be penalized for making late payments.
6. CAREFULLY READ THE CONTRACT
It’s time to sign the SPA with the developer once you have finished with all of the above components. Make sure to carefully read the agreement before you sign it. Keep an eye out for any minor circumstances that you have not ratified. Additionally, look for the asterisk symbol (*) to find any unstated terms that are mentioned in the contract.
This is the comprehensive list of factors to consider when buying an off-plan property in the UAE.
HOW TO CONTROL DELAYED PROPERTY HANDOVER
Off-plan home handover delays are a frequent problem that investors may experience. Multiple factors, such as market conditions, global crises, construction issues, and others, may be to blame for the delay.
1. TALK TO THE DEVELOPER
The first thing to do if the property handover is consistently being delayed is to talk with the developer. Work out an agreement with the developer that will work for both of you.
Read the SPA as well because it should contain a language outlining how to handle a delayed property transfer. Customers may request a refund if the developer is unable to honor the provision in question.
2. Verify if the project has been canceled by the government.
Verify whether the property has been cancelled by the government prior to submitting a claim. Every Emirate has the authority to halt projects that aren’t going according to plan for a variety of reasons. In the event that the government cancels the project, the authorities also provide information on how refunds would be processed. Another justification for investing in off-plan property in Dubai and the other Emirates is the secured transaction and possibility of recovering paid sums.
3. SUBMIT A CLAIM
Buyers may get a return if the government does not cancel the property. However, confirm that the dealer’s grace period for the delayed property handover has expired. It will be useless to file a case before the grace period. To minimize any inconvenience, it is advised to get expert help when submitting a refund claim.
FAQS
IN THE UAE, HOW DO I BUY AN OFF-PLAN PROPERTY?
Buyers must first create a budget and choose a location before they can buy an off-plan property in the UAE. After deciding on a location, buyers should pick a real estate agent, look for a project being built by a respected builder, establish a payment plan, and finish the paperwork.
CAN YOU GET A LOAN FROM A BANK TO BUY AN OFF-PLAN PROPERTY?
Banks do indeed offer financing for the buying of off-plan properties. Although the investor was supposed to have paid at least 50% of the total purchase price, the mortgage is not offered for down payments.
DO OFF-PLAN PROJECTS COST MORE THAN READY PROJECTS?
No, off-plan properties typically cost less than completed developments. But buyers can save a lot of money by selecting unfinished projects over properties that are already built.
WHAT SHOULD HAPPEN IF I AM UNABLE TO PAY MY OFF-PLAN PROPERTY’S INSTALMENTS?
The developer may impose fines if you fail to make timely installment payments. The contract, however, becomes worthless if payment is overdue for a predetermined amount of time, allowing developers to resell the home to another customer. After the specified period specified in the agreement, the defaulter will receive the paid sum from the developer.
IS IT POSSIBLE TO SELL OFF-PLAN PROPERTY PRIOR TO COMPLETION?
You may sell your unfinished off-plan property, yes. Read your contract carefully, though, as some developers won’t let you resell the property unless a certain sum is paid.
Our overview of buying a property off-plan in the UAE comes to a close here. If your financial resources are restricted or you don’t have much money available for down payments, off-plan properties are seen to be a great investment. In addition to simple financing options, off-plan projects can provide a number of other advantages, including better ROI. If you want to take advantage of these advantages, go through these UAE properties for sale to select the best off-plan project for investment.
