Payment plans and construction milestones
Payment plans and construction milestones
Your questions on buying, selling, financing or investing, answered right here.
Some common scenarios about payment plans, buying, selling real estate in Dubai are answered here:
We bought an off-plan property with a payment plan based on construction milestones, for which we made a down payment of 40 per cent of the purchase price. To our surprise, there was no progress on our villa when we were asked to start making installment payments. The developer claimed that the milestones are based on the overall project progress, and not our individual villa. We paid 70 per cent of the purchase price before deciding to sell. We then discovered the developer is charging us a penalty for delayed installment payments. Are the developer’s actions correct?
As far as construction milestones, the Real Estate Regulatory Agency (RERA) payment schedule is based on the overall progress of the project, and not on individual properties. RERA allows the developer to request payments of up to 10 per cent over the construction completion milestone. For example, if 50 per cent of the project has been completed, the developer can require that an installment be made to bring the total amount paid by the buyer equal to 60 per cent of the purchase price. As far as penalties for late installment payments, it depends on what is stated in your Sales and Purchase Agreement (SPA). If there is a penalty clause, and you made late payments, the developer may have the right to charge the fee. It is best to consult with a law firm to review the contents of your SPA, explain your rights and suggest the appropriate course of action. If a buyer wishes to confirm the status of a project, it can be completed via the Dubai Land Department’s website, under the “Project Status Tracking Service”. The “Dubai Brokers” mobile app also includes much of the information about developers and projects.
I am renewing my lease for another year, and the estate agent is asking for a 5 per cent commission on the annual rent. Is this permitted by RERA?
Brokers are not allowed to charge a commission on a lease renewal. However, the Real Estate Regulatory Agency (RERA) has previously stated that “administrative fees” can be charged on renewal, if they are transparent and can be justified by the work being done by the broker. A limit on administrative fees has not been specified, but the standard fee appears to be between Dh500-1,000.
I am interested in purchasing a property in Dubai International Financial Centre (DIFC) and getting the two-year residency visa. Is this possible?
The two-year residency visa for property owners is obtained through the Dubai Land Department (DLD). For a property to be eligible for this visa, the title deed must be issued through DLD. DIFC has its own property registry, therefore DLD has no authority over properties located there. So, a DIFC property would not be eligible for the two-year residency visa. However, if you wish to purchase a property in other designated (freehold) areas of Dubai for the visa, you may do so if:
- Property is owned freehold (not leasehold or rent-to-own);
- Title deed is in the name of the applicant;
- Property purchase price is at least AED 1 Million (future increases in value will not be considered);
- Property is ready to live in (not off plan);
- There is a mortgage, at least 50 per cent is paid off.
Disclaimer: This blog is intended for informational purposes only, and should not be considered legal advice, nor does it reflect the opinions of any government agency. Majdel Musa will not be held liable for the use, non-use or misapplication of this information, any lost profits, personal or business interruptions, or any other loss.
See also:
The Power of Attorney for real estate in Dubai
