Dubai’s real estate market has experienced significant growth over the past few years, driven by its cutting-edge infrastructure, high potential for investment returns, tax advantages, and unique lifestyle offerings. These factors have drawn investors from around the world. However, not everyone can afford to pay the full price upfront for properties in Dubai. To address this, property developers have introduced a variety of payment plans to make purchasing more accessible and convenient for genuine buyers. I’ve outlined the four most common payment plans available for buying property in Dubai to help you find the one that best suits your needs.
Rent To Own Payments (RTO)
Rent-to-Own (RTO) payment plans offer a straightforward path to homeownership in Dubai, particularly for those looking for move-in-ready properties. This option is ideal for buyers who may not have the funds to make a full upfront payment. In a Rent-to-Own scenario, you initially rent the property for a predetermined period, during which you have the option to purchase it at the end of the lease.
The process begins with a tenancy contract between the buyer and the landlord, specifying the rental term. Typically, the rent under an RTO agreement is slightly higher than the usual market rate. If all the conditions of the contract are met by both parties, the renter has the opportunity to buy the property. The unique aspect of RTO plans is that the rent paid during the lease period is counted towards the down payment on the home. Any remaining balance can either be paid in full or financed through a mortgage with a bank. This arrangement makes it more manageable for renters to transition into homeowners without the burden of a significant initial investment.
Post-Handover Payment Plan
The Post Handover Payment Plan is a preferred method of purchasing properties in Dubai, particularly appealing for off-plan properties offered by major developments as well as private real estate companies. This payment plan allows buyers to defer a significant portion of the payment until after they have taken possession of the property. Initially, the buyer must pay a certain percentage of the property’s total price to secure it and remove it from the market.
This plan is especially advantageous in Dubai due to the high rental yields. Buyers can use the income generated from renting out their property to pay off the remaining balance. This makes the plan very attractive not just to investors but also to end-users, who appreciate the ability to pay the remainder in installments after moving in and settling down.
Commonly used ratios for these payment plans include 40:60, 30:70, 20:80, and 10:90, where the first number represents the percentage paid up front and the second the amount deferred until after handover. This flexibility has contributed significantly to the popularity of this payment model in Dubai’s dynamic real estate market.
Payments In Instalments Until Handover
This payment plan, popular in Dubai, involves splitting the total cost of a property into percentages that are paid at different stages up until the property is handed over. For example, with a 70:30 payment plan, you would pay 70% of the total price in regular installments leading up to the handover, and the remaining 30% when you receive the property. The specific ratio can vary, with common splits including 25:75, 10:90, 60:40, 50:50, 40:60, and 20:80. These ratios can differ depending on the developer.