Dubai 1% Payment Plan is a developer payment plan that is generally applicable for off plan properties and where the buyer is required to pay approximately 1% of the purchase price of the property each month (based on the developer’s agreed payment schedule).
You should know that the one percent payment plan in Dubai is not a government backed plan all over Dubai. It is a payment plan offered by individual developers, so the deposit, number of instalments, payment on handover, post handover period and other terms can differ from one project to another.
What does “1% payment plan” mean?
Take for example you are purchasing an apartment in Dubai for 1,000,000 AED. If the developer really provides a plan of 1% monthly, it means:
- Property price: AED 1,000,000
- Monthly instalment: AED 10,000
- 1% of property price: AED 10,000
- 12 monthly instalments: AED 120,000
But don’t think you need just AED 10,000 to begin. Most of the plans involve a booking or down payment, followed by monthly or construction-linked installments. Some also require a balance at handover or ongoing payments post handover.
Table: Example of a developers offer
| Payment | Percentage | Amount on AED 1M |
| Initial payment | 20% | AED 200,000 |
| Monthly instalments | 1% × 60 months | AED 600,000 |
| Handover/final payment | 20% | AED 200,000 |
| Total | 100% | AED 1,000,000 |
How does the Dubai 1% plan work?
The Dubai 1% Payment Plan process generally works like this:
1. Choose an eligible property: You buy off-plan from a developer with a 1% or similar payment plan.
2. Pay the first payment: Booking / Down Payment according to the developer that varies all over the place, depending upon the project.
3. Sign the SPA
You sign the Sale and Purchase Agreement (SPA) outlining the legally agreed payment schedule. Oqood is the system used by the Dubai Land Department for initial / provisional sale registration for off-plan purchases.
4. Make the monthly payments
Then you pay the scheduled payments. If the plan is specifically for 1% per month then for a property of AED 1 million it would normally be AED 10,000 per month. Some may be tied to construction milestones, not necessarily 1% each calendar month.
The Dubai Land Department said buyers could ask a developer of the project to provide a confirmation of how much has been completed for payments based on the completion of construction.
5. Continue until handover
Depending on your contract you may:
- Balance to be paid in full before handover
- Pay a percentage on handover
- Or you can pay monthly after you have taken possession of the property.
Plans at 1% post-handover are especially appealing as the buyer may be able to rent or live in the property while still paying the developer.
What are the requirements?
The “1% plan requirements” are not the same that apply to all, as the plan is provided by the developer and not by a government financing program.
The basic requirements include:
- Identification papers and valid passport.
- KYC has been completed by the developer.
- Booking / down payment to be paid.
- Signing the SPA.
- Payment of applicable registration and government fees.
- Making the payment (installment) on time.
- Further documentation shall be provided, upon request by the Developer.
- The developer will also set its own eligibility rules and payment timetable.
Do you need a mortgage?
No. The developer payment plan is different from a bank mortgage, you are paying the developer under the SPA (Sale and Purchase Agreement) and you are not borrowing the entire purchase price from a bank. This can be especially useful for overseas buyers or those who don’t want to get a traditional mortgage right away.
What about the 4% DLD fee?
This is a substantial expense that will be included into your payment plan. The Dubai Land Department said the fee for land registration is typically 4 percent of the property’s value and the payment/arrangements are timed according to the transaction agreement and the registration process.
- So, for a property worth AED 1,000,000, the 4% is AED 40,000
- Buyers should not be calculating out affordability based on the 1% monthly payment advertised.
- Additional registration, administration or developer fees may be charged.
Benefits of the 1% payment plan
Lower initial cash-flow pressure: Reduction in pressure on initial cashflow: This means you don’t pay the full price of the property all at once but in installments over time.
No traditional mortgage needed: The terms of the developer could allow buying the property without taking a bank mortgage right away.
Predictable monthly cost: As a fixed 1%-of-price monthly payment structure, it is easy to figure the payment.
For example:
- AED 750,000 property → AED 7,500/month
- AED 1,500,000 property → AED 15,000/month
- AED 1,000,000 property → AED 10,000/month
- AED 2,000,000 property → AED 20,000/month
Anticipated post-handover income: If you are able to pay after the handover, you can rent the property and pay in installments.
Useful for cash-flow planning: Means you can keep more cash on hand during the period of payments, as opposed to having all your capital tied up in a property up front.
What are the risks?
Don’t just look at the headline of 1%, evaluate other things as well, like:
1. Large final payment: The plan may advertise 1% monthly payments but still require a big amount to be paid at handover.
2. Long-term commitment: An expensive property may seem more affordable than it is because you can pay a low monthly payment.
3. Risk of buying off-plan: You are buying a property that is not yet built, until it is complete, it is at risk. Dubai has project registration and escrow accounts as measures to regulate off-plan projects. Dubai Land Department (DLD) said money from off-plan buyers is put into the project’s escrow account.
4. Missed/ Late payments: Know what happens if you are late or miss payments. Dubai Land Department (DLD) has a process for termination of provisional registration in the event an investor breaches contractual obligations by not paying installments.
5. The price of the property is important: A payment plan does not mean the property is cheap, you should compare total purchase price, not monthly payments, with similar properties.
Who is suitable for the 1% payment plan?
The one percent payment plan in Dubai, can be particularly attractive to:
- Investors with good monthly cash flow.
- Overseas buyers.
- Buyers who don’t want to get a mortgage immediately.
- Investors with long term payment period
- Buyers who are expecting rental income just after handover.
- People buying off-plan and willing to take the construction risk.
If you can only afford the property because of the low monthly payment, but you don’t have enough funds for the initial payment, DLD fees, future installments and any handover balance, it might not be for you.
So is the Dubai 1% Payment Plan really “interest-free”?
In general, the developer installment plan is not a conventional interest-bearing loan, but that does not make it cheaper by default.
The developer may have a different purchase price and payment structure for the property than a cash purchase or a different project. So look at the total price and all the other costs, not just assume “1%” means you’re getting it for cheap.
Important checklist before buying
Before signing a 1% payment-plan property, ask the developer for a written full payment schedule and verify the following details:
- Overall purchase price of property
- Initial/booking payment, amount paid
- Number of monthly instalments
- Exact monthly instalment to be paid
- Construction-related payments
- Transfer payment to be done
- Payments following the handover
- Post-handover instalments
- Registration/ DLD fees
- Oqood/ administration fees
- Date of completion (expected)
- Project registration/escrow account details
- Late payment penalties
- Provisions for default and cancelation
- If you are able to sell/ assign the property prior to full payment
- Are there restrictions on renting post handover
Key Takeaway
The 1% Payment Plan in Dubai is basically a flexible developer payment plan, typically linked to off-plan property. The buyer will pay an initial amount plus about 1% of the purchase price per month. The balance will be structured per the project’s SPA (Sale and Purchase Agreement).
The biggest advantage is the cash flow flexibility. Its biggest potential trap is not knowing the total purchase price, DLD fees, handover amount and complete payment schedule, but just focusing on the attractive monthly payment.
Frequently Asked Questions
1. What is the Dubai 1% Payment Plan?
The Dubai 1% Payment Plan is a developer payment plan, used for off-plan properties, whereby the Buyer pays approximately 1% of the purchase price of the property each month according to the agreed payment plan.
2. Do I need a mortgage to use a 1% payment plan?
No, usually not. A developer payment plan is not a bank loan, you don’t take money out of the bank to pay the purchase price. You will instead be paying the developer according to the instalment schedule as stipulated in your Sale and Purchase Agreement (SPA).
3. Who is eligible for a 1% payment plan in Dubai?
There are no eligibility criteria for all the plans of 1% across Dubai, what is needed will depend on the project and the individual developer.
4. What are the benefits of a 1% payment plan?
The primary advantage is the flexibility of the cash flow. Most of the cost of the property can be deferred to a later date and can be amortized over a longer period of time.
5. Are there any risks or additional costs with a 1% plan?
Yes, as the advertised 1% is only a part of the pay structure. You need to verify whether the plan has good down payment, construction linked installment, payment on handover or payments to be made after handover.
