This guide covers the escrow and registration rules in Dubai, Abu Dhabi and Saudi Arabia, the common payment plan types, a worked billing example, a collections routine for late installments, and the VAT and accounting points to get right.
Which rules govern off-plan payments in Dubai, Abu Dhabi and Saudi Arabia?
In all three, buyers' money goes into a project escrow account, and the sale must be registered or licensed. The details differ.
| Dubai | Abu Dhabi | Saudi Arabia | |
|---|---|---|---|
| Law | Law No. 8 of 2007 on escrow accounts; Law No. 13 of 2008 on the interim real property register | Law No. 3 of 2015 | Off-Plan Sale and Lease Law, 2023, replacing the earlier Wafi rules |
| Escrow | Each project has an escrow account; buyer payments go into it and may be used only for that project's construction | Separate escrow account per project; no withdrawals before 20% construction, unless backed by a bank guarantee under a 2025 decision | Payments go into regulated escrow accounts; withdrawals need certification by the project's consultant and accountant |
| Registration or licence | The sale must be entered in the interim register, or it is void | Registration with the Abu Dhabi authorities | No off-plan selling or advertising without a licence from REGA |
| Fees | 4% registration fee, collected from the buyer and paid by the developer to the Dubai Land Department within 60 days | Registration fees apply | Reservation fees capped at 5% and paid into escrow |
| At completion | 5% of the escrow balance held for one year after units are registered to buyers | Per the law and project terms | Construction must start within six months of the licence |
For finance teams, two consequences follow. Every buyer payment must be traceable to the project's escrow account, not an operating account. And registration fees are collected on behalf of the land department, so they are a liability, not revenue.
What types of off-plan payment plan are common?
Most plans combine a down payment, installments during construction, and a final payment at handover. They differ in what triggers each installment and how much is left after handover.
| Plan type | How installments fall due | Example split | What to track |
|---|---|---|---|
| Time-based | On fixed dates, such as every quarter | 10% down, 50% in quarterly installments, 40% at handover | Due dates; easy to bill automatically |
| Construction-linked | When the project reaches a stage, certified by the engineer | 10% down, 10% at each of five stages, 40% at handover | Stage certificates; billing waits for the milestone |
| Post-handover | Part of the price paid after the buyer receives the keys | 10% down, 40% during construction, 50% over two to five years after handover | Long-term receivables and buyer credit risk |
| Mixed | Some installments by date, others by stage | Down payment, dated installments, stage-linked final payments | Both calendars together |
Each plan needs fees billed alongside the installments, such as registration fees, and a clear rule for what happens when the project is delayed. Construction-linked plans protect buyers from paying ahead of progress, but they make cash flow less predictable for the developer.
What does an installment schedule look like? A worked example
A buyer purchases an off-plan apartment in Dubai for AED 1,600,000 on a construction-linked plan: 20% on booking, 10% at each of four construction stages, and 40% at handover. Figures are illustrative.
| Installment | Trigger | % | AED | Paid into |
|---|---|---|---|---|
| Booking | Signing the sale agreement | 20% | 320,000 | Project escrow |
| DLD registration fee | Signing; paid on to the Dubai Land Department | 4% | 64,000 | Collected for DLD |
| Stage 1 | 20% construction completion certified | 10% | 160,000 | Project escrow |
| Stage 2 | 40% completion certified | 10% | 160,000 | Project escrow |
| Stage 3 | 60% completion certified | 10% | 160,000 | Project escrow |
| Stage 4 | 80% completion certified | 10% | 160,000 | Project escrow |
| Handover | Completion certificate and handover notice | 40% | 640,000 | Project escrow |
| Total | 100% | 1,600,000 |
As a first sale of a residential unit, the installments are zero-rated for VAT, so no VAT is added.
When the consultant certifies 60% completion, the system raises the Stage 3 invoice for every sold unit in the building on the same day, with a due date 30 days later. For a 300-unit tower, that is 300 invoices in one run, each with the buyer's escrow payment details. Without that link between the stage certificate and billing, invoices go out late, and every day of delay is a day of escrow funding the developer doesn't receive.
How should you chase late installments?
With a fixed sequence that keeps the buyer relationship intact for as long as possible and leaves a clean record if the legal process is needed.
| When | Action | Who |
|---|---|---|
| 14 days before due | Reminder with the amount and escrow details | Automatic |
| Due date | Invoice due; second reminder | Automatic |
| 7 days late | Call from the customer relationship team; agree a payment date | Collections |
| 30 days late | Formal letter; late fees if the sale agreement allows them | Collections and legal |
| 60 days late | Offer a revised plan in writing, or start the formal default process | Management |
| Dubai default process | The Dubai Land Department gives the buyer 30 days' written notice; the developer's options then depend on completion | Legal |
Under Law No. 19 of 2017, which amended the Dubai interim register law, the developer's options after the notice period depend on how complete the project is:
- Over 80% complete: keep the contract and claim the balance, ask the land department to auction the unit, or terminate and keep up to 40% of the unit's value.
- 60% to 80% complete: terminate and keep up to 40% of the unit's value.
- Under 60% complete, with construction started: terminate and keep up to 25% of the unit's value.
- Construction not started, for reasons beyond the developer's control: terminate and keep up to 30% of the amounts the buyer has paid (not of the unit's value), refunding the rest within 60 days.
Completion is set by a report from a consultant approved by RERA. Keep every reminder, call note and letter on the unit's record; they are the evidence that the process was followed.
Which VAT and accounting points apply to installments?
Tax depends on the country and the type of unit; accounting depends on your revenue policy, not on the billing schedule.
- UAE residential: the first supply of a residential building within three years of completion is zero-rated. Later sales of residential property are exempt.
- UAE commercial: offices and shops are standard-rated at 5%. Installments are tax points as they are invoiced or paid, so VAT is charged on each one.
- Saudi Arabia: property sales are exempt from VAT and subject to the 5% real estate transaction tax. On off-plan sales, the tax falls due when ownership is transferred at notarisation, not on each installment.
- Registration fees: the 4% Dubai fee is collected for the land department and should sit in a liability account until paid over.
- Revenue: under IFRS 15, revenue from off-plan sales may be recognised over time or at handover depending on the contract terms. Billing an installment is not the same as earning it; agree the policy with your auditors.
- Escrow balances: keep escrow bank accounts separate in the ledger, and reconcile them every month to installments received per unit.
A mixed-use project can need all of these at once: zero-rated apartments, standard-rated shops, and one escrow account for both.
What does HYP see at developers?
Most collection problems start with billing, not with buyers. When installment schedules live in spreadsheets, maintained by sales or customer service, a stage milestone is reached but nobody issues the invoices for a week, or a buyer's revised plan is agreed by email and never reaches finance.
The developers with the cleanest collections keep each unit's sale, payment plan, receipts and escrow deposits in one record. Invoices and reminders go out automatically on the due date or when a stage is certified, and the collections team works from one ageing list across all projects.
The same discipline applies to any business billing in installments; our guide to a customer credit limit policy and collections routine covers the general approach. See how HYP manages units, payment plans and collections on our Real Estate Sales, Booking & SPA Management page.
Sources
- Dubai Law No. 8 of 2007 on escrow accounts for real estate development
- Dubai Law No. 13 of 2008 on the interim real property register
- Dubai Law No. 19 of 2017 amending Law No. 13 of 2008 (buyer default)
- Dubai Land Department: developers to pay registration fees within 60 days
- King & Spalding: Abu Dhabi off-plan escrow and the 20% rule, May 2026
- REGA: new off-plan sale and lease law, October 2023
- Trowers & Hamlins: Saudi off-plan law implementing regulation, November 2024
- UAE Federal Decree-Law No. 8 of 2017 on VAT (Articles 45 and 46)
- ZATCA: Real Estate Transaction Tax detailed guideline, May 2026