Off-plan escrow accounts in Dubai: how they work
What the Dubai Land Department says about the escrow account behind an off-plan project.
When you buy off-plan in Dubai, your payments go into a dedicated bank account for the project. This guide sets out how that account works, based on the Dubai Land Department (DLD) frequently asked questions.
- 01Buyer payments for off-plan units go into the project's escrow account.
- 02Money is paid out against verified construction milestones.
- 035% of the amount is retained for one year after completion.
- 04Project progress can be checked with the DLD project status service.
What an escrow account is
According to DLD, the real estate escrow account is a bank account of a real estate project in which the amounts collected from buyers of off-plan units, or from the project's financiers, are deposited.
The account aims to regulate construction and sales of off-plan units and to guarantee investors' rights. It applies to all real estate developers in Dubai who sell off-plan and receive payments from buyers or financiers. The escrow rules come from Law No. 8 of 2007.
What goes in
All amounts received from buyers of off-plan units are deposited in the project escrow account, including money received through the buyers' mortgage. The financing for developing the project is deposited there too.
The account is opened in the name of the project and used only to develop that project. DLD states that the sums in it may not be withheld in favour of the developer's creditors.
What comes out, and when
- Who is paid: as a general rule, payments from the account go to the contractors, consultants and marketing of the project. Not every developer expense qualifies, and only 5% of total sales can be paid for marketing.
- When: the agreement between the developer and the account trustee sets the main construction stages. When a stage is reported as complete, the trustee's engineer visits the site to check it before payment is released.
The 5% retention
Article 14 of the escrow law requires 5% of the total amount paid into the account to be retained for one year after the project is completed. It is a guarantee that the developer or contractor will address defects that are clear at completion or appear within one year after handover.
Check progress yourself
The DLD project status service shows the completion percentage and status of projects in Dubai. You can search by plot number, project number or project name on the DLD website, or use the Dubai REST app.
Tax position
0% income tax and 0% property tax*: the UAE does not levy income tax on individuals, and income from real estate held in a personal capacity, without a commercial licence, is outside UAE Corporate Tax.
*T&Cs apply.
Talk to an advisor
An iRealtor advisor can explain the steps and shortlist homes in Abu Dhabi and Dubai, including off-plan launches.
This article is general guidance, not tax, legal or financial advice.
FAQs
Does every developer in Dubai need an escrow account?
DLD says the law applies to all real estate developers in Dubai who sell off-plan and receive payments from buyers. The Real Estate Regulatory Agency (RERA) can grant an exception in some cases, especially for projects that are far advanced and have no problems.
Who manages the escrow account?
A bank or financial institution licensed by the Central Bank of the UAE and approved by RERA acts as the account trustee.
Does a buyer's mortgage payment go into the same account?
Yes. DLD says money received from buyers who took a mortgage is deposited in the escrow account too.
