What percentage can a developer initially take from an escrow account for soft costs?

The correct answer is that a developer can initially take 5% from an escrow account for soft costs. This regulation is in place to ensure that a portion of the funds collected from buyers is reserved for important costs associated with the development process, such as planning and administrative expenses, which are referred to as soft costs.

Setting the percentage at 5% helps maintain a balance between enabling developers to cover necessary preliminary expenses and ensuring that a significant amount of the funds remains available for the actual construction and delivery of the property. This regulation is designed to protect buyers by limiting the amount developers can access upfront, ultimately serving to safeguard buyers' investments until defined stages of project completion are reached.

Understanding this aspect of escrow accounts is crucial for real estate professionals operating in Dubai, as it reflects their responsibility to manage client funds ethically and in line with regulatory standards established by the Real Estate Regulatory Agency (RERA).