Dubai landlords could soon demand fewer cheques from tenants

Most landlords currently expect payments in four cheques, finds report



Landlords in Dubai could soon expect tenants to pay their rents in fewer cheques as the residential property market begins to recover, according to a new report.

In recent years, tenants in the UAE benefitted from falling rents and a growing willingness by landlords to accept multiple cheques, website Propertyfinder said.

Of the nearly 24,500 Dubai apartments and villas advertised for rent on Propertyfinder.ae, only about one in six specify the number of cheques required.

Of those that do, 1,842 listings state tenants can pay in four cheques, 925 mention one cheque, 1,052 refer to two cheques and 140 allow 12 cheques.

A decade ago, most landlords demanded an entire year’s rent upfront and those tenants whose employers did not offer such advances were often forced to borrow from the bank, the report claimed.

However, greater competition helped ease the burden on tenants and two to three cheques became the norm, with four cheques also common.

“The current market has seen some power return to tenants – they can start to dictate more favourable terms and the amount of cheques is often one of those negotiation points,” said Lukman Hajje, Propertyfinder Group CCO.

Few tenants ask to pay in more than four cheques and it is rare for a landlord to accept a request for six cheques, said Mark Towers, managing director of Edwards and Towers, one of Propertyfinder.ae’s brokerages.

“We believe we are some way off a market where 12 cheques or payments are the norm and as the market improves landlords will try to reduce the amount of cheques again,” he said.

An expected real estate recovery in Dubai could again see property owners reduce the number of cheques, the report said.

Dubai apartment and villa prices are close to the bottom of their current cycle, after declining 6 per cent and 8 per cent respectively in 2016, according to JLL. The consultancy forecasts that prices are likely to rise upwards.

However, tenants will find it difficult if landlords reduce the number of cheques.

“As the labour force evolved and HR departments have started to lump housing benefit into salaries we have seen more of a need for landlords to accept more cheques,” said Towers.

“Ten years ago, employees would get a single rent payment form the employer but now it is added onto the salary and paid monthly. This puts a strain on tenants’ finances and they have no choice but to search for landlords who will accept multiple cheques.”

In developed markets across the world, the norm is for tenants to pay rent monthly, preferably through a direct debit from their bank account. But landlords in the UAE have shown little willingness to adopt this method, the report stated.

“We don’t believe more legislation is required to move towards a monthly payment structure,” said Towers.

“It is more a matter of time for landlords to become accustomed to a new reality – a combination of economic factors has occurred over the past two to three years where companies are paying their employees differently and the new workforce is putting pressure on the landlords to adjust.”

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