Dubai: Tenants could negotiate monthly rent payments with new direct debit system

The new rental arrangement will lead to a more common practice of monthly or quarterly payments



by

Waheed Abbas

Published: Mon 6 Feb 2023, 3:29 PM

Last updated: Mon 6 Feb 2023, 5:51 PM

Dubai has integrated the real estate online registration system Ejari with a direct debit system of the Central Bank, thus, allowing landlords to debit rent from the tenant’s account directly, doing away with the need for post-dated cheques.

But one big question for tenants making monthly, quarterly or half-yearly payments is whether they will continue with their existing payment method.

Real estate brokers and property management firms say that the landlords and the tenants will mutually agree to whatever methodology suits both parties. Some industry executives suggest that the new system will lead to a more common practice of monthly or quarterly payments.

According to HP Aengaar, CEO at Asteco, the frequency of payments are to be agreed upon by the parties and forms part of the lease agreement.

HP Aengaar
HP Aengaar

“We have seen both monthly and quarterly direct debit mandates put in place. We have encouraged landlords to consider the direct debit mechanism to be ideally suited towards monthly instalments as it reduces the probability of returned cheques due to irregular signatures, overwriting and the dreaded need to order a new chequebook,” said Aengaar.

“To ease cashflow on tenants in areas where rents are increasing significantly, monthly direct debits would alleviate some of the tensions on payment obligations, and we believe for many landlords, the assurance of regular payments being received is a positive for both sides,” he said.

Anisha Sagar
Anisha Sagar

According to Betterhomes, single cheque payments are on the rise as the power has shifted to landlords, with an annual increase of six per cent in Dubai.

Anisha Sagar, head of property management at Allsopp & Allsopp, said the beauty of this system compared to the European or UK model is that the direct debits are determined by the agreement made on the payment schedule between the owner and tenant.

He believes that landlords would be more comfortable with the new system.

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