Dubai rents: Single or 12-cheque payment? How to save big during price negotiations

Landlords are capitalising on the growing trend of tenants opting for multiple cheque payments and negotiating higher rents. Many tenants also push for 12-cheque payments, even if it means losing a couple of thousand dirhams.

This annual increase in rental rates is putting additional financial strain on tenants struggling with stagnant salaries. Experts have said that brokers also seek higher commissions because the market is robust.

The upward trajectory in rental prices will continue to impact tenants in 2024. If tenants pay upfront in a single cheque, they can save big on their rentals. Industry executives have said that landlords are in a position to demand higher rentals as the number of cheques goes up.

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However, tenants can make the best of what they have been given by pushing for value add-ons during negotiations. According to experts, these include robust maintenance contracts or AC servicing. These tend to be paid for by the landlord across a longer period and are easier to negotiate for, Ainsley Duncombe, founder of Off-Market Listing (OML) Dubai, said.

Alex Pigaev, chief business development officer at Realiste, said landlords negotiating a higher rent increase with 12 cheque payments is becoming more common; however, people cannot increase their income as fast as rentals are growing. "Consequently, we observe that areas located farther away are experiencing a growth in the number of rental requests."

Duncombe said an increasing number of landlords are asking for higher rents in compensation for more cheques.

Despite Dubai's population being more liquid and having more disposable funds on average than the rest of the world, he added that multiple cheques for rental contracts are increasingly becoming the norm because large corporate employers, offering to pay rent in one cheque, have become few and far between.

"It's fair to say that one-cheque payments are more of a legacy from a bygone era. The unfortunate reality for tenants is that with an undersupply of listed property and rising rental values, negotiating lower rents is very difficult, and in many cases, simply not realistic," said Ainsley Duncombe of Off-Market Listing.

Rents to continue rising

Market players expect rents will continue to rise at a double-digit rate in 2024 due to high demand, driven by the city's growing appeal as a haven for the wealthy and the influx of professionals, among other factors. Following a 23 per cent rise in the first half of 2023, rents are expected to go up by another 20 per cent this year.

Pigaev said rental rates have increased in some areas by up to 30 per cent in 2023 as compared to 2022.

"Due to the high rates, tenants are trying to wait for the low season, renting holiday homes, making it challenging and expensive to find apartments. The high demand has caused brokers to ask for higher commissions because the market is robust. Customers are rarely asking for a single cheque, as not everyone is ready to pay the entire amount upfront," he said.

Some financial institutions also take advantage of this to offer rent packages where tenants pay monthly and the landlord receives larger, less frequent instalments.

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