Temperature will reach up to 36ºC and 33ºC in Abu Dhabi and Dubai, respectively
Real estate agents in Dubai are increasingly piloting the new direct debit system which allows them to directly debit rent from the tenant’s bank account.
This will result in reduced usage of the cheques for the rental transactions in the emirate’s property leasing segment.
Under the new system, the Central Bank will be in direct control, and will remove the “middleman,” allowing both landlord and tenant banks to talk to each other directly.
Some property management companies such as Asteco and Dubai Asset Management rolled out this facility for their tenants a few years back.
Asteco has been utilising direct debit since 2018 as it has been a property manager for third-party property owners. This means that rent is collected, in a majority of cases, in the name of the landlord in cash, post-dated cheques, direct transfer or direct debit.
In June 2022, Dubai Land Department and Emirates NBD signed an agreement which allowed tenants to make payments through their bank accounts instead of issuing cheques.
Last month, the Dubai Land Department 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.
The direct debit system will be set up using the government’s Noqoodi portal. The landlord will need to approach Emirates NBD and get registered for the service. Instead of collecting cheques, the landlord will collect signed direct debit mandates from tenants and register all those mandates with the help of his sponsoring bank.
For property owners, cheques were an administrative challenge and a hassle due to irregular signatures and other errors. But the Dubai Land Department and UAE Central Bank’s integration of the relevant technologies will allow landlords to debit rent directly through the tenant’s bank account, eliminating the need to submit cheques.
“As the system has just been introduced, we will see in the coming weeks on the intake from our owners. However, we are sure this will be welcomed by landlords,” says Anisha Sagar, head of property management at Allsopp & Allsopp.
“We are piloting the system first over the next couple of weeks and then will offer this out to our current managed units,” said Sagar.
Harry Tregoning, founder of Tregoning Property, believes that the new system will take some time to bed in but will catch on.
“The people who pay in one cheque/payment will not need this obviously, and with the strong market, there are a lot of tenants paying this way. To many expatriates, the direct debit is a system that indicates a monthly payment, and many landlords will not want to be on those terms,” he said.
“We will always try and facilitate for a tenant to pay in the most favourable way. We never, however, receive rent or rent cheques to ourselves, and so it will have to be driven by the landlords and property management companies,” he said.
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