Are you able to pay a year’s rent in one cheque? In the UAE, landlords are willing to offer lower rents.
In the UAE’s property rental market, landlords use cheque-based payments to be safe now that a bounced cheque is not a crime. “The thinking is if they offer a reduced rental but with the provision, the entire amount is paid upfront, landlords don’t have to worry about collecting and encashing more cheques for that contract period,” said Firas Al Msaddi, CEO of fam Properties. “Landlords are definitely turning cautious.”
Landlords are changing their stance on contracts for both residential and commercial properties. “Some landlords are – surprisingly – even asking for a reference letter from the tenant’s bank and/or the employer,” said Al Msaddi.
Changes on cheque defaults
It was last year that the UAE changed its law to make cheque defaults no longer subject the issuer to criminal prosecution. Due to this change in law, bouncing cheques no longer carried the same level of consequences for tenants if they sent cheques to landlords.
Landlords had to tighten their games and reduce the risk of non-payment and lengthy legal proceedings to recover their owned sums from tenants. According to an estate agent at a leading property brokerage firm, “Landlords are within their rights to protect their interests and receivables.”
Qualifying process
According to Al Msaddi, this is why landlords are “refining” the way they handle lease agreements. “Many landlords are being very picky in terms of the number of cheques, the number of years the tenant is staying/has stayed in Dubai, the tenant’s designation at his workplace, the employer’s name and reputation.
“Most property management companies acting on behalf of landlords are running a detailed screening on all tenants, on social media and via Google search.”
Is intense scrutiny going to be the norm?
There may be a reason for the tightening up of pre-lease cheques because landlords are still getting used to the change in laws about cheques. After they get used to the changes, it should be a much smoother process. The majority of landlords are still open to multiple cheques because paying off a single or two-part payment for a full year is out of reach for the majority of tenants.
According to H.P. Aengaar, CEO at Asteco, “Based on the current market, we don’t see too many changes in the terms and conditions – but that may change once market sentiment alters as more properties become available.”
Until then, landlords who wish to make all their payments at once will offer a reduced rent as an incentive. Would tenants accept this?