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“The main positive is that rent deductions are made on time without (landlords) having issues with missing checks or irregular signatures,” said Abdullah Al Ajaji, managing director of Driven Properties. “The pros and cons have yet to be determined; however, we believe that based on recent , a default on a direct debit payment will not have the same effect as a bounced check.
Real estate and banking authorities have yet to clarify when post-dated cheques will become a thing of the past in the UAE real estate rental market. Also, landlords need time to process their requests.
According to Al Ajaji, “Multiple landlords and developers may not be able to move completely within a short period of time. There may be many corporate tenants who will first have to make this new service part of their internal accounting policy. If the success rate is high, it will save development business and landlord time and effort, and then we’ll see faster adoption.”
The pandemic has also prompted landlords to consider alternatives to collecting checks. Some of the largest developer landlords in the UAE are allowing tenants to pay monthly rent via bank account or credit card during this period. Later, helping the process was the UAE’s confirmation of the decriminalization of refunds.
Something that was part of the Covid era lives on. “(Direct debit) is more common among individual owners in freehold areas,” said Adham Younis, group chief executive of D&B Properties. “I definitely think (other banks) will join the Dubai Land Department’s initiative. It’s for banks Additional services have been provided and a new level of trust has been established between tenants, banks and landlords. The UAE absolutely needs this to be in line with international best practice.”
Currently, large developer landlords do charge additional fees to tenants who want a direct debit. “Sometimes, they may also need a backup post-dated check as security,” Younis said. “Personally, the UAE Central Bank has always had plans to move forward with this initiative. Thanks also to the Dubai Land Department for driving this initiative together with Emirates NBD.
“This should spread quickly to other emirates once other land sectors see the benefits.”
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