Navigating Rent Raises in Dubai: Monthly Payments a solution?

Exploring Solutions for Managing Soaring Housing Costs

Dubai residents are facing sharp increases in their annual rent payments. As a result, more tenants are asking landlords to allow monthly direct debits from their bank accounts. The requests mostly come from those living in mid-range residential areas hit hardest by rent hikes after updates to the RERA Rent Index.

Financial Strain and Bounced Cheques

Making monthly payments helps tenants better manage their budgets instead of ensuring enough funds when rental cheques are due. There has also been a rise in bounced rental cheques, impacting tenant-landlord relations and credit scores, adding to financial stress. Although bounced cheques no longer lead to criminal action in the UAE, they remain problematic.

Expert Insights and Potential Solutions

Monthly direct debits from tenant bank accounts could provide relief, say experts. Umair Butt, CEO of Direct Debit System, notes, “96 percent of the UAE’s population receives monthly salaries. Studies show allowing monthly deductions for large expenses reduces bounced payments by 41 percent.”

Butt added: “The cost of living has impacted everyone, including landlords. Tenants want monthly rent payments to align with their household budgets. Going with monthly debits is more sustainable and avoids the cyclical nature of real estate.”

However, convincing landlords to accept monthly direct debits may be challenging. Property sources say some landlords offer 12-cheque options or direct debits, but their numbers still need to be higher. Many still prefer the safety of post-dated rental cheques from tenants.

Usman Jameel, Sales Manager at Azco Group, says, “The adoption of direct debits is mostly among younger tenants comfortable with digital payments through RERA-approved online platforms. In time, we expect this to become widely adopted.”

But landlord mindsets may need to be faster to change. Butt cites reasons for their reluctance to use direct debits, including concerns over legal protections and potential conflicts with bank loan agreements tied to their properties.

As living costs continue to rise in Dubai, demand for alternative rent payment methods like monthly direct debits will likely grow among tenants seeking better financial management tools.

Alok Verma

Alok Verma is an accomplished International Reporter at IndiaFocus with a deep-seated passion for global affairs and cross-border stories. With an impressive track record in international journalism, Alok is dedicated… More »

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