Dubai: Faced with the prospect of losing tenants and ensuing property vacancies in a soft rental market, rigid payment frequencies of years past are giving way to more flexible rental schedules, suggests a Dubai property expert.
For years leading up to 2008, landlords across the UAE demanded a one-time annual rent cheque from tenants presenting hardships for those earning minimal salaries.
The single block leasehold payments in the country reflected a more commercial mindset for office leasing but are less preferred in the residential rental sector.
Since the last economic crisis, rent schedules have been staggered by some landlords to three or four cheques a month to entice tenants.
But now, with rents forecast to fall well into 2018, a small segment of landlords are making allowances for rent payments 12 times a year in order to keep existing tenants in their properties.
In its [2017] Q3 report, Asteco noted that in Al Ain, for example, “landlords offered reduced rents and flexible payment terms on contract rentals to retain existing tenants.”
- John Stevens | Managing director, Asteco
The easy-pay schedule could become more popular as more owners and landlords compete for tenants with better rent contract terms, said John Stevens, managing director of Asteco.
“Ultimately, yes, [landlords] are flexible and they are becoming more flexible,” he said. “In a few years’ time, we could see monthly cheques — landlords may start opting for that. Landlords are beginning to understand that it’s a competitive market and they have to attract tenants.”
In other countries such as Canada and the United States, 12 monthly cheques is the norm in many provinces and states where new tenants pay two months rent up front to cover first and last month’s rent. They also pay a security deposit that is refundable at the end of the lease if there are no damage to the property,
To protect landlords in the UAE, however, renters who pay monthly might be expected to pay a higher security deposit to guard against tenants abandoning their contractual obligations.
“Yes, we might be looking at a higher deposit levels of three months at least to cover them,” Stevens said.
