UAE | Housing & Property
The joy is short-lived for tenants
Are Dubai's landlords - at least some of them - slipping back into their bad old ways?
- By Sam Armstrong, Freelance Writer, Property Monthly
- Published: 00:00 January 1, 2010
- Image Credit: Asghar Khan
- Tenants feel that if Dubai wants to grow, rents should be paid on a monthly basis and landlords must take full responsibility for
With activity in the residential rental market holding steady over the last two quarters of 2009, some landlords, it seems, have conveniently decided to give short shrift to their promises of allowing multiple cheque facilities to their tenants. If this trend holds, it could represent a major blow for residents who are still reeling from the ill effects of the financial turmoil and an uncertain job market.
Changed tactics
Early last year, the media was awash with talk of a new breed of Dubai landlord who was happy to take on-board the norm of monthly rental payments. Yet exactly one year on, we could be forgiven for thinking talk of multiple rent cheques as an urban myth or the kind of PR spin we remember from old.
It was in early 2009 that a good number of the local landlords started to allow — albeit grudgingly — annual payments through multiple cheques from their earlier practice of limiting them to a single one. During the bleakest phase of the property market's downturn, there was even talk that the ‘enlightened' ones would allow up to 12 cheques, a practice that is quite common in the UK and the US. But as with most good intentions, this one is also starting to flounder.
"We did initially witness landlords being more flexible and willing to negotiate with cheque payments, if this helped them rent their property more quickly," says Melissa Morrison, property manager for Leasing at Dubai Luxury Homes.
"But over the last few months we have seen payments returning to one or two cheques, as well as rents creeping up slowly in certain hotspots where the landlord is able to dictate their terms again.
"Landlords are citing renewed demand, and unless the tenants move here on a relocation package, the payment situation is getting to be extremely hard for an individual."
There is not much that tenants can do. As per the directions of the relevant government agencies, landlords are well within their rights seeking the payment mode that best suits their circumstances. Worsening an already dire situation, companies are now even less willing to write cheques covering annual rents for their employees.
According to one Australian expatriate, it is the tenant who is left carrying the onerous financial burden: "When my family transferred two years ago, it was on the understanding that the annual rent cheques expected in Dubai would be financed by the company. But as the environment changed, so did the company policy.
"When it came to renewing our rent, the best we could negotiate was two cheques and we were faced with drawing on savings at home, battling with banks for a loan (which we were unlikely to get) or taking a loan from the company at a ten per cent interest rate. I wonder how this rental system (or lack of one) will affect the growth of Dubai if we have no choice but to move back home?"
Indeed, the last weeks of 2009 have further jolted concerns about potential job losses. Some of the big names have already let go of more people on their employment rolls, and the first three months of this year could further raise the casualty toll, and appreciably at that.But the landlords have their own reasons for their changed stance on allowing multiple cheques.
With new residential stock coming into the market, they are in a position to expect tenant loyalty for keeps. So, the landlords would much rather have all of the payment — or the bulk of it — made upfront. "Having rental funds in advance gives landlords security as there is no direct debit/standing order system with banks," notes Melissa. "We deal with a lot of overseas landlords and it is not a viable option to have multiple payments as they are not here to ensure the cheques are banked and cleared."
The absence of a regulated system is not only a financial issue, there are also the practical hassles to be suffered.
When a landlord has the money upfront, paying for maintenance drops on their list of priorities. Many tenants are left chasing for basic repairs, as well as dealing directly with unreliable suppliers, all of which results in a strain on the living situation.
Regulated system
A tenant in Dubai's popular Old Town area says: "If Dubai wants to grow, the system must be changed to enable all the young professionals to survive. Rent should be paid on a monthly basis and landlords must take financial and practical responsibility (direct or via estate agents) for maintaining their properties."
Going forward, a regulatory platform would enable landlords, agents and banks to cater to the needs of tenants and to maintain a community that people are inclined to live in for the long-term.
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