Dubai: Landlords in Dubai allowing monthly cheque payments was at one point rated the best available option for tenants to better plan their rental payments. It sure beats having to constantly make sure there are enough funds in the account under the three- or four-cheque payment system.
But even where tenants are offered monthly payment options, it has become quite the slog to be on the right side of matters when the cheque is sent over for clearance.
The Dubai Land Department on its part is also pushing for more rentals to be processed through direct debit facilities, and doing away with what is increasingly being seen as a cumbersome process of issuing cheques and then for the landlord to submit it. And depending on the balance maintained in the individual’s account at the time, lead to a ‘fingers’ crossed’ situation.
This is when financing options such as ‘rent now pay later’ come into play. Because when rent gains in Dubai are still hitting year-on-year growth of 20-35 per cent – pick your location and find out how much they are up. Even the latest quarter-on-quarter increases have been significant.
“An RNPL system works because a majority of tenants will not have seen the salary increases to match rent gains,” said an estate agent. “RNPL schemes will benefit those who are paying using credit cards and have to wade through substantial balance payment obligations each month.
“If the RNPL is offered at 0 per cent interest, there could be savings for the tenant compared to the additional costs they bear in drawing from credit cards.”
There is a lot in play when missing payments on just about any commitment residents have. Sure, a bounced cheque is no longer a criminal matter, but each payment miss – whether on a cheque, card, utility bill, or rental – earns demerits in the consumer scores from the Al Etihad Credit Bureau.
It could come into play the next time you are hunting for a new home to rent. The last thing needed at the time is for the prospective landlord seeing missing out on making the past rents on time.
What RNPL could bring on
Walid Shihabi is the co-founder and CSO of Keyper, the proptech platform that’s launching its RNPL scheme in July. Available for tenants in Dubai, it seeks to make a single payment to the concerned landlord and then have the tenant pay back over up to 12 months via their card.
According to Shihabi, once RNPL gains traction with the intended audience, it could bring about some wholesome changes in their equations with landlords.
- Consumers are getting used to managing their retail expenses with BNPL (buy now pay later). So they will naturally look for solutions to manage their cash flow across other core spending areas, starting with the largest, rent.
- Rent prices are rising, driven by increased demand as Dubai grows as a global hub. As consumers' current rents increase, their ability to pay many months in advance becomes more limited.
- Higher competition for available units makes landlords more incentivized to increase their demands to tenants, and request fewer payments per tenancy.
All of which could come to pass, eventually. Because a vast swathe of Dubai tenants could do with all the help they can get on rentals.
The Dubai property market has had another exceptional quarter of sales value and rental increases. Not many are talking about a demand softening, though some market sources say that in the mid-market, sales negotiations are taking longer to close.
But no such thing in the rental space. The landlords demand – and they get.
According to an update from ZaZEN Properties, 7,600 apartments were completed in Dubai during Q1-23, and with another 27,400 to be built through the rest of the year. Even if these estimates come in short, they still add up to plenty. Though, given how rental trends are, there is little chance of all those new homes slowing down what landlords are asking for.
It’s into this space that RNPL is stepping forward.