Stock JBR Jumeirah beach residence Dubai property
Tenants find that landlords are tuning extra cautious about cheque deposits after the recent change in the UAE laws. Image Credit: Stefan Lindeque/Gulf News

Dubai: Are you prepared to pay a year’s rent through a single cheque? Then, landlords in the UAE are willing to offer a lower rent.

This is the situation in the UAE’s property rental market as landlords try and play safe on cheque-based payments now that a bounced cheque is no longer deemed a criminal action. “The thinking is if they offer a reduced rental but with the provision the entire amount is paid upfront, landlords don’t have to worry about colleting and encashing more cheques for that contract period,” said Firas Al Msaddi, CEO of fam Properties. “Landlords are definitely turning cautious.”

This change of stance by landlords is showing up in residential and commercial contracts alike. “Some landlords are – surprisingly – even asking for a reference letter from the tenant’s bank and/or the employer,” said Al Msaddi.

Changes on cheque defaults

It was last year that the UAE changed the law so that a cheque default no longer made the issuer liable for a criminal prosecution. It meant that issuing cheques to landlords no longer carried the same degree of consequences for tenants if their cheques bounced.

This naturally meant that landlords had to tighten their game and reduce the risk of non-payments or facing lengthy legal proceedings to get their owned sums from tenants. According to an estate agent at a leading property brokerage firm, “Landlords are within their rights to protect their interests and receivables.”

Qualifying process

This is why landlords are “refining” the way they handle lease agreements, says Al Msaddi. “Many landlords are being very picky in terms of the number of cheques, the number of years the tenant is staying/has stayed in Dubai, the tenant’s designation at his workplace, the employer’s name and reputation.

“Most property management companies acting on behalf of landlords are running a detailed screening on all tenants, on social media and via Google search.”

Firas Al Msaddi, CEO, fam Properties
Firas Al Msaddi of fam Properties: "Property management companies are running detailed screening on all tenants, whether through their social media posts or using Google search." Image Credit: Virendra Saklani/Gulf News

Will intense scrutiny be the norm?

The tightening up on pre-lease checking could be because landlords are still getting used to the change in laws on cheques. Once they get used to the changes, it should turn out to be a far smoother process all-round. Even now, the majority of landlords are still open to multiple cheques, because paying off in a single or a two-part payment for a full year is beyond the reach for a majority of tenants.

According to H.P. Aengaar, CEO at Asteco, “Based on the current market, we don’t see too many changes in the terms and conditions - but that may change once market sentiment alters as more properties become available.”

Until then, landlords wishing to clear all their payments in one go will hold out the incentive of a lowered rent. Will enough tenants be willing to go in for that?