Payment Terms

UAE homeowners to ask for higher upfront payment, fewer checks after bad check law changes

Dubai: Landlords in the United Arab Emirates will likely review the credit history of their potential tenants and reduce the number of checks they accept after NSF checks were removed as a criminal offence. In fact, some landlords are even willing to offer reduced rental terms if it means the tenant is willing to pay the annual rent in full up front or via a single check, according to market sources.

“We received over 50 requests from owners in just 24 hours to explain what they had to do under the amended bad check law,” said Firas Al Msaddi, CEO of fam Properties. “Certainly landlords would be much more conservative so they will do initial checks on the tenant’s credit profile and if they don’t like what they see or can’t check credibility they would consider lower rent for a payment. “

This altered state of the tenancy is reported by other real estate agents when it comes to lease renewals. The landlords are proceeding with caution because one of the levers they had – the checks they held – is no longer a criminal offense if the tenant does not have sufficient funds to honor it.

What could happen immediately is landlords dropping six-cheque or even four-cheque payment terms. (The UAE residential rental market is already seeing few of the 12-check options many landlords had to offer in 2020 when the pandemic hit residential rental applications.)

Background check

As with any change, owners probably need some time to process the new circumstances. Some of them will take longer to make sure they complete the full credit check of a likely renter. “Landlords are more likely to use a professional probity officer who can oversee each tenant’s selection and qualification criteria,” Al Msaddi said. “They will also need to know if the tenant has ever had a dispute with the Rental Dispute Center for insufficient funds.”

According to Firas Al Msaddi, CEO of fam Properties, “It has become very important to check the tenant’s credit history, if he has had bad checks before and to check if the tenant has ever had a case with the committee of rental disputes before. , in particular in the event of insufficient payments.”
Image credit: Virendra Saklani/Gulf News

Switch to holiday homes?

More landlords in Dubai may also be inclined to put their units on the short-term rental market rather than one-year leases. This way, there is less need to settle payments by check, which means less hassle chasing after money owed.

Any new process triggered by the change on NSF checks will eventually result in the greater good of the real estate market. “It’s not about making things difficult for tenants,” Al Msaddi said. “On the contrary, the change will make the market more transparent as these checklists will become the new normal.

“So, of course, when tenants understand the need to keep a clear and clean record of their credit history – at all times.”