'One cheque' demands ease as credit tightens

MORE CHEQUES: Landlords are easing off on demanding one cheque for rent advances amid the credit crunch. (Getty Images)

Landlords are starting to relax their payment criteria for tenants struggling to secure a year’s rent in advance as UAE banks tighten credit controls, Arabian Business has learnt.

Tenants have been left unable to afford exorbitant rental rates, after many banks in the region reviewed their lending criteria during the past month.

“Landlords have become sympathetic to accepting more than the one cheque up front,” said John Davis, CEO of Colliers International, Middle East.

“Obviously they [landlords] want to get their money as soon as possible but if asked, nine times out of ten they have agreed [for more cheques].

“Rentals are getting so high that for people to come up with 100,000 dirhams straight off is sometimes a bit difficult and the majority of landlords are sympathetic to that.”

Most landlords in the UAE demand a year’s rent in advance but agents have warned them they may have to relax this as many are struggling to secure tenants.

This week Arabian Business revealed that Lloyds TSB had more than doubled its minimum monthly salary needed to qualify for a person loan in the UAE to 25,000 dirhams ($6,806).

HSBC has also raised its minimum salary to obtain a loan from 10,000 dirhams to 20,000 dirhams while Barclays has also raised its threshold from 4,000 dirhams to 8,000 dirhams.

Salah Sadeq, a graphic designer from Dubai who is currently looking at leasing a new property in the city said he had noticed landlords are now prepared to negotiate.

“When I first got here, the first thing an agent would say is that I needed one cheque and in some cases an additional 10 percent deposit,” he told Arabian Business.

“But yesterday one landlord started at four and that’s unheard of here.”

But some landlords, who have often used the cheque to put a deposit down on another property, are not yet prepared to relax payments.

“We are definitely trying to persuade agents to to push landlords for multiple cheques,” said Alison Farley, a leasing agent for Cluttons in Dubai.

“Tenants fuelled the freehold property market,” she said. “In five months time they might not be in a position to ask for one or even two cheques, it could be four.”

Melissa Morrison, a property manager for Dubai Luxury Homes said she doubted monthly payments would ever be introduced to the UAE, but said she is urging landlords to reduce payments schedules.

“Five years ago the same villa that today costs 250-300,000 dirhams a year, was 60,000 dirhams a year. People are now offering to pay more money just to pay in smaller amounts,” she said.

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READERS' COMMENTS

one cheque days over
Posted by md, canada on Thursday 4 December 2008 at 09:26 UAE time


with a lack of credit available to purchase a home, property sellers will struggle to unload there property. with more property available for rent, you'll see the rental market plummet. the agents and landlords deserve what's coming as their greed has finally been punished.

as for the one cheque, first of all, if you needed to take a loan to pay your rent to begin with, somethings wrong with your budgeting. either find a cheaper place, or just leave dubai altogether. anyways, with such people unable to get loans to pay their rent, landlords may have to further lower prices or relax terms to what they were a few years back 4 cheques...

Real Estate Agents
Posted by S Johnson, Manama, Bahrain on Tuesday 25 November 2008 at 16:44 UAE time


Who drives the real estate agents? Where do they derive the power to be so rude? The immediate answer would be "market demand". If so, think again, please.

landlords
Posted by Philip, Dubai, U.A.E on Tuesday 25 November 2008 at 08:38 UAE time

My landlord is a prominent business man and extremely wealthy yet he now needs me to move out of my rented villa for his sister to live in it. Yeah right!! Having tried to bypass the rent cap the last three years and failing , he is now using the loophole RERA has obviously left in place to get what he wants. When he first bought the villa of the previous owner it was ," I am only increasing the rent because we will provide better maintenance". That never happened.
Please don't tell me that landlords are sympathetic, they want a return on their investment as does everyone but they treat real estate as a short term investment that should give them immediate profitability nothing like the old days in Dubai when we all knew we needed each other and we all knew building this place was a joint effort that required mutual respect. The new gulf attitude is now evident in the childish ( throw the toys out of the pram, I don't want to play anymore) attitude when they realised they can actually lose money on the stock markets and that they don't have a God given right to guaranteed profit in every venture.
Reality check and about time for this generation of spoilt and pampered individuals who wouldn't know what a real hard days work is.

'One cheque' demands ease as credit tightens
Posted by Nirmesh Tiwari, Dubai, UAE on Monday 24 November 2008 at 22:24 UAE time


Dear All,

All of us know very well that the rents in UAE are very highly inflated, and the major contributors are the Real Estate Agents whoc just out of speculations increse the rents and lure the landlords of higher rents (its not the fault of landlords).

Saudi Arabia is a brilliant example where Government has really put all efforts to take care of the residents in terms of rents, still in KSA at good locations once can rent a 2BHK for around 15K-20K S.Riyals, so thats very realistic and not the UAE rents.

All in all, these greedy Real Estate Agents must be put-off the UAE markets and then rents issue will be normal.

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