'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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