UAE bank loan clampdown hits rental sector

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LOAN DIFFICULTIES: Renters in Dubai are having to visit up to nine banks to secure a personal loan. (Getty Images)

A clampdown by Dubai banks on the availability of personal loans is making it difficult for potential renters to secure finance, according to a local real estate company.

Better Homes claimed on Wednesday that it can now take up to nine attempts at different banks to secure a personal loan to pay the one or two rent cheques landlords still prefer.

However, the stricter loans policy comes at a time when more properties are coming on to the rental market as a result of the economic downturn, and a drop off in property buyers.

Banks have not hiked salary levels for loans but occupation and length of time in Dubai are now strictly assessed, with lawyers and police officers often being randomly discriminated against, according to Gavin Frith, manager of Better Plus, a subsidiary of Better Homes.

The situation with securing loans has become so difficult that the company launched a new service six weeks ago, which acts as a middle man between its customers and banks, in a bid to streamline the lending process, Frith added.

“Some banks will lend to some people and other banks will lend to others, it depends on a number of things such as type of employment, but imagine going to nine different banks to get a loan,” Frith said

“What we now do is we will find the bank that will lend to you,” he added.

The company said about 50 people per week are calling the company enquiring about the Rental Assist scheme that will pay up to 12 months rent upfront that can be repaid over a year, or up to a four year period.

The scheme is run by Better Homes’ sister company Independent Finance that charges a one-off service fee of two percent of the total loan.

Arabian Business reported last week that landlords were starting to move on the traditional one, two, three and four cheque policy - with many becoming more willing to take on 12 cheque agreements.

However, the total amount of rent paid usually increases in line with the regularity of cheques, which means fewer cheques is still a cheaper option for tenants, Frith pointed out.

The loan difficulty has come to light in the wake of news that rents in some of the most prestigious part of Dubai have fallen by 33 percent in the last two months, according to an Arabian Business investigation.

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READERS' COMMENTS

Commission Fee
Posted by KiKi, Dubai, UAE on Saturday 11 April 2009 at 23:03 UAE time


Can anyone confirm for me that a commission fee of 5% is for real estate agents/companies only.

I am being told by my landlord that i must pay him 5% com fee as its the norm and a law. Yet there is no agent involved. I know he is wrong but I would like proof to show him that it isnt a law at all.

Ethical Real Estate companies...... I think not!
Posted by David, dubai, uae on Friday 6 February 2009 at 08:07 UAE time


In a Rental Market unlike anywhere else I have ever been, tenants pay commission of 5% to the Real Estate Agent for the privelige of paying over the odds for renting poorly constructed property. The Rental Market, in general, have been driven upwards by unethical Real Estate comanies, sheer greed on the part of local and international investors, and a clear desire on the part of the government not to create solid regulatory decree's until the prices were so high that they needed underpinning by a new Regulatory Body to make sure they didn't dip significantly, even in a Global Downturn. However, it is now refreshing that Betterhomes now provide a new Revenue Generator, (oops I meant a 'new service') that assists in locating a lender for tenants to be able to provide annual or semi-annual rent up front. Fantastic! All they charge is 2% of the loan amount, plus (obviously) the default 5% of the total cost of the annual rental in commission. Effectively, a new total of 7% commission in a slightly reduced Rental Market. Caring, sharing? I think not. Come on Betterhomes, who do you think you are kidding? Does greed see no end? I wish the best of luck to tenants in this altered market. Negotiate with the landlords, yes? But hammer the Real Estate companies as well. Isn't it time for a little payback?

Landlords
Posted by dxbfornow, Dubai, UAE on Friday 6 February 2009 at 07:15 UAE time


To Robert the landlord - yes Robert, I for one would want maximum returns on my property invement but I would not cheat or lie to get this as happens so much here. I have never seen so much greed as in the property market here and wonder how some people can sleep at nights. The misery caused to families by lying and cheating landlords (not all but a great many unfortunately) is deplorable. I am also a landlord but not motivated by greed and can sleep soundly at nights

this is new
Posted by Sami, Dubai on Thursday 5 February 2009 at 14:36 UAE time


if People are borrowing money to pay rent, then what are they doing here in Dubai, far away from their home countries, why no one has the guts to say that rents have fallen, since many people are leaving the country.
Better homes are fooling only themselves by the nonsense they're stating

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