Monthly rental cheques are a must

Ed Attwood argues that landlords are back to their old tricks
By Ed Attwood
Mon 15 Jul 2013 02:54 PM

With rents back on the rise in some parts of Dubai, some landlords appear to be getting back to their pre-2008 ways.  I’m hearing more and more that owners are demanding that potential clients pay for their entire year’s rent upfront, via a single cheque.

This has been a traditional part of life in Dubai. But not all of us are working for companies that provide us with a housing allowance, which is the main reason the one-cheque policy came into being in the first place. Your company would pay for your accommodation, and the easiest way to do this was via an upfront lump sum. Later on, even if companies weren’t paying for housing, many would provide an interest-free loan to cover the cost of that one cheque.

But Dubai is a different place these days. It’s not exactly a ‘hardship posting’ any more, and many firms aren’t keen on providing a housing allowance. And why should they, when no other city in the world demands payment of a year’s rent in advance?

I can see why landlords want the full payment in one go. After all, having that lump sum sitting in the bank will earn them far more in interest than a dribble of monthly or quarterly payments would. And if they decide to invest the full amount, their returns are likely to be much higher.

The Real Estate Regulatory Authority (RERA) clearly feels that the sector doesn’t need any more regulation, according to recent remarks by director general Marwan Bin Ghalaita.

But I disagree. Those who can pay should, of course, be able to pay for a year upfront, presumably at a significant discount. But renters should also be offered a choice, which should include the ability to pay monthly. A move to mandate that might also help avoid the types of rental scam – such as last year’s Shamyana scandal  - which only serve to destroy confidence in the local market.

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