By Sarah Townsend
Micropolis says typical requirement to pay a year’s rent upfront is crippling SMEs
An online community has been established with the aim of offering rental advice to mid-income residents and small businesses in Dubai.
In particular, the website is campaigning to scrap what it calls the “outdated” annual rents system that hampers resident’s cashflow.
British expat Lucy Bradley is the brains behind Micropolis, a website intended to provide a support network for small-to-medium-enterprises (SMEs) in Dubai.
One of the initiatives Micropolis has launched is a forum to share advice on rental problems faced by SMEs – most notably, the common requirement to pay a year’s rent upfront.
In a campaign statement on its Facebook page, Micropolis says: “Dubai’s annual rents are stuck in sand.
“There are quite a few challenges facing small businesses in Dubai, from difficulties to getting loans to high set up costs, to expensive rents.
“Then, on top of all those obstacles is the outdated ‘one cheque’ rule!
“If this last challenge is supposed to get small business wheels turning, then they’re spinning in the sand and getting nowhere.”
In an interview with 7Days, Bradley said the rent payment system in Dubai “is very bizarre”.
“Nowhere [else] in the world do they ask for one cheque paying the whole year’s rent,” she said. “I know many people who have to base their life around this – decisions about leaving the country, changing jobs, putting children in school are according to when they have to give their rent.
“It is not only a problem for residents but for small businesses, too. Cash flow is important and SMEs may not have one year’s rent to lease a place and will then look to operate from home or online, which is not legal.”
Micropolis is urging people to join its community and help it lobby landlords to accept monthly rents from residents and SMEs. So far, it has attracted more than 1,000 members, and Micropolis itself has negotiated rent payment in six cheques for its office in Al Barsha.
Through the online community, residents can also learn about how to deal with rent increases and negotiate with their landlords. “Tenants are very misinformed, they do not believe that just a talk or research into topics can lead to positive outcomes,” Bradley said.
“We would urge more people to speak to their landlords directly and explain the situation.”
To find out more visit the group’s Facebook page.For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Its not just the rent. Schools in Dubai are taking 10% of the fee a year in advance (which is non-refundable). Pathetic!
I am a tenant and a landlord. I pay 4 cheques for my rent but one of my tenants has negotiated an excellent discount of nearly 15% on the current market rate in the area by offering me a Single cheque with the full year's rent up front. They save money, I have a lump sum to invest in my business. It's a mutually negotiated and mutually beneficial arrangement.
The problem comes when there is coercion.
Absolutely, the 1 year rental payment requirement is absolutely disgraceful, it's an unnecessary imposition on all. It is out dated, especially in these trying times, it's unhelpful for business particularly the SMEs which are the biggest employers in the country. This ridiculous custom urgently needs to be changed and / or abolished and any publicity highlighting this is most welcome.
I am a landlord of 2 flats in Dubai Marina. Every year many tenants ask me to pay one cheque to get a discount. I never agree for this & usually take 4 to 6 cheques. I want to note again - tenants ask me but not I ask tenants. If I need some money urgently I can easily get from 3 of my credit cards. Free for 50 days.
It is not about the rent. You can negotiate and get what you want. I have been doing it every year and it is working. It is really about the school fees which lots of us are having problems with. You pay in advance and it is non refundable! I have 3 kids in a well known school and they have been harassing parents as of Jan 2016 to pay in advance for next year's entry (sept 2016/2017). This is truly unacceptable.
Just one observation: I have often heard this "nowhere else in the world" thing about the advance rent in Dubai. It's also said about some other things. What the speaker invariably means is "nowhere else that I have been". Because advance payment of rent is incredibly common around the world, especially in developing countries with significant expatriate populations. This is not a bracket that Dubai generally cares to join but is in fact an accurate description of the city. And in common with other such cities, particularly in Asia, Latin America and Africa, advance rent payment is the norm. In some boom towns, such as Luanda a few years ago, three years advance payment was a common requirement to secure accommodation. Of course in those cities expats are often expensive intra-company transfers and the employer picks up the tab so it is not the broad-based phenomenon experienced in Dubai. However, it is pure nonsense to say that this happens nowhere else in the world.
I think along with the Rent Index , RERA should decree that there will be 4 cheques for a year's rent as the rule. If there is an agreement between the tenant and the Landlord for mutual convenience / benefit, so be it. But any landlord who DEMANDS the whole year's rent in one cheque should be penalised.
why do you agree to one cheque. Is one cheque being forced on you ? why not find a landlord who will take 4,6 or twelve cheques. It does exist. If the landlord is asking more than the market rate then the property will remain vacant and the landlord will suffer his/her greed. These trying times are seeing landlords offer flexible payment terms , lower deposits , increased fit out period foc and in cases extra 'incentives' such as more parking spaces , all in order to attract tenants. So get off your moaning horse, be active in the market and find a landlord willing to work with the tenant. (FYI: my retail tenants get 6-12 cheques (4 months fit out free) , commercial 4-6 cheques and residential get 4 cheques (Some pay 1 and get a discount as they request)
A landlord is also from the same people not a super man or goldmine owner. He also lease his very valuable property to an unknown person to live and stay peacefully. So the owner of the property is also a human and need money on his investment held.
I never say for one cheque nor any tenant wish to pay advance rent in one cheque. But while discussing or deciding such matters , i suggest to keep in mind the fears and risks of the owners also. Here many cases about return cheques and tenant ran away. So tenant are not heaven goat, nor so innocent or pressed, they are also very tricky. Rent should be increased which can secure the owner also and tenant should be given facility accordingly