Digitised rent payments using the Central Bank of the UAE’s Direct Debit System will continue to offer security to landlords.
That’s the view of Zhann Jochinke, Chief Operating Officer at Property Monitor.
During an interview with Dubai Eye’s 103.8’s Business Breakfast show, he explained what would happen if a tenant skipped the pre-dated cheque plan.
“If you enter an additional agreement, not just your lease you’re now entering an agreement to have that direct debit taken. Signing that is a guarantee of payment just like a cheque is.
“So if the payment declines it would be a kin or it should be a kin to bouncing a cheque and I would assume the same recourses are going to be in place”.
The move is also set to offer further flexibility to tenants, especially those who can’t afford to do single payments.
Jochinke explains how it will help.
“Everyone’s feeling that pinch in their pocket lately. Cost of living, inflation – you feel it across the board with everything, so not having to come up with that huge one lump sum payment is definitely going to make life easier for those already trying to stretch a Dirham further each day,” he added.
However, it’s likely that the habits of landlords will change too much.
“I think probably the lowest you’re going to see here is it go to monthly. During the pandemic, we saw a lot of things that used to be one or two cheques drop down to three or four cheques and some to even six. So getting to a monthly point over time I think is there, maybe with some of the bigger more institutional landlords you’ll see that.
“With your individual landlord or landlords with a couple of properties, I don’t think a lot of them will be in a rush to accept that but they might drop down to quarterly payments.”
Niral Jhaveri, Head of Property Management at Better Homes, thinks it’s a great idea for those who don’t have experience using cheques in their home countries.
“It’s a very good idea that it’s going to be paperless. But for the landlord in terms of cash flow their payments will be cleared soon and for the tenants, a lot of Expats don’t have the habit of writing cheques as they don’t have this in their home country.
“It’s good for them, especially the ones coming in new, they just have to set up their bank account which is done pretty quickly. They don’t have to wait for cheque books arrive and write the cheques and tenancy contracts.”
On Monday, Dubai Land Department signed a deal with Emirates NBD to pave the way for rent payments to be made by direct debit.