Some Dubai tenants to pay rent by direct debit instead of cheque

Residents leasing properties via Asteco qualify for the paperless service that aims to end post-dated payments

DUBAI , UNITED ARAB EMIRATES ,  October 21 , 2018 :- View of the Dubai Skyline on Sheikh Zayed road with Burj Khalifa ( left ) in Dubai. ( Pawan Singh / The National )  For News.
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A new digital payment service for Dubai tenants allowing them to pay rent via direct debit could signal the end of the annual rent cheque.

Asteco, a property services company in Dubai, has teamed up with National Bank of Fujairah and Direct Debit System to allow rental payments to be made digitally rather than with a post-dated cheque.

Elaine Jones, executive chairman of Asteco, said the service will “contribute to creating an efficient and secure financial environment in Dubai for long-term residents and newcomers”.

Writing out post-dated cheques a year in advance is the traditional payment method for tenants in the UAE. While this gives landlords the security the payment will be made, it can cause financial strife for tenants who sometimes borrow the rental amount to meet the outlay.

Asteco said its direct debit system “is currently operational and has been welcomed by landlords” and labelled the practice of writing post-dated cheques as “outdated”.

“Allowing tenants, especially those who are new to the UAE or have an outstanding bank loan, to pay their rent in multiple instalments makes the process simple, convenient and safe,” the company added. “Smaller and more frequent rent payments also ease the cash flow for tenants that currently often resort to taking out loans to meet their rent commitments.”

However, tenants have been finding themselves in an increasingly strong position in recent months as the depressed property market and resulting rental declines has seen landlords more willing to negotiate on payments, with some even accepting 12 cheques rather than one.


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In April, The National reported that a landlord on Reem Island in Abu Dhabi with about 150 apartments across three towers in Marina Heights was renting out empty properties for monthly payments. Other towers in the Reem area were also following suit as landlords lured in potential tenants with generous discounts, and more flexible ways to pay.

Mario Volpi, the sales and leasing manager at real estate agent Engel & Volkers, said Asteco will still have to secure a landlord's permission to accept this kind of payment.

“While it is secure and frequent, what they are requesting is a 12-time payment. This is normal in Europe and UK but will need time to get local landlords to this way of payment or thinking,” said Mr Volpi.

“Nobody else in Dubai offers this way of paying rent at the moment and if this method can be adopted by the wider community, I believe it will be a game changer.”

Under Asteco’s digital service, the tenant signs a "direct debit authority" before payments are debited from their current account, savings account or credit card at the agreed date and frequency, such as monthly or quarterly, and deposited into the landlord’s account.

The company has approximately 20,000 residents in its management portfolio which includes both tenants and homeowners' association occupiers. It said all landlords approached so far have agreed to implement the system and offer monthly payment options to their tenants, with the initial implementation phase targeting over 5,000 properties in its rental portfolio.

"As we continue to drive the initiative, we expect to convert both existing tenant payment terms as well as offer incentives to new occupiers," said Ms Jones.

The system is also being offered to other landlords, developers and homeowner's associations outside Asteco.

Vince Cook, chief executive of NBF said the move to paperless payments was a “critical milestone in the real estate sector” and helps "ease the significant burden of the cheque payment structure".