Out of the box

Automation of rents .. Will it protect the rights of real estate owners?

Ismail Al Hammadi

August 02 2022

Last July, the Dubai Land Department concluded a partnership with Emirates NBD Bank, whereby the payment of rent checks will be automated and digitized, by enabling the collection of rents using the "Emirates Direct Debit System" of the Emirates Central Bank.

This step aims to enhance the digitization of the real estate sector, facilitating and simplifying its operations and procedures, as well as enhancing the Dubai government's vision of paperless payment or payment systems, as well as the "Dubai X10" initiative.

Supervisors of this cooperation say that it will allow property owners and property management companies, the benefit of eliminating the administrative activities required to manage post-dated checks manually.

But the question arises: Will this step protect and guarantee the rights of rental property owners, as is the case with dealing with checks?

For nearly four years, we have heard that some real estate companies have switched to adopting “direct debit” cards to pay the prices of selling or renting real estate. However, the matter did not witness a great spread in the market, as checks remained the dominant and dominant situation in various real estate transactions, but with the adoption of an agreement “Automation” between the highest authority responsible for the real estate sector in Dubai and one of the largest local banks, as this may change the road map and work for many property management companies and owners, which calls for developing a well-thought-out and clear plan to take advantage of this agreement, in order to guarantee the rights of real estate owners.

It may be necessary to make amendments to the rent law in the emirate, to keep it in line with modern developments.. Why not, since the law is the only deterrent and the first guarantor of the rights of the parties to the rental relationship?

We're not sure that adjustments will be made soon, but there is enough reason to reconsider them. For example, if the tenant's account does not have enough direct debit money to make the rent payment, how will the landlord guarantee his right in this case?

“Direct deduction” may benefit the tenants who are unable to obtain check books from the banks, and it may benefit real estate owners who own many units destined for rent, as this system will provide a continuous flow of their financial liquidity on a monthly basis, but not for everyone, as not all tenants enjoy The financial efficiency that entitles the property owner to obtain his dues within the specified deadlines, and for this the situation may prompt the owners to reset the criteria for selecting tenants, and the payment payments may turn into monthly payments instead of three or four checks annually, and other requirements to renew the lease contract, considering that the check was a form of A means of guarantee for their financial dues owed by the tenant and a source of safety for them.

Accordingly, if the general system of rents in Dubai may move towards “direct deduction” mechanisms, the situation will inevitably require new lease agreements and additional amendments to the prevailing rent law, in order to adapt to this change.

"Direct debit" may benefit tenants who cannot obtain checkbooks from banks. 

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