Tenants in Dubai will not have to borrow from banks to pay rents, thanks to Dubai’s Flexi Rent scheme, which will improve cashflow for the residents.
Real estate industry executives say that this programme will help tenants avoid borrowing money to pay their rent, as the Dubai Land Department’s (DLD) initiative allows residents to pay rent in flexible monthly cheques.
For years, many tenants in Dubai have quietly turned to personal loans or credit cards to raise the cash needed for a large upfront rent cheque, effectively paying interest just to secure a home within their means.
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Industry experts say Flexi Rent is designed to eliminate that need altogether, without changing the total amount tenants pay over the year.
“Many were quietly funding that cheque through personal loans or credit cards at interest, effectively paying a premium to live within their means,” said Rohit Bachani, co-founder of Merlin Real Estate.
“Flexi Rent dissolves that. Tenants can spread the annual rent across monthly, quarterly or semi-annual instalments, and the total payable does not change – a tenant paying monthly pays exactly what they would have paid on two or four cheques,” he added.
Bachani said the scheme also brings added relief through grace periods, restructured payment schedules, card payment options and waived bounced-cheque fees, along with waived rent increments for the year in specific cases.
“I’ve watched families budget around June and December cheque dates for thirty years. That anxiety is finally being retired,” he said.
Upfront cost
Farooq Syed, CEO of Springfield Properties, said the upfront cost of renting has long been one of the biggest obstacles for new tenants, particularly those earning a steady monthly salary.
“One of the biggest challenges a lot of new tenants face is that they have to have a big upfront financial commitment,” he said.
He explained that if an annual rent is Dh100,000 split into four cheques, coming up with the first instalment of Dh25,000 or Dh50,000 on a two-cheque plan can be difficult for salaried residents.
“Many end up saving for four to six months and are forced into short-term rentals at higher prices in the meantime.”
Syed added that the scheme brings Dubai’s rental market in line with international norms.
“It’ll help household cash flow,” he said, noting it also reduces the financial pressure associated with moving from one home to another, aligning the emirate with practices in the US, Canada and most European countries, where monthly rental payments are standard.
On June 23, the Dubai Land Department (DLD) launched the Flexi Rent programme to provide a more flexible and accessible rental solution for residents.
It allows tenants renting through participating real estate companies to choose monthly, quarterly or annual payment plans, helping to ease upfront financial commitments.
As part of the Flexi Rent initiative, Dubai is preparing to launch a new “Rent Now, Pay Later” service in September, allowing tenants to spread annual rent payments over as many as 12 months without interest.
According to an Emarat Al Youm report, the service is being developed by the Dubai Land Department in partnership with a local bank.
Landlords could still charge premium
Both executives said the scheme itself is unlikely to significantly move rental prices, which they said will remain governed primarily by supply, demand, location and property quality.
“I don’t think the flexi rent itself will affect the rental market,” Syed said, noting that its main effect would be to widen access for tenants and increase competition among landlords, which he described as broadly positive for renters.
He cautioned that some landlords could still charge a premium to tenants opting for more instalments.
Bachani drew a distinction between headline rent and the “effective cost” of renting, saying the scheme does not push up the advertised rent but instead removes the need for tenants to borrow to cover a large cheque.
He said its real impact would be felt in occupancy and leasing speed rather than price. With citywide rents down around 6 per cent quarter-on-quarter in the second quarter and roughly 32,000 additional units expected in the second half of the year, he said many landlords would likely use flexible payment terms rather than rent cuts to stay competitive.
“I’d expect Flexi Rent to act as a shock absorber in this cycle,” he said, adding that regulators should watch for any attempts by landlords to reintroduce a “monthly premium” through other means.
Source: Khaleej Times