No more rent cheques: Dubai's new direct debit system for tenants, landlords explained
No more rent cheques: Dubai’s new direct debit system for tenants, landlords explained
A landmark agreement announced in Dubai that eliminates the need for tenants to submit post-dated rental cheques is now in effect. The new system, announced earlier this week, “is readily available” and can be accessed by “landlords and tenants”, an Emirates NBD spokesperson told Khaleej Times.
“Landlords can now get a one-time direct debit mandate signed by tenants, allowing Emirates NBD to debit the rental from the tenant’s account or credit card. Landlords can recover the rental using the automated system provided with the digital banking channel,” the spokesperson explained.
Under the agreement signed between Dubai Land Department (DLD) and Emirates NBD bank, rental cheque payments are automated and digitised using the UAE Central Bank’s Direct Debit System (UAEDDS). It benefits landlords, property management companies and tenants by eliminating the need to manage post-dated cheques manually.
Annual rents in Dubai are typically paid in two, four or six instalments via post-dated cheques.
How to avail of the new service
The bank’s spokesperson explained the procedure to subscribe to the UAEDDS service:
“The landlord would need to approach Emirates NBD and get registered for the service. Instead of collecting cheques, the landlord will collect signed direct debit mandates from tenants and register all those mandates with the help of his sponsoring bank.”
When asked if the system is applicable to Emirates NBD customers only, the spokesperson said that landlords can register for UAEDDS service with any bank that offers it.
“Emirates NBD is one of the major banks with digital capabilities offering end-to-end direct debit service. Landlords can register for this service through their account held with Emirates NBD. Tenants can have accounts or credit cards with any bank in UAE,” he added.
Is the new system mandatory?
According to the bank, UAEDDS can run “in parallel” to the existing services being used by the landlords and tenants.
“UAEDDS is not a mandatory service; however, the system provides an automatic, hassle-free and reliable alternative to cheques,” added the spokesperson.
When asked if the bank foresees a near future where rental cheques are completely done away with, he said the Dubai Government envisions paperless methods for conducting businesses.
DLD had said earlier that the solution offers a “seamless digital alternative to tenants for making rental payments using their bank account”. This will allow them to avail of flexible payment plans from their landlords or property management companies.
Sultan Butti bin Mejren, director-general of DLD, had said: “We have partnered with Emirates NBD in line with our efforts to fully digitise our services as per the Dubai Paperless Strategy. Such collaborations will help facilitate and streamline the processes involved in the property market by employing progressive machinations on the path towards replacing the legacy systems in place.”
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source: khaleejtimes
