New payment models are being explored to address the growing financial strain on tenants, particularly among new residents and mid-income earners, as Dubai’s rental market continues to grow. Upfront, lump-sum rental payments have long been the norm in the city, but they are increasingly seen as a barrier to housing accessibility, experts note.
The challenge of upfront payments
In the UAE, upfront payments, which require tenants to pay large sums in advance, create significant financial pressure. This is particularly challenging for new residents and mid-income earners who are often not accustomed to this payment structure.
“For many, the burden of paying moving costs and high rents all at once can force them to downgrade their housing choices or look for alternative solutions that may not meet their needs. This system primarily benefits landlords by ensuring financial security, but limits tenant flexibility and affordability, reducing overall market access for a significant portion of the population,” shares Mr Omar Abu Innab, CEO & Co-Founder of Keyper.
Furthermore, with rent prices in Dubai rising by 70% since 2020, tenants are feeling even more squeezed. As housing becomes more expensive, the traditional upfront payment model is becoming a significant hurdle for those looking to settle in the city.
Landlord preferences shifting with tenant expectations?
In response to growing competition and rising rental costs, “institutional landlords are increasingly offering flexible payment options, such as multiple cheques, to attract tenants amid rising rental costs and competition,” explains Omar.
Abu Innab adds, “While one-cheque payments still offer discounts, multi-cheque options have become the norm for fostering trust and retaining tenants. This shift is an attempt to strike a balance between tenant expectations and landlord preferences.”
“However, not all landlords are embracing this change. We’ve seen a shift in tenancy payments, from over 50% paid in 4 payments to over 70% in 1 or 2 payments now,” notes Omar.
One notable development in the rental market is the rise of alternative payment models.
According to Omar, Keyper’s “Rent Now, Pay Later” has been designed to help tenants manage rental payments on a monthly basis, aligning with their income cycles. This approach reduces the financial strain on tenants, while also benefiting landlords by improving retention rates and leasing speed.
“With integrated payment options such as direct debit, minimize rental defaults by ensuring timely payments and reduce traditional administrative burdens. Flexible payment terms enhance market competitiveness, attract reliable tenants, and reduce turnover,” he remarks.
Digital payment solutions to take over?
In the UAE, digital payment options are playing a key role in modernizing rent collection and making it more convenient for both tenants and landlords.
“Digital payment options simplify payment schedules, the ability to earn bank rewards (for tenants), and reduce late fees, benefiting both parties,” Innab concludes.
With features such as automated reminders and penalty management, landlords can ensure that rent payments are collected on time, while tenants benefit from more flexible payment schedules.
A balanced approach
The evolution of payment models in Dubai’s rental market reflects a growing recognition of the need for more flexible, tenant-friendly solutions. As the market becomes more competitive, these innovative models help attract reliable tenants, reduce turnover, and foster better long-term relationships between landlords and tenants.
With the right solutions in place, both parties can benefit from a more efficient and transparent rental process, ensuring that Dubai remains a dynamic and accessible market for renters of all income levels.
