Dubai’s direct debit system for rents: Will tenants be fined for insufficient funds?

Dubai’s direct debit system for rents: Will tenants be fined for insufficient funds?

Typically, real estate firms impose a penalty if cheques bounce

Published: Thu 14 Jul 2022, 9:11 AM

A new system that lets tenants pay rents in Dubai through direct debit came into effect recently. The system offers tenants an alternative to submitting post-dated rental cheques to their real estate firms.

Through the system, landlords 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 an automated system.

Typically, real estate firms impose a fine or penalty on tenants if their rent cheques bounce due to insufficient funds at the time of its clearance. So, what happens if a tenant fails to maintain sufficient balance in time for the direct debit?

According to an Emirates NBD spokesperson, the bank will not impose any penalties on tenants for this.

“Landlords might impose some fines / penalties on the tenants for repetitive recovery failures. The charge recovery will take place outside the banking system and will be imposed by landlords directly,” the spokesperson added.

Reminders will not be sent to tenants ahead of the direct debit, the official said. However, real estate firms may choose to do so, as some do