Dubai tenants can soon rent now, pay later to ease cash flow

Renters will have the option of spreading their payments over 12 months using credit or debit cards

Keyper, a digital real estate investment management platform, is currently creating a wait-list for its pilot rent now, pay later programme. Pawan Singh / The National

Digital real estate investment management platform Keyper will soon offer a rent now, pay later programme that will allow tenants to pay their annual rent in monthly instalments using a credit or debit card.

The RNPL service, which is set to be launched in July, will make it easier for tenants to manage their finances by spreading rent payments over 12 months instead of the current system of one to four cheques, Keyper said on Wednesday.

“Tenants can pay with their credit card or debit card and they can also benefit from reward points or miles,” Omar Innab, co-founder and chief executive of Keyper, told The National.

“Over time, we’re working on a solution where it can work on direct debit as well. So on a monthly basis, the platform will automatically deduct the amount from your bank account.”

Since July last year, tenants in Dubai have been able to pay their rent through their bank accounts and credit cards after the Dubai Land Department and Emirates NBD signed an agreement to digitise rental cheque payments through the UAE Central Bank's Direct Debit System.

This eliminates the need to manually manage postdated cheques submitted to landlords and property management companies, the DLD and Emirates NBD said at the time.

However, Keyper found in a survey of 4,000 properties that about 90 per cent of tenants in Dubai currently pay their rent with one to four cheques.

RNPL is based on the buy now, pay later business model, which allows consumers to make online purchases instantly and spread their repayments over interest-free instalments.

Keyper, which has a property management licence from the Dubai Land Department and oversees 1,500 units, will offer to pay tenants' annual rent upfront at a discounted rate to the landlord, thereby easing their cash flow and eliminating the risk of default, Mr Innab said.

By allowing tenants to pay their rent in 12 instalments, landlords are likely to experience improved tenant retention rates and reduce the risk of late or missed instalments.

The service will initially be available in Dubai. Keyper is currently creating a wait-list of tenants for its pilot RNPL programme.

As rent renewal negotiations between landlords and tenants usually occur 90 days before lease expiry, it is the right time to discuss the RNPL option with the property owner, Mr Innab said.

The product is suited to work on a new lease with a new rent amount. However, tenants are not required to move to a new property to explore the use of the RNPL option.

“We cannot do it on an existing lease unless both the landlord and the tenant agree to new lease terms, such as the number of cheques and the rent amount,” he said.

“We will need the landlord to approve because in case of default, we need to have the ability to evict the tenant and get a new occupant.

“The tenant makes an introduction to the landlord and we speak to them to see if they’re OK with this financing arrangement.”

As part of the onboarding process, tenants will be asked to provide a salary certificate or three months of bank statements to validate that they receive recurring income that allows them to cover their rent.

Tenants will be able to track their payments, add new credit or debit cards and gain access to their tenancy contract through the tenant dashboard on Keyper’s mobile app.

They will not be charged a monthly fee for the RNPL option, but will instead be required to pay a higher rent depending on the frequency of the payments.

Keyper will earn an income from the landlord’s property management fee. The company charges a fixed fee of Dh3,650 ($994) for an apartment and Dh5,400 for a villa, Mr Innab said.

Tenants will be charged a late payment fee of Dh500 if they miss a card payment, he added, but no interest will be levied for late payment.

If the tenant misses their payments for 30 days or more, Keyper will initiate legal proceedings with the Real Estate Regulatory Agency but, given market historical standards, this is rare, he said.

The RNPL payment option will reduce the debt burden on tenants, according to Keyper’s chief executive.

“When people move to Dubai, they face the burden of finding a house, paying a broker commission, deposit and the landlord’s demands of rent payment in one or two cheques,” Mr Innab said.

“It’s a burden for existing tenants too, because they are paid on a monthly basis. But this option allows them to have the flexibility to pay on a monthly basis as their money comes in.”