Text size:

  • Small
  • Normal
  • Large
Ending the 'one-cheque' rent system could prevent fraud, say experts in Dubai.
Ending the 'one-cheque' rent system could prevent fraud, say experts in Dubai.

End one-cheque rent system in Dubai, experts say

Take our poll: An overhaul of the emirate's subletting industry is required if Dubai is to avoid a repeat of recent rental scams that have affected thousands of tenants and landlords, say experts.

DUBAI // An overhaul of the emirate's subletting industry is required if Dubai is to avoid a repeat of recent rental scams that have affected thousands of tenants and landlords, experts say.

In September, two agents from Marks Falcon Real Estate and FHS Properties fled with half-yearly rent payments amounting to at least Dh80 million, handed to them by as many as 7,000 tenants.

In August, Haitham Al Kouatly, chief executive of Shamyana Entertainment Services, siphoned at least Dh6 million in annual rent from at least 130 tenants, plus quarterly payments from about 350 tenants.

The Real Estate Regulatory Agency (Rera) has since outlined government plans to increase fines and ban property companies found guilty of breaking the emirate's rules. It also asked residents to check their landlord's title deed and broker's registration, and register tenancy contracts under their Ejari scheme to avoid similar fraud.

"Rera's plans are good but these are reactionary measures and what we need to put in are preventive measures," said Ludmila Yamalova, a managing partner at legal consultancy HPL Yamalova & Plewka JLT.

"We need an offensive instead of a defensive strategy by removing the incentives to cheat."

For starters, she suggests government support monthly or quarterly rent payments instead of the prevalent single cheque for a 12-month lease.

"These scams were unique to Dubai. This would not happen in the West because the practice of paying up front with one-cheque does not exist.

Paying monthly highly reduces the chance of scamming in the western world and if a company tried to, the most he could scam would be one month's rent.

Shahram Safai, a partner at Afridi & Angell legal consultants, believes the focus should be placed on brokers' liability.

"That is the place to focus because within this transaction the only professional is the broker. Brokers need to know that the regulator is watching and they may have to pay the price."

There are 6,000 brokers and 800 real estate firms with 117 companies with sub- leasing licences in Dubai.

Rera fined 22 real estate companies Dh900,000 in July for registration violations.

Ms Yamalova takes Mr Safai's suggestion a step further, saying real estate firms should not be permitted to sublet or accept payments from tenants, but merely act as brokers.

"A lot more is needed with the first being that brokers should be just brokers and not allowed to rent," Ms Yamalova said.

She said estate agents were required to conduct due diligence, and recommended that brokers' commissions only be paid after all documents including the title deed were submitted to Ejari.

Kimberly Kosterno was among the victims conned by Haitham Al Kouatly.

She and her fellow victims, including engineers, teachers, bankers and media professionals, have appealed for more transparency from Rera along with campaigns to publicise questions residents must ask before signing lease agreements.

"There is nothing to warn you on arrival in Dubai," she said. "Most people will accept it when someone presents you with what appears to be a genuine contract."

Mr Safai supports the idea of workshops to educate the public.

"Some blame can be attributed to tenants," he said. "That's unfortunate but it's a truism you cannot get away from.

"They must understand there are rights and obligations on both sides and this could happen when you don't follow the law."


Back to the top

More articles

Editor's Picks

 Marina Square apartments Reem Island: Q1 2% rise. Studio - Dh65-68,000. 1BR - Dh75-95,000. 2BR - Dh110-145,000. 3BR - Dh170-190,000. Q1 2013-Q1 2014 no change. Sammy Dallal / The National

In pictures: Where Abu Dhabi rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Abu Dhabi have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 This comparison image shown on Reddit annotated the objects with vehicles from the movies.

What Star Wars fans say is going on in Abu Dhabi’s desert

We may still not know exactly what The National caught pictures of in the Abu Dhabi desert last week, but the online community has had plenty to say. Here are some of the best bits.

 Courtesy Al Ittihad

Time frame: It’s all going swimmingly

Built on what was originally a public park, Ain Al Faida - the flowing source - became one of the country’s first resort hotels when it opened in the mid 1970s.

 The iconic Kingdom Tower project in Jeddah, Saudi Arabia. Above ground work is set to begin on the tower which is expected to be taller than Dubai’s Burj Khalifa. Rendering courtesy EC Harris/Mace

Saudi’s Kingdom Tower set to go skywards as it aims for world’s tallest building tag

Above ground construction work due to start next week in Jeddah, after months of testing and preparation work.

 Jia Ruhan sings as a guest artist during a concert by the pianist Robert Wells concert in 2012. The Chinese soprano is being groomed by the government to become an international pop star as a way of increasing its global influence through ‘soft power’.

In pictures: Meet China’s Jia Ruhan, no ordinary pop star

Jia Ruhan is being groomed by Chinese authorities to become a global pop star as a way of expand its cultural influence worldwide.

 Screen shot from Vin Deisel's facebook page of he and Michelle Rodriguez in Abu Dhabi for the filming of Fast & Furious 7. April 2014

Fast & Furious in Abu Dhabi, a social media frenzy

Fast & Furious 7 wraps up an eventful and much-anticipated week of filming in the capital. Let's take a look at what went on via the key players' social media, while they were enjoying the delights of the desert.


To add your event to The National listings, click here

Get the most from The National