---
title: How does LRD work in the UAE?
description: "In the UAE, the Lease Rental Discounting (LRD) option lets property owners borrow money against their future rental income from leased properties. Here’s how it works— - First of all, the lease agreement should be for a significant duration (e.g.,…"
url: "https://yazodo.com/help/lease-rental-discounting/how-does-lrd-work-in-the-uae/"
updated: "2025-12-06"
category: Lease Rental Discounting
tags:
  - Approved Properties
  - "Interest Rate & Tenure"
  - LRD
  - LRD Process
---

# How does LRD work in the UAE?

In the UAE, the Lease Rental Discounting (LRD) option lets property owners borrow money against their future rental income from leased properties. Here’s how it works—

- First of all, the lease agreement should be for a significant duration (e.g., 5-10 years) with a reputable tenant. After that, the Property Owner (Borrower) seeks LRD financing from a bank or financial institution. 
- Next, the Bank (Lender) assesses the property's lease agreement and the tenant's creditworthiness. 
- The bank calculates the present value of the future rental income (often at a discount).
- Provides a loan amount to the property owner, which is typically a percentage of the property's value or rental income.

Apart from the above, the bank will also set up an escrow account or similar arrangement for the tenant to deposit his/her rent payment directly. Here, the tenant will pay the rent directly to the bank instead of the property owner. This way, the bank gets its money back with a fixed rate and interest.