Property service charges in Dubai are fees paid for the maintenance and reconditioning of common areas in a residential community.
Service charges vary a lot based on the location of the property and the quantity of the services offered to cover up the expenses for security staff, cleaning services, landscaping etc.
When buyers are purchasing property in Dubai for the first time, it is important that they get to know about these additional costs beforehand, in order to handle their financial costs and liabilities better.
Introduction to OA:
OA, Owners’ Association, is a non-profit establishment and a separate legal entity that is formed in aligning with all the owners of the units in a jointly owned property.
Basically, OA is responsible to keep the property well maintained and reconditioned over years. To accomplish this task, OA collects service charges from unit owners and spend it on property related maintenance.
Giving service charges is an obligation in Dubai. If any landlord denies paying it, the next day he will find a lawsuit being filed against him. In some cases, it can get even worse and the landlord will find his basic facilities like Chiller and other connections totally cut off!
Types of funds:
All OAs have established two major funds to operate and maintain their responsibilities: an Administrative Fund and a Reserve Fund.
Each of these funds has separate utilities. The Administrative fund is used to carry out day to day responsibilities such as keeping up the landscaping, meeting the costs of management and insurance premiums, paying recurring expenses and salaries of workers etc.
Reserve funds are utilized to cover up capital expenditures that occur on a yearly basis.
Whenever the buildings will require a replacement of the roof, windows, and balconies, the charges will be covered up using Reserve funds.
Even the renovation costs of parking areas, elevator equipment, fire-safety systems, and mechanical equipment and A/C systems of the property are maintained with the reserve funds.
Service Charges Have Deceased in 2018:
The Dubai Real Estate Regulatory Agency has declared that the service charges have decreased to 12%, across 11 residential communities of Dubai in 2018.
RERA has already issued orders for all the service management companies in Dubai to provide full financial statements for service charges to the agency for an audit.
Service management companies can begin to charge owners and demand payment only after RERA has approved their statements.
The Dubai Land Department (DLD) has confirmed that lowering service fees for co-owned properties, is a strategy to attract more investment in real estate projects and increase the rates of buying property for foreigners in Dubai.
Note for First Time Buyer:
First-time buyers should be cautious. They should check out the procedures to buy property in Dubai and evaluate the financial liabilities and risk associated with purchasing property in a foreign land before making any commitments in the real estate sector.
First-time buyers can visit the index section of the DLD website for more information and check out the service charges of the particular apartment or villa that they are going to buy.