Dubai homeowners face impact of increased charges
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Dubai homeowners face impact of increased charges

Dubai homeowners face impact of increased charges

Homeowners in Dubai have seen service charges for communal areas almost double in 2008. Developers have blamed this on the inflationary pressures being felt in the markets as the cost of raw materials and necessary utilities increase.

    Residential service fees are often the 'hidden' charge placed on home owners living in community developments.

    At present these are usually payable to the developer of the project, who charge owners a set sum which is then put toward the upkeep of communal grounds, facilities and building spaces.

    From October, this role will be taken over by owners associations, under Dubai's upcoming Strata Title Law.

    Property owners have seen these charges rise sharply since the start of the year, as market pressures and the effects of double-digit inflation have trickled down to the end user.

    Owners in Emaar communities have been told of added increases, but many have yet to receive invoices reflecting these.

    Charges to double

    AME Info has learnt that increases in some of the Emaar communities are likely to potentially double once the charges are seen.

    In the Arabian Ranches development, the charges differ according to the size of the property.

    Al Reem villas will go from approximately Dhs6,000 per year, to Dhs11,000. The Saheel and Savannah communities will see rates rise from around Dhs7,000 to close to Dhs16,000, while property owners in the Alvorada community could see their fees top Dhs20,000 annually.

    Similarly, some owners in Union Properties Green Community development have seen their rates go up by over 50%, with charges for a studio going from around Dhs6,000 to approximately Dhs9,000 per year.

    'The charges have been increased in all communities, but it's in line with the increases that are having to be paid across the board,' said an Emaar Customer Care representative.

    'The service providers have raised their prices and there's been an increase in raw materials. The Dubai Electricity and Water Authority have upped their charges by 50%, so it's all reflected in the new rates.'

    Property owner's responsibility

    Although the service charges are solely the responsibility of the property owners, some landlords have tried to pass on the rate increases to tenants, despite having no justification for doing so.

    'Service charges are the responsibility of the owner unless the tenancy contract specifically says otherwise,' confirms Alexis Waller, partner in the property department of law firm Clyde & co.

    'I still always amend tenancy contracts to make this clear and to avoid any doubt. Maintenance and repair obligations are usually limited to leased premises, so a tenant could argue that they are not paying building maintenance charges.'

    'In relation to facilities, tenants could rely on Article 11 of the new Landlord and Tenant Law which states that the rent is inclusive of the use of communal facilities such as a pool, gyms etc, unless otherwise agreed.'

    Owners could also be in for further price shocks. The introduction of the Strata Title Law could see charges rise further, as areas of communal maintenance that may previously have been subsidised by the developers in order to increase units' appeal, come under the aegis of community home owners associations or strata management agents.

    As well as routine maintenance and upkeep charges, owners are likely to have to pay premiums to cover complete building insurance, as well as contributions to an emergency reserve fund to take care of larger maintenance work; potentially including the road network within communities.

    See also:
    Dubai prices likely to see correction 'by 2010'
    Are Dubai's rental price control mechanisms abut to change?

    AMEinfo Staff

    AMEinfo staff members report business news and views from across the Middle East and North Africa region, and analyse global events impacting the region today.

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