With so many buildings and communities now having been handed over to owners, the spotlight has fallen on how well they are managed. A number of issues have already come up.
In order to resolve property-related issues efficiently, responsibility must be given to a credible association manager, who can be appointed only after the formation of the owners' association (OA).
While a few communities in Dubai have taken baby steps towards setting up these associations, there are others who either have no, or interim, associations. Buildings or communities where there are proper OAs in place and that work within the framework of rules established by the government seem to be doing well.
Authority and responsibility
P.R. Vijayakumar, managing director, Pacific Owners' association Management Services, says, "Most associations are getting registered by Rera [the Real Estate Regulatory Agency]. OAs will soon be given the authority to open a bank account and be registered as a company with the Dubai Economic Department. The directors of the associations will have authority and responsibilities and are pretty independent at the moment to take over the property from the developer. This is a moment of transition."
Anil Kumar, a homeowner in Jumeirah Beach Residence, is not happy with the current situation regarding his property. He says even though he is paying a high service charge of Dh15 per square foot, the standard of facilities and services offered by the building management firm is appalling. While he is on the board of the interim association for his building, he says things have been unsatisfactory so far, as the interim association doesn't have any sort of authority.
Anil believes once a proper OA is set up, things will get better as the OA manager and other service providers will be appointed by the body after proper assessment.
Vijayakumar explains that the OA laws in Dubai have been specifically tailored to the needs of the emirate and its culture and are not derived from any other country or source as perceived by some people.
"Even in the most developed countries, the strata laws have undergone major radical changes over the years. So it is to be expected that we here in Dubai will modify the laws until we arrive at the best solution . The association managers are closely coordinating with Rera in achieving this goal," he adds.
Once the OAs take charge of the communities, the association managers come into the picture. Rera has issued licences to a few experienced managers.
OAs select managers through a process of tendering, usually at the annual general assembly. This is done by circulating a document called the request for proposal (RFP) among Rera-approved owners' association managers.
"The association managers go through the document and submit a proposal, which is divided into two parts — technical and commercial," says Khalid Choksy, director, Outlook Community Management. The technical proposal outlines the details and experience of the company, based on which the an OA shortlists four to five firms which then make a presentation at the annual general assembly. Then the commercial proposal is considered and the assembly appoints one manager based on the technical and commercial proposals and the presentation.
Association managers are different from property managers who focus on tenant selection, rent collection and facilities management and soon. Property managers' primary duty is to look after the common areas in the community. Vijayakumar says an association manager should be an expert in several things such as financial management and facilities management. If someone at the firm has good knowledge of engineering, this would be an added advantage for managing a building, as there will not be the need to depend on consultants every time something goes wrong, he adds. Also, when the building is handed over to the OA, a manager with enough knowledge will be able to identify faults and get them rectified.
"Our services consist of more than just facilities management. They include general well-being and the interest of the whole community at large and to make provisions for peaceful living… With the right manager in place, the difference is noted over a period of time as a well-maintained building increases its asset value," he explains.
Some of the responsibilities of the manager include choosing the right insurance policy, hiring professional maintenance service providers, general upkeep of the building, creating community awareness and social networking among residents, and so on. In a place like Dubai where mixed-use buildings are common, association managers will have to take up the responsibility of liaising with different entities on the premises such as residential, retail, commercial and so on.
The association manager also gets involved in the financial aspects of managing a community. "We prepare an itemised budget and submit it for approval by the association and Rera. Once it is approved, then the service charges are calculated based on that budget," says Khalid. Usually, the total cost of maintenance and management is divided by the net saleable area in the community. "We arrive at the service charges based on entitlement of each unit. If you have a higher share of ownership, you will have to pay a higher rate," adds Khalid. While Rera has no hard and fast rules for service charges, association managers play a key role in preparing the right budget for the community.
"As managers we advise the association to keep the budget within certain parameters. There are obligatory payments we need to make such as utilities and there are charges for the master community. These have to be included in the budget. Creating that awareness among owners is also the responsibility of the manager. Lowering the budget doesn't mean the building will get run down. What matters is the prudent way of running a building to get the optimum result," says Vijayakumar.
Rera has a set of rules in place when it comes to finances. As per the laws, a proper audit has to be conducted every year and the auditors are selected by the OAs.
Since the role of the association managers is a comparatively new initiative, there are a few issues that are expected to be sorted out with time. Currently, the biggest problem is the collection of service charges.
"The law has provision to punish people who don't pay. As per the law, we can approach the court for a lien on the property and if the owner still does not pay the service charges then the property can be auctioned. But unless the associations are formed and registered, these rules cannot be enforced," says Vijayakumar.
Those who generally don't pay include owners of vacant apartments or offices. Sadly, many of them are not even contactable.
Q and A with Mohammad Khalifa
Mohammad Khalifa is head of real-estate relations management at Rera.
Q What are the initiatives taken by Rera to spread awareness about owners' associations?
A We have released a set of guidelines in Arabic and English. It is also available on our website. We have also prepared a professional course related to owners' association management.
Q Is there a dedicated number homeowners can phone to ask queries?
A They should contact Rera's customer service department at 04 222 2253.
Q What should homeowners know about how owners' associations operate?
A All homeowners should make sure they attend all the meetings organised by the owners' association. The decisions made at the meetings should be for the overall improvement of the building. The owners should avoid conflict of interest while making important decisions. All the homeowners should pay the service charges for the timely maintenance of their building.
Q Who will handle the finances and should there be an auditing system in place?
A The associations will handle the finances with guidance from the association managers. Auditing should be conducted every year by an auditor appointed by the owners' association.