Dubai property owners cannot delay 2020 service charge payments any longer

Dubai: Homeowners in Dubai cannot delay paying their 2020 service charges any longer – the regulator has issued notice that all such payments need to be made up to date.

“The Real Estate Regulatory Agency will work closely with all community management companies and master-developers to come up with measures to take the necessary steps to collect fees to ensure your community’s well-being,” the notice states unequivocally.

“Everyone should cooperate and commit to pay the fees due to avoid any legal consequences in accordance with the procedures of Law No. 6/2019 of jointly own ownership.”

A hot issue

In recent weeks, owner association (OA) management companies as well as facilities service providers had been trying to get RERA to intervene and ensure this year’s service charges are paid - on time. Instances of non-payment had been piling up, and escalated after the COVID-19 pandemic hit and caused significant disruption to individuals’ job and income status.

Property management companies had been complaining that if this state were to continue, they wouldn’t have sufficient funds for the upkeep of properties and of the communities. “RERA had in April issued notice that homeowners who defaulted on 2019 service charge payments will have their fines waived,” said a market source.

“Many homeowners were thinking that this would be extended to 2020 payments as well, and that was the prime reason why they were delaying payments.”

Need to pay up

In its notice, RERA clearly states why homeowners need to come up with their share. “Without necessary funds in your community accounts, critical services to your community may be at a risk of disconnection and disruption. This may ultimately impact you and your property.”

It's thus important “your payments towards your community’s service fees are paid on time and in full.”

Without necessary funds in your community accounts, critical services to your community may be at a risk of disconnection and disruption

- Notice to homeowners

Not much leeway for homeowners

For property owners, it’s as clear a directive as any they can get these days.

“It appears as if regulators are now signaling that the “holiday period” on service fees is effectively over,” said Sameer Lakhani, Managing Director at Global Capital Partners. “And that OA companies that have been struggling to collect fees will now be empowered with a legal recourse once again.

“This is a welcome step for OA companies to be sure, but leaves landlords facing the prospect of low - and even negative - yields as people vacate properties.

“It would be interesting to see whether the impetus to lower service charges will be followed through in the coming weeks providing relief to property investors as well in these difficult times.”

The legal route

Lakhani’s mention of “legal recourse” is particularly valid. OA management companies have to get prior RERA approval to send legal notices to homeowners who have repeatedly defaulted on service charge payments.

With the latest notice to pay up, the path has been cleared to take all possible legal options to pursue defaulters.

Property management companies say their hands are tied as well – “If we do not get those timely payments, there’s no way the property/community upkeep can be maintained to bare minimum expectations,” said a source. “Eventually, when standards slip, it will only be OA management companies that will be blamed.

“Everyone understands the pandemic has disrupted peoples’ lives and livelihoods… but properties still need their upkeep. To ensure that, service charges need to be paid.”