As a property investor in Dubai, I would start by asking two questions...
* How many homeowner associations have been registered since 2007?
* Who has the actual financial interest at stake when property is bought to OWN?
To my knowledge, there are hardly any property owners associations (OA) registered due to various legal complications in the implementation of the previous version of the JOP (jointly owned property) law. The result IS that whereas the property was sold, the conveyancing - the transfer of full ownership - was not done for all practical purposes.
The owners are at the mercy of developers and are forced to pay hefty amount(s) on a year-to-year basis towards service fees. Thus, the developers continue to be the de-facto owners and used this lacuna to make money on a yearly basis.
Investors have to work within severe constraints, since the developer controlled the communities through their own owners association management companies.
Power lies elsewhere
Actual control lay in the hands of owner association (OA) management companies, who have no financial stake in the community, and their interest solely lay in the yearly remuneration they could generate towards managing the communities.
I do not mean any disrespect to these businesses, but the fact remains that they are made to play by the rules of the developers. My experience tells me that the developers have managed keeping control of the property and make handsome profits on year-to-year basis.
A quick summary of how the communities are run today goes to show that the actual owners have almost a zero say in how the property is managed, and this can only harm the interest of the actual investors.
The audits, I feel, are not really carried out in the interest of the actual owner. The audit reports are submitted to the OA management company, whereas these reports should be addressed to the actual stakeholders, i.e, the property owners.
I sincerely hope that the scope of any audit is changed from its traditional scope, since there is only truly interested party and that is the investor. But currently, that investor is nowhere in the entire audit exercise.
As an example, I know of an instance where the auditors disregarded the fact that certain receivables were almost 30 months old and still continued to show them as current assets without really making any serious note on the same.
In another community, I came to know that after the buying of our property, I was informed that the it belongs to another and that I need to pay the service charges to that owner. But there was no proof of how this came about. It was quite a shock when I was asked to pay differential service charges for the past seven years – imagine getting a bill in 2018 for the period 2009-2015.
The lacuna of not having a legalised OA makes it a toothless tiger - this surely does not help the cause of the investor.
- Gautam Patel is a property owner in Dubai.