Buying property - tips lead
Homeowner associations are there, but more needs doing for buyers to feel they have been vested with the powers to influence decisions. Image Credit: Gulf News Archive

In this entire chain of property ownership, there is only one party with a financial exposure besides the developer. And in the developer’s case, his exposure only extends to the unsold part of the project.

But the difference is that the developer is in full control of the property and, thus, is in a position to control any potential damage to his interests, whereas the actual buyer has almost next to zero powers. And is in fact exposed year-on-year to further unavoidable - and unjustified - costs.

See more

This equation of falling rental income and constant or increased service fee cost does obviously not help investors who will tend to shy away from the market for valid reasons.

It is important to note that owners who opt to work on any OA (owners association) are subject to stringent paper work, some of which also cost money. Notwithstanding the fact that these services are done pro bono and are actually the only ones who work for zero consideration and at their own time. Moreover, most developers are not keen to have any active owners participate on the OA.


My experience with working on any OA is that it is tiring, time consuming and, probably, frustrating. Having said that if the owner does not think about safeguarding his own interest, who would?

The owners or board members have no say in the appointment or selection of the property management company. It is decided between the developer and the management company unless the developer has his own business, in which case obviously there is no other consideration.

Proxies everywhere

For that matter, a board member need not be an owner at all and can be deputed by the owner. I have seen enough boards constituted on the strength of proxy voting by developers to the detriment of the owners.

The management company plays a crucial role in the whole chain and is best poised to protect the interest of owners provided they play a fair game in tandem with the owner representatives or the board.

The recent directive by the authorities in helping owners through reduced service fees is a great step, but here again the relief has come from the building reserve fund. That practically means from owners’ pocket – be it the right one or the left.

Here again, the issue is that there is no actual reserve fund in the bank - at least that’s what a community I was associated with found out. The fund was all represented by receivables and that means there was a serious cashflow problem and making it unable to meet day-to-day commitments. The community is still surviving on creditors’ funds.

Compounding a problem

I will admit that in the community where I was involved and where we had a reduced service fees, the board was not responsible for the reduction. In fact, it was a surprise since this particular community was under tremendous strain on its cashflow due to unrecovered service fees. The reduced service fees meant cash collections dropped further.

At no point do I mean to do away with the chain of players – my only concern is that the whole circle should work in tandem and support each other in the interest of the actual owners.

I sincerely hope the regulatory think-tank will ponder on these issues and come out with a fair solution in the best interests of all concerned.

- Gautam Patel is a property investor in Dubai.