Dubai property owners have another reason to pay service charges - on time

Dubai: For property owners in Dubai, missing out on their service charges will only add to their problems. More so if they are also resident in the UAE.

Because non-payment of services charges will become part of the UAE’s credit registry system (along with missing rental payments in the case of tenants, or not meeting payment obligations on offplan property purchases).

When that happens and the individual’s credit score rating reflects it, ‘for residents in the UAE, that means future difficulties in raising loans whether as an individual or a business owner’, said an analyst. “It places non-service charge payments on property on the same footing as not meeting your credit card obligations or bank loans.

“Because at some point, the chances are that a resident of the country will be placed in a situation where he needs to raise a loan. And when that happens, if your credit score is poor, it will be difficult.”

The UAE’s Etihad Credit Bureau is putting the finishing touches to including property-linked payments to the critical credit registry system.

“Typically, the UAE credit score tracks monthly payments on loan EMIs and utility/phone bills, but with service charges, it will be expanded to include quarterly payments,” said Marwan Ahmad Lutfi, Director-General of Etihad Credit Bureau.

“Whether it’s a rent or service charge, the individual has an obligation to pay up on time. Just like any other credit facility that’s been offered to them. It’s not just in Dubai, service charge payments will become part of the UAE credit registry in all the emirates with property ownership.”

Along with the Dubai property boom from 2021, there was one outcome that has become a constant issue for the real estate industry – non-payment of service charges by homeowners. It had reached epic proportions in the immediate period after the Covid crisis when rentals declined and property investors found they were short of funds to pay the maintenance fees.

Homeowner associations and developers have tried to come up with solutions, sending out legal notices to the defaulting property owners. It did not stop there.

“Any service charge non-payment history on a property meant that unit cannot be rented out with an ‘Ejari’ certificate from Dubai Land Department,” said an industry source. “If the property was to be sold, then the deal can happen only if all the service fee payments were cleared. But even with all these restrictions, there were property owners who were regularly falling behind on payments.” (As a last resort, the property can also be auctioned, but that’s not been widely used to recover payments.)

According to property sources, there had been some improvements in collections from property owners on their dues in 2024. But so far this year, the backlog of non-payments is again piling up, affecting the maintenance of buildings and communities. 

In March last, the Dubai Land Department informed property owners they could pay off dues by way of flexible payment plans over a 6-month period. And that if the homeowners sign up to this, there will be no action by property management companies against them.

Annual service charges in various locations within Dubai’s freehold areas had risen for 2025, but that was widely expected after the April 2-24 rains and subsequent damages caused by flooding. This meant many buildings and communities saw their maintenance reserve funds getting depleted to repair the damages, in situations where insurance payments didn’t cover the costs.

“If service charge non-payments are added to one’s credit score ratings, this will be an incentive for homeowners to pay up,” said the owner of a facilities management company. “The only way to ensure timely collections is through a carrot-and-stick policy.

“At the very least, residents who own property in the UAE and fail to meet service fee payment deadlines will be affected by poor credit scores. It will then be one of the best incentives for these owners to pay up. Maintenance of a building requires all property owners to pay to deadlines.”

So, property owners who are residents in the UAE will soon be facing another reality to get them to pay what they owe as service charges. Will they let their credit scores down by still not paying up?