Dubai: There are indications that service charges at prime freehold locations in Dubai have started to stabilise and, in some instances, even taken a dip.
Where owners associations have been able to take charge and effect a hands-on oversight, “there have been cost reductions by way closer scrutiny of vendors’ quotes and energy savings,” said P.R. Vijayakumar, Managing Director of Pacific Owners Association Management Services. “Keen competition among FM companies has also played a large part in price reductions. Still, energy costs continue to be our biggest problem since they contribute between 40-50 per cent of total service charges.
“Where costs go up there will be a review of service charges and it is required to itemise such changes and justify it to Rera and the board of directors at owners associations.”
There is widespread agreement that the Rera (Real Estate Regulatory Agency) decision to go online with its service charge database has forced the pace in creating the checks-and-balances required by a maturing market.
On the legal side, “There have been no new laws ... the ‘Jointly Owned Property Law’ of 2007 and its related directions of 2010 govern the issue of service charges,” said Shahram Safai, Partner — Real Estate at the law firm of Afridi & Angell. “The Law provides that the level is to be determined by the board of owners association and administered by a facilities management company.
“Nevertheless, issues exist with the formation of owners associations which hinder their ability to effectively set the level of service charges.
“Furthermore, procedurally, such service charges require the approval of Rera, which has bands depending on the location and type of property. As a result, the owners association is restricted in the amount of service charges in this regard.
“There are rumours that a revised Jointly Owned Property Law is coming. Such new law is said to give more power to developers to manage properties and impose service charges.”