Jumeirah Lake Towers (JLT)
District cooling companies in Dubai will be dropping their rates, and this should see some readjustments on service charges as well. Image Credit: Shutterstock

Dubai: The red-hot issue of services charges at Dubai’s freehold properties could see some cooling off as district cooling companies make cuts to their customer tariffs. The push for reduced utility costs comes right from the top.

The Dubai Supreme Council of Energy has directed district cooling companies to “reduce bills”. “The decision supports the Demand Side Management Strategy 2030, which the Council launched, and aims to reduce demand for electricity and water by 30 per cent by 2030,” said Saeed Mohammed Al Tayer, Vice-Chairman of the Council.

Utility charges currently make up 50 per cent of the overall service charges that property owners have to pay. So, any reduction in one component – district cooling – could lighten their load.

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Re-set rates

The Council has mandated a reduction in fuel surcharge from 6.5 fils to 5 fils per fro kilowatt hour of power use and 0.6 fils to 0.4 fils per gallon of water usage.

“All district cooling companies [are] to fully implement this reduction in their customers' bills and to take the necessary measures in this regard,” the statement from the Council added.

Some respite

The process of finalising the 2021 service charges across freehold communities and buildings in Dubai is still ongoing, market sources say. This directive will thus be factored into the final tariffs.

Property owners have been making repeated calls to RERA (Real Estate Regulatory Agency) and its designated auditors to consider their requests on what the rates should be. All through this year, relations between property owners and OA (Owner Association) management companies, which do the upkeep of the communities, have been particularly tense. Owners insist that they should have more control in the setting of annual rates.

Multiple fronts

The battle is being fought at levels – within OA associations or taking it up directly with RERA. And of late, even at Dubai’s Rental Disputes Centre, which is hearing a clutch of cases related to non-payment of service charges, both due this year and those unpaid over the years.

In the initial verdicts, the RDC has issued directives that all such properties where dues are not paid cannot be rented out. This will be done by the denial of ‘Ejari’ certificates, which are mandatory for the property to be formally registered in the systems.

Trickle of payments

Even with these verdicts going against property owners, the payment of service charge dues is proceeding at a lacklustre pace, industry source say. Just for this year, dues paid still haven’t touched the 50 per cent mark at several OA companies.

“The lack of collected funds is starting to show up in the quality of the property upkeep,” said one OA management company source. “The real estate market will need to see those payments being made now – RERA can decide what the service charges should be.

“But right now, funds need to be replenished – not paying dues hurts everyone, and even those who have paid up but are suffering because the property is not getting the adequate levels of management.”

District cooling supports the objectives of the Carbon Abatement Strategy to reduce carbon emissions, which achieved great success in 2019. More than 14 million tonnes of emissions were reduced [in Dubai] last year, a 22 per cent reduction compared to business as usual

- Saeed Mohammed Al Tayer, Vice-Chairman of Dubai Supreme Council of Energy