Dubai: Gail Thompson owns a five bedroom villa in Victory Heights, Dubai. When she bought the property last year, she never dreamt that one day maintenance might become her responsibility.
Rajesh Pujari, Managing Director of Rawaat Group, values his time above everything else. Living in a Dh2.3 million three-bedroom villa in The Springs with his Chinese wife, Pujari was comfortable in shelling out a fixed amount on a monthly basis to the developers for the upkeep of his two villas in The Springs and an apartment at Jumeirah Lake Towers.
Today, both Thompson and Pujari are faced with the burden of an added responsibility — maintaining their very own properties.
And they're not alone. The introduction of the new Strata Law has upset many homeowners.
According to the new Strata Law No 27, all homeowners are now responsible for maintenance and upkeep of their jointly-owned properties.
In layman's terms, the law gives homeowners control of their properties. Once a property is constructed, the developer stops doing the day-to-day maintenance of the project. Instead, every homeowner, by default, becomes part of the Home Owners' Association and works with others in his/her building/area to form a board, which takes over all property maintenance issues from the developers and runs the association.
Come October 13, homeowners will automatically be a part of an association with its own elected board of decision-makers, who will be solely responsible for maintenance of all jointly-owned areas within the community or development.
For homeowners — most of whom are still in the dark about the very existence and consequences of the law — the introduction of the strata law gives rise to doubts and uncertainties. Who's going to volunteer his or her time to be a full-time board member for free? What will he or she get out of it? How to deal with absentee homeowners?
Homeowners are keen on getting answers to these queries.
According to Pujari, time is more crucial than money. "I'd rather find a private company and put it in control, regardless of the cost involved, than waste my own time on it," he said.
"Unless some people are retired and have time, homeowners won't be able to work 100 per cent as decision- makers. The majority of homeowners in The Springs 11 are businessmen or top-level executives. So I doubt any one of them would have the time or inclination to head the Home Owners' Association. And why would they? It's a full-time job," Pujari said.
Not only do homeowners need to do what developers did without the income the developers received for the job, they now have to pay from their own pockets to be on board.
Work without pay
"There's an additional requirement for members to attend a Real Estate Regulatory Authority [Rera] accredited course before being on board the Home Owners' Association," said Kent O'Brien, CEO and Managing Director, Strata Global. "These owners have to pay Dh3,000 out of either their own pockets, or from the association's budget, to do this course."
With obstacles such as these in the way and a lack of knowledge on the law itself, the question remains as to who would want to devote their time on something that was earlier handled by the developers.
"It won't work," said Thompson. "Handing over decision-making powers to reluctant individuals may only complicate matters. This move might ruin the market."
The businesswoman said the only reason she bought a villa in Victory Heights was because of the reputation of its developers — Dubai Sports City. "If I knew they're not in charge of maintaining my property and that it might be handed over to a board of homeowners — whom we don't get to choose anyway as we need to accept whoever volunteers — I would never have bought here."
"The problem is that a lot of homeowners don't know what to do and unless they have a manager come in and take control, they're lost in a sea of laws of which they haven't even been informed yet. For a lot of people, the Strata Law is still rather vague," O'Brien said. "Naturally, it's all very confusing for people who aren't used to this set-up."
A case in point is Thompson. The glamorous homeowner had no concept of the law or its existence when first contacted.
"Dubai Sports City hasn't breathed a word of this to us yet. Seeing that the law will be in practice as of October 13, why haven't we been informed of it yet? Why weren't we informed a year ago when we initially purchased the property? Surely if the law was introduced in April this year, it must have been in the testing stage nine months prior to that? If I had only known then, I would have thought twice about buying property here," she said.
Would Thompson consider nominating herself to be on board? "Absolutely no," she said. "Representing all homeowners and making decisions in their best interests is a full-time job! Why would anyone take it up?"
Additionally, with the number of absentee homeowners, the problem has magnified.
"In my experience," said Graham Yeates, Strata Manager, Cluttons Middle East, "an overseas investor with multiple properties is generally too busy to be involved. Imagine a person who lives in Russia and has properties all over Dubai.
"Earlier, he just had to pay a fixed sum of money and everything would be taken care of for him. Today, he's involved in the decision-making process. Do you really think he'll be all that bothered to be an active member? I'm seeing associations struggling to meet the minimum requirement of five board members, much less the average of seven, plus a reserve of three members at any given time."
"At the end of the day, it really boils down to one basic question," said O'Brien. "How does one get homeowners to be interested in their own properties without considering it hard work?"
Third party
Enter the world of strata and facilities management companies.
"Imagine being a homeowner in a little community development in the Marina. You may be a resident owner, but the majority are overseas investors who may not care about the details as much as you do. Imagine how frustrating that might be. How do you get everyone as interested in the jointly-owned property as you are? Where do you start?" questioned Yeates.
The solution might be in appointing a third party to help out. Organisations such as Cluttons and Strata Global do just that. Besides doing the planning construction for strata subdivisions, they also do owners' associations management. The organisations set up the development to be registered as a jointly-owned property and then take on the management of the Owners' Association once it's registered.
Once these facilities and strata management firms are appointed, they take over the responsibility of running the buildings.
Complicated? It certainly is for some. "I don't have the time for all this. At least 30 per cent of my time is spent travelling. Rest of the time I need to run my businesses. Agreed, maintenance costs may just come down now because the middleman, the developer, has been eliminated from the system. So those charges will be reduced from our bills. However, this will mean that although we may end up saving money, we'll be investing a lot more of our time."
According to Pujari, money is not the issue. "Time is. I would rather invest my time in my business than sit in monthly meetings. Attending just one or two major meetings in a year would be OK, but since I own multiple properties, it isn't feasible for me to be present at all of them. I'd much rather transfer authority to my finance controller and nominate him to be on the Owners' Associations' boards so that, even in my absence, my input is added to the final decision. For the properties I have rented out, I will empower the tenants to make decisions on my behalf."
Pros and cons
"Naturally, there will be many corporations that will benefit from the introduction of this law," said Mohanad Al Wadiya, Managing Director, Harbor Real Estate.
Besides having to make decisions regarding property, maintenance and finance, board members will also have to bear with delays by absentee owners in paying their maintenance fees and service charges. "An owner that continually breaches the agreed rules or refuses to pay service fees and fines, despite several reminders and legal notices, might face legal action from the Owners' Association and his property might be publicly auctioned. It is expected that the Owners' Association will deduct the outstanding fees and penalties from the money generated from the auction and pay the remaining amounts to the owner," Al Wadiya said.
All this just means extra work for those on-board. "To be honest, 90 per cent of the market isn't interested in contributing to the Home Owners' Association. And the other 10 per cent are only interested because they may be worried about service charges changing," O'Brien said.
"The only way to get the uninterested 90 per cent involved enough to attend meetings and participate would be to run a motion to increase service charges. Do that and see what a major attendance the meetings would have. If everything is run to plan, one would be lucky to see even a handful of owners turn up at these meetings.
"Rock the boat a little and create the interest."
The law at a glance
The new Strata Law places the onus for property maintenance on owners through the creation of an owners' association.
Under the law, the developer no longer provides maintenance services, unless the owners' association decides to employ the developer to do so.
The association is responsible for maintenance, building improvement, fiscal management of yearly operating budgets and fund management for future building upgrades and maintenance.
Owners will own a share of common areas such as lifts, swimming pools, gyms, walkways, roadways and gardens and will have the right to vote on budgets that determine the annual service fee to award the maintenance contract to a facilities management company.
The rules are legally enforceable and owners can be fined or may even lose their apartments if they continually breach agreed-upon rules or refuse to pay service fees.
The Real Estate Regulatory Authority (Rera) has been modelling Dubai's version of the Strata Law on the version that's in place in the state of Queensland, Australia.
Did you know?
An owner's association is a special not-for-profit entity made up of unit owners and formed upon registration of the first unit sale. It has a board of five to seven members, who are elected by a general assembly. This board is responsible for the management, maintenance and operation of common areas such as the parking, recreational facilities, gardens, lifts, tanks, pipes, generators, water mains, bridges, lakes, fountain and other water features.
