Hopes and fears over strata law

Homeowners in Dubai will gain the right to form associations and to select their own service providers under the regulations, but industry professionals and property investors say there are many details still to be worked out.

The strata law will enable property owners to save on the cost of building maintenance by allowing them to select their own service providers.
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It has been almost three years in the works, but a law that allows homeowners to form their own associations has finally arrived in Dubai.

The so-called strata law will not only enable property owners to save on the cost of building maintenance by choosing their own service providers, it also means they will be entitled to seek compensation from developers that fail to deliver on their promises. As well, those property owners who fail to keep up with their service fees could also risk losing their homes. The law will allow the housing associations to go to court in order to sell the property to recover the fees.

The move is seen as key to reviving confidence in a market where disputes over service charges are rife. But what will be the impact of the new law? The National asked a number of experts to give their views. Abdul Majeed Ismail al Fahim, the chairman of Pearl Dubai, a property developer: It is positive. Why? Because everything is going to be much clearer and it will give people trust. It will put the mandate into the hands of property owners, who will decide what services they want and they won't be overcharged. They will nominate their homeowner associations at general assemblies and they will be able to vote for people who they think will do a good job. As for developers who are afraid of the rules and universal living standards, they should not be here. They should not call themselves a developer and sell to the public.

Ahmad Kasem, the chief development officer of Cayan, a property developer: I'm happy to pass on control, although developers and owners should work together during the first year after homes are handed over in order to deal with any "'snagging" problems that arise with the building. But after that, I believe the developer should immediately leave the building management to the associations. Strata is a good law, but it has to somehow be implemented to serve the majority. For example, what happens if a member does not pay their service fees?

Michael Aldendorff, the owner of a Dh728,000 (US$198,205) property at Nakheel's Discovery Gardens: I've been through the guidelines very briefly. We're now forming an interim owners association to challenge Nakheel on some of the points. It is going to be interesting to see how this progresses. I think the guidelines are very good; it's just whether or not they are going to be enforced or if it is just another document. The law also needs to take everything into account before associations can just sell the properties of those who have not been paying service charges in order to recover the fees.

Cem Sabri Pozam, the owner of a property at Jumeirah Beach Residences (JBR) and one at Discovery Gardens, for which he paid a combined Dh2.3 million: The law is still not entirely clear to the property owners. I don't know who's going to form the association or who's going to help us. At the moment, the management we have is a nightmare. The law will definitely help bring costs down, especially in Discovery Gardens, and we'll be able to find a management firm for a price we can afford to pay. In JBR, you sometimes pay for services you don't get. For example, last year we paid to have our windows cleaned four times but they were only done three times and we didn't get a single explanation as to why.

Stephen Kelly, a strata title specialist with the international legal practice Clyde and Company in Dubai: The regulations are basically what we expected ? I don't think there are any great surprises with them. I've said all along that they would only answer some of the questions and that it would still take time for the Land Department to formulate policies around buildings because the regulations really only deal with the formation of owners associations in non-complex developments. So there's still quite a few questions surrounding complex developments and how they should be structured. The law will cater for the majority of developments, but the bigger, more complex ones will need further policy direction.

Ron Hinchey, a partner at Cluttons, the property consultant: One of the reasons behind bringing in strata was to stop developers making a profit out of it. That was the whole point of it, to give the market confidence that it's being properly regulated. While the strata management companies and the contractors doing the work are allowed to make an operating profit as they do their business, the owners association or the developer must not make a profit out of strata. From that perspective, I think it's gone quite a long way to protecting the owners' interests as well as giving them control of their own property. It's going to take a while to settle in and there's bound to be teething issues. But appointing a strong strata manager can actually add value to your asset and I think that is how it's got to be perceived.

Adrian Quinn, the chairman of Essential Community Management, a strata management company: This will be a major leap forward as now owners associations will be able to properly recover service fees. Some projects have lost between 30 and 50 per cent in service fees because of people who have not paid. The new law will allow owners associations to sell members' properties if they have not paid service fees. The Dubai Real Estate Regulatory Agency [RERA] will first of all send out three warning notices to the person defaulting. If they do not comply then the owners association can take the matter to court to ask for the property to be sold. Nobody's property will be sold instantaneously; it might take six to nine months to go through the RERA process of serving the notices. But at the end of the day, if you have not paid, the owners association will sell.