Question: My husband and I bought our apartment three years ago. One thing that worries us is that our service charges seem to increase almost every year. I completely understand that swimming pools, gyms, security and landscaping all cost money, but how can owners tell whether they are paying represents a fair amount? Is there a way of checking whether the charges are reasonable compared with similar buildings? Emma L, Dubai
Answer: Service charges are among those topics that rarely receive enough attention when people buy a property, yet they can make a significant difference to the overall cost of ownership.
The first thing I would say is that higher service charges don't automatically mean something is wrong. Buildings with extensive amenities, such as large landscaped areas, multiple swimming pools or concierge services, naturally cost more to operate than a simpler residential tower.
What gives owners confidence is understanding exactly what they are paying for. Every owners’ association works to an approved annual budget, and that budget should explain where the money is being allocated. I always encourage owners to take the time to review it because it's surprising how many never do.
It can also be useful to compare your building with those of the same age and specification, rather than simply looking at neighbouring communities.
Two buildings may sit side by side but offer completely different levels of service and therefore very different running costs.
One thing I've noticed over the years is that buyers often focus heavily on the purchase price while giving very little thought to recurrent ownership costs.
In reality, service charges should always form part of the investment calculation because they will affect both your annual expenditure and, in some cases, how attractive the property is to future buyers.
If you understand what you're paying for and the building is being maintained to a high standard, those charges often become much easier to put into perspective.
Q: I would appreciate your view on a situation affecting owners in a villa community in Dubai. The developer has sold a number of villas to private owners but continues to own and rent a significant number. The community has not yet completed its Rera/Mollak registration. Owners have now received service charge invoices for a second year. I queried the basis for the charges. The developer’s answer is that the owners’ sale and purchase agreements (SPAs) require payment of service charges from completion and that funding of the operation and maintenance of the community must continue while registration is carried out. Can a developer legally invoice and collect provisional service charges in these circumstances before Rera/Mollak approval?
The issue is of particular concern because owners have limited visibility over expenditures, while the general standard of maintenance, facilities and security within the community is poor. What is the appropriate route for owners to take in this situation? SM, Dubai
A: Your email raises several important issues and I can certainly understand why you are seeking greater clarity, particularly since this is the second year that interim service charges have been requested without the community completing its Rera/Mollak registration.
Having reviewed the provisions of Dubai Law No 6 of 2019, my view is that the legislation appears to draw a clear distinction between a developer's contractual right to recover service charges under an SPA and the statutory framework governing how those charges are approved, collected and administered.
Article 27 is particularly relevant because it states that a management entity must not charge or collect service charges without first obtaining the relevant approval from Rera. The law also anticipates situations where a final budget is not yet available by allowing Rera to approve a temporary service charge budget until the audited budget has been finalised.
Based solely on the information you have shared, it would therefore appear reasonable to ask whether such a temporary Rera approval has been obtained. If no temporary budget has been approved, then there is at least an arguable question as to whether the current invoicing process is fully aligned with the requirements of Article 27. That said, without knowing exactly where the development sits within the registration process, I would be cautious about concluding that the developer is acting unlawfully.
Similarly, Article 30 requires service charges to be deposited into a Rera-recognised service charge account established for the jointly owned property. If the developer confirmed that the account currently receiving payments is not yet the approved regulatory account, it is understandable that owners would seek reassurance regarding how those funds are being safeguarded and whether they will ultimately be transferred into the prescribed account once registration is complete.
The developer's reliance on the SPA is not without merit. Most SPAs require owners to contribute towards the costs of operating and maintaining the community from completion, and there is a practical reality that landscaping, security, cleaning and maintenance must continue while the registration process is carried out. However, my view is that the contractual obligation to contribute does not necessarily override the statutory framework established under the 2019 Law, particularly where that legislation explains how service charges are to be approved, accounted for and collected.
I think you have already asked the developer the most important questions, such as when the Mollak/Rera application was submitted, what its reference number is, whether a temporary service charge budget has been approved by Rera, and when full registration is expected.
Those answers will provide a much clearer picture of whether the current arrangements are simply part of an ongoing regulatory process or whether there is a more substantive compliance issue.
As for transparency, owners are, in my opinion, entitled to understand how their contributions are being calculated and used. At the very least, I would expect the developer to be able to provide a detailed interim operating budget, an explanation of the basis upon which the provisional charges were calculated, and, once registration is complete, a document showing the actual expenditure against the amounts collected. The legislation also contemplates independently audited budgets and Rera oversight as part of the approval process.
Finally, your comments regarding maintenance standards are important. If owners are paying significant sums, yet the condition of the community does not reflect that expenditure, requesting greater financial transparency is entirely reasonable. Service charges should ultimately be reflected in the quality of services delivered.
For the moment, I would suggest waiting for the developer's response to your questions regarding the status of the Rera/Mollak application. Depending on those answers, owners may then be in a stronger position to determine whether the matter is simply one of timing or whether it warrants being raised formally with the Dubai Land Department or Rera for clarification.
The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario@evadxb.com
