DUBAI // Developers are scrambling to prepare for the enactment of the Strata Title Law in October, when owners of freehold projects across Dubai will take over the upkeep of amenities such as swimming pools, foyers and lifts. The law, which sets the rights and responsibilities of Owners' Associations (OAs), came into effect last year, however the actual rules and regulations are expected to be fully enacted at Cityscape Dubai in October. Under the law, freehold buyers will automatically become part of an owners' association, which will then elect a management board of between three and seven people.
"I've briefed about 50 developers on their requirements and frightened them as to what's happening, and there's been a real flurry of activity in the last two months," said Peter Crogan, the chief executive of BCS Strata Management Services, which manages 130,000 properties under strata title in Australia and is to adopt a similar role in Dubai. Master developers such as Emaar and Nakheel have been making extensive preparations for the massive handover of responsibilities in what will be one of the most significant law changes since freehold property was made legal in 2002.
One of the biggest challenges is preparing some people for the shock of seeing their common charges increase by tens of thousands of dirhams a year. The law requires owners of flats or villas to elect a management board to collect a fee from owners, pay for the overall project's insurance and hire maintenance companies. The system, known as the strata law, is common in the US, UK and Australia. Jeevan D'Mello, the director of community management at Emaar Properties, said that for years many developers had subsidised the maintenance cost of their buildings and residential neighbourhoods. Now, those costs will shift to the owners.
"We have been slowly making people aware that they will have to start paying for these things," he said. "The developers will no longer pay for something that they don't own anymore." The Real Estate Regulatory Authority (Rera) is still finalising some exceptions, where the master developers will be able to maintain some larger services that would be too complex for a OAs to handle, he said. Emaar has already set up seven basic associations, even though they are not yet legally required, to ease the transition. Mr D'Mello said the company was also arranging tutorials on the new system for owners, and sending staff members to the US and other countries for additional training in the strata law.
"Community associations in this part of the world are very new," he said. "There will be difficulties at first with making sure everyone understands." David Nicholson, the general counsel of Nakheel, said that the company had formulated a programme to make sure all the existing buildings had the legal framework to make the transition mandated by the new law. He said that the asset management division would help owners with appointing an association, and appoint a general manager.
Rera has also hired Mr Crogan, of BCS Strata Management Services, to train more than 3,000 property agents about the law. The company will also consult at the Green Community, Green Community West and Tiara Residences on the Palm Jumeirah. The implementation of the law will lead to a "far more transparent system for homeowners", said James Garbutt, a senior vice president at Spectrum Real Estate Advisors.
"When the owners are responsible for upkeep, they have more interest in driving up the best quality management," he said. But he warned that the developers had a key stake in making sure owners understood the law and the importance of upkeep. "In the UK, there have been situations where buildings didn't see enough people interested," he said. "Things tend to fall apart in those cases." Additional reporting by Robert Ditcham
bhope@thenational.ae
