Dubai residents face power cut-off over unpaid bill

Those living in a Dubai Marina tower have been told the electricity will be cut to common areas and lifts unless a Dh316,000 bill is paid.

Residents of a Dubai Marina tower have been told that the power will be cut off to the common areas and lifts unless a Dh316,000 (US$86,029) electricity bill is paid.

Thousands of residents in Dubai complexes are facing a similar scenario wheremaintenance fees have not been paid and cash-strapped developers are reluctant to make up the shortfall. It comes as the new strata law, giving owners the right to oversee the running of their buildings, comes into effect. "It's terrible," said Rob Richards, 38, from New Zealand, who rents an apartment on the 15th floor of the Marina Diamond II. "We don't know what to do."

"I think there are going to be a lot of situations like this across the Emirates," said Brent Baldwin, an associate with the law firm Hadef & Partners. "It's a major issue."

Fares Saeed, the chief executive of Diamond Investments, which owns the six Marina Diamond towers, said his company would not cover the electricity bill for the Marina Diamond II, a 15-storey tower with 274 apartments. The money is owed to the Dubai Electricity and Water Authority (DEWA) and Mr Saeed said the owners of the apartments were responsible.

Twenty per cent of the apartment owners in the building have not paid their maintenance fees, he said.

"Unfortunately, there are no binding laws to force them to pay," Mr Saeed said.

Eventually, under the terms of Dubai's Strata Law, homeowners associations will be responsible for paying bills for electricity and maintenance services for communal areas. The law went into effect in April. Owners of apartments in buildings across Dubai are in the process of forming associations.

However, the associations do not have any legal standing until they are registered with the Real Estate Regulatory Agency, legal analysts say.

Until then, developers are responsible for collecting maintenance fees and paying building expenses such as electricity bills. But apartment owners are increasingly defaulting on their fees, property managers say.

In some cases, residents are unhappy with services or concerned about how the money is being spent.

Others purchased their units at the height of the market and are now simply reluctant to pay additional fees, the managers say.

"People who bought in the boom were getting boom rents and now they're getting realistic rents," said Alex Smith, the senior owners association manager with Essential Community Management in Dubai. "That's the market."

At the same time, developers are growing more reluctant to cover expenses in buildings where apartment owners are not paying their fees, property managers say. Mr Smith said he was dealing with a similar situation in the Dubai Marina area, which he declined to name.

"The developer said they have paid enough," he said.

The management company at the Horizon Tower in the Marina has posted notices with the names of owners who it claims have not paid their fees, in a bid to encourage them to pay up.

In the Marina Diamond II there was a total shortfall of Dh450,000 in maintenance fees last year, said Tariq Jamal, the manager of Best Dynamic Facilities Management.

In the nearby Marina Diamond I the shortfall for the year is closer to Dh860,000, he said. In the past, the unpaid fees on the two buildings was typically closer to Dh150,000 a year for each tower.

For three years after the building opened, Diamond covered the shortfalls and continued to maintain the building, Mr Saeed said. "We kept our promises."

But he said now the company could not afford to cover costs for the owners who had not paid, he said.

The electricity cut-off notice, distributed to residents earlier this week, said DEWA had issued a final warning about disconnecting services unless the Dh316,000 bill was paid. Yesterday, however, the power was still connected.

DEWA did not respond to a request for comment. Mr Jamal said he had e-mailed owners who had not paid their maintenance fees and posted notifications. Maintenance fees in the towers are typically Dh13 per square foot per year, Mr Jamal said.

Only about 7 per cent to 10 per cent of the units in the development are occupied by owners, the rest are rented, he said.