Service Charges Might Be The Deciding Factor When Looking At Dubai Rental Properties

The Dubai Rentals industry has been plagued by the services charges ghost for some time now

. Things started to come to a head last year between property developers and landlords/tenants. Disputes arose over the collection of service charges on the apartments and villas. Developers wanted property owners to pay the outstanding amounts. The latter on the other hand, wanted the charges being levied to be reduced.

The tenants whod elected to go in for properties for rent were the ones helplessly caught in the crossfire between the other two. The disputes had turned ugly when certain developers initiated actions that would seek to bar tenants with outstanding dues on the apartments from community facilities. These common facilities went on to include the clubhouses and gyms on premises, swimming pools and even parking lots. The controversial moves even went on to include the restriction of access to common beachfront areas amongst others.

Ultimately, the Real Estate & Regulatory Authority (RERA) had to intervene and soothe frayed nerves. A truce was soon worked out, but sporadic recurrences of disputes over outstanding service charges continued to be reported through the year. The threat of such instances continued to loom large over the Dubai rentals segment with tenants and landlords both being jittery over the next round of developments.

Last month, RERA again stepped in to clarify that they were mulling over the introduction of new guidelines on the payment of service charges. These guidelines are reported to make it obligatory for the landlords of Dubai rental properties to clarify their stand on the payment of service charges. Under the proposed guidelines, landlords would have to declare any outstanding service charges owed to the master developer and shed light on the responsibility of payment for the same. All this would have to be done prior to entering into a formal tenancy contract with a prospect looking at properties for rent in Dubai.

While this matter is still some time away from resolution, a few developers are taking an alternative stance on things. Tameer, the realty major that are behind the tallest residential towers in the world have elected to refrain from managing their properties. They have refused to don the role of asset managers, instead choosing to focus on core development.

Such an approach is indeed in stark contrast to the rest of the realty players. For example, at the tallest tower in the world the Burj Khalifa, residential owners are forking up over Dh50 per square foot in service charges. In comparison, the service charges range between Dh 10 to a shade over Dh15 at the five tallest residential towers. At a time where developers are holding the lucrative property management contracts rather close to their chest, this move by Tameer comes across as a whiff of fresh air.

Thus, service charges being levied by the developer could play a significant role in the decision making process of those that looking at apartments to rent in Dubai, in the immediate and near future.

by: Alfrenzo Rodrigz

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