Service Charges and New Rules for Shared Buildings

As thousands of apartments in Dubai's towers are handed over, a new issue has moved to the centre of owners' concerns: service charges. These annual fees cover the cost of maintaining lifts, lobbies, pools, security and other shared facilities. In some buildings they have risen sharply, and owners have often had little say in how they are set. The authorities are now establishing a framework for jointly owned property to bring order and transparency to the system.

Why service charges cause disputes

• Lack of transparency: owners may not see detailed budgets or accounts.
• Rising costs: maintenance, utilities and staff costs increase over time.
• Limited control: owners may have no formal role in decisions.
• Developer influence: in early years, developers often control management.

What the new framework aims to do

Rules for jointly owned property set out how buildings should be managed, how service charges are calculated and approved, and how owners can participate through owners' associations. The newly established Real Estate Regulatory Agency is expected to play a role in overseeing these arrangements.

What owners should expect

Over time, owners should receive clearer budgets, regular accounts and a greater voice in management decisions. Owners' associations can help ensure that costs are reasonable and services meet expectations.

What buyers should do now

Buyers should ask for current and historical service charges before purchasing, understand what they cover and check for any planned increases. High service charges reduce net rental returns and can affect resale value.

The importance of good management

Well-managed buildings tend to retain their value and attract better tenants. Owners should take an active interest in management, especially once owners' associations are formed.

Our view

Clear rules for jointly owned property are an important step in Dubai's market maturity. We welcome greater transparency and encourage owners to participate actively in the management of their buildings.