Dubai property owners need a permanent solution on service charges

Dubai property owners need a permanent solution on service charges.

Surely, we live in the paradise of the individual. Proof lies around us.

It was at the time of the Industrial Revolution that the idea of professionalism appeared, in that the contribution it made to society was an assertion of possession of reason. Obviously, the cooperation of the whole group - with each other and with society as a whole - was essential for the benefit of the general population.

Nowhere is this more needed at present than in homeowner associations and service fee collections in Dubai. Service fees are not understood by almost anybody in the industry. Owners keep complaining about how high the rates are and that they need to be brought down.

No linkage at all to rents

They link them to falling rents, which is a false argument at best. Owner association providers seem to be caught in the middle, where they lack enough muscle to enforce collections. Since the pandemic set in, they have been unable to give adequate explanations for why fees are structured the way that they are.

Or alternatively, keep the asset well-maintained. Regulators have incrementally improved the transparency of these charges. But in a market structure dominated by foreign investors, they have been unable to galvanize the latter into paying on time.

Short-term rentals became a loophole whereby higher rents that have been collected by the operators have been done without any onus being placed on the same providers to ensure service fees too are paid.

Mollak invoices have been sent numerous times to the wrong address (because of old databases), with the result dues keep rising, with a proliferation of unpaid service fees of more than five years. Developers left with unsold stock promise service-free periods, only to then turn around and neglect the asset, which creates a further disincentive to the ones that have complied with payments.

The result, inevitably, has been that everyone has felt powerless, even though the intent was the exact opposite. What is to be done?

From the micro to the macro, there are a series of measures that can be taken to enforce compliance. Individual access cards to common areas such as elevators, gyms, and pools that would disallow usage to those that have not paid would be an effective way to start.

Property management companies that collect rents could have their license renewals linked to service charge collections, creating an incentive for databases to be updated and ensuring that monies are coming to the service providers.

Source: Gulf News