New Law on Dubai’s Property Service Charges

Developers in Dubai woke up to new reforms in the Property Service Charge laws.

What is the service charge?

Service charge is the cost of maintaining your property and includes the costs for cleaning, maintenance, repair jobs of the common areas in the property.

Until now, the developers were allowed to collect service charges on behalf of the property owners. Now the government has ruled against that process. Instead, the government has decreed that property owners, or property management companies that have been approved by the owners to act on their behalf, will take care of the collection responsibilities.

The Law: Common Properties Law No. 6  (2019)

This is the law that has come into effect from the 19th of November. This prohibits any developer from collecting the service charges, therefore creating a clear sense of transparency between homeowners and the money they pay for the upkeep of their properties. The electronic system, Mollak, introduced by the government is meant to emphasise on this transparency that they want to achieve.

The service charge funds will get collected in the service accounts of 7 approved banks, and a complete breakdown of every fil will be provided to the homeowners. The homeowners also do not have to pay any hike in the service charges unless approved by RERA.

For fractional owners, the law decrees that they have to have an owners association and property management companies to work on their behalf.

Moreover, the developers do not have the right to set their rules jin creating the owners association and the likes.

The Dubai Land Department and RERA has been busy for the last 2 months since the freehold ownership law was announced. 1,240 buildings have been to the electronic system, 89 property management companies have been approved by the government and 45,000 have been invoiced.

The CEO of RERA confirmed that Mollak will track all the information including the origin and destination of funds as well as the approving authority of the owner association’s funds.

Among the developers who have already adapted to the new system is Emaar while RERA is working to get the other developers to switch before the deadline.

The Dubai Land Department is constantly working towards creating a transparent system for every property in Dubai and the property owners.

In accordance with the new law, every developer has to submit all required documents of any freehold property to the DLD within 2 months of completion as well as the receipt of the completion certificate.

A register will be maintained by the DLD wherein all the information regarding the freehold projects will be added, including the land owned by the developers and units meant for independent ownership. This register will also be inclusive of names of owners, committee of owners members, and the chart of the building management with the maintenance procedures of the common areas, all of which are as per the laws put in place by the Dubai Land Department.