Understanding Service Charges in Dubai Real Estate: A Complete Breakdown

Are you planning to relocate to Dubai? If so, you need to understand additional costs beyond just the property price. Along with agency fees and utility setup charges, one crucial expense is service charges that property owners and tenants must be familiar with. Planning these expenses will help ensure a smoother transition to your new home. So what are the service charges, how are they calculated, and which factors influence them? Let's explore every bit of detail about these charges in this blog.

What are Service Charges?

Service charges are the continual fees the owners and tenants pay for repairing and maintaining residential buildings and communities. Have you ever wondered how the building stays clean, lifts stay operational, and facades shine? A dedicated team ensures the smooth operation of the building/community, and the service charges paid by the residents help the system run smoothly. They cover:

• 24/7 security 
• Building maintenance (electrical and plumbing systems, lift maintenance, landscaping, managing parking area)
• Facilities management (cleaning and maintaining gym, pools, kids areas, parks, gardens)
• Common area utilities (air conditioning and lighting)
• Reserved fund (sinking fund for major repairs and maintenance)
• Insurance (coverage for unforeseen events)

Service Charges Legal Framework and Regulations

Service charges are not just a mandatory fee but a legal requirement regulated by the Dubai Land Department (DLD). There are laws and systems relating to the charges to ensure transparency in the process. They are: 

Law No. 6 of 2019, also known as Jointly Owned Property Law, provides a legal framework for managing jointly owned properties. It has a clause regarding cost calculation and collecting service charges. 

Oqood System that validates registration and management of service charge contracts between owners and management companies.

RERA Service Charge and Oqood Index provides guidelines for service charge rates in Dubai and publishes the index on its website. 

Service Charges Index

Dubai Land Department (DLD) has established a regulatory framework to standardise service charges, and the Dubai Service Charge Index is part of it. The index allows owners and tenants to determine how much service charges they must pay for their property.

The total cost of service charges depends on the property's location, type, and usage. These charges vary depending on the type of space, such as offices, retail shops, showrooms, restaurants, or cafes. The reputation of a developer also impacts the service charges. For example, developers like Damac and Emaar may charge higher service charges for a property than a less reputable developer.

On average, the average service charges of apartments and villas in Dubai are:

Although apartments are smaller, the additional amenities such as BBQ areas, elevators, kid's play areas, and pools demand higher service charges than villas.

Average service charges for apartments and villas in different neighbourhoods are:

Dubai Marina

Apartment: AED 18.25/sq.ft.

Al Furjan

Apartment: AED 13.50/sq.ft.

Villa: AED 5.60/sq.ft.

Business Bay

Apartment: AED 21.25/sq.ft.

Downtown Dubai

Apartment: AED 25.00/sq.ft.

Dubai Silicon Oasis

Apartment: AED 11.90/sq.ft.

Villa: AED 6.75/sq.ft.

International City

Apartment: AED 8.40/sq.ft.

Villa: AED 4.90/sq.ft.

Jumeirah Lakes Towers

Apartment: AED 8.40/sq.ft.

Palm Jumeirah

Apartment: AED 20.45/sq.ft.

Villa: AED 7.25/sq.ft.

How to Check Service Charges with Service Charge Index

There are three ways to check a property's service charges with the Dubai Service Charge Index.

1. By Title Deed

Open DLD's official website.

Click " Inquiry about Services fees indicator."

Enter certificate no., certificate year, property type, and budget year.

Click "Calculate"

2. Inquiry about Service Fee Indicator Method

Select "Inquiry about Service Fee Indicator" next to title deed no.

Enter the project name, property usage, and the year.

Click "Calculate"

3. Select via Map Method

Locate the area on the map and enter details such as the project, usage, and the year.

Different Channels to Pay Service Charges in Dubai

You can pay for property service charges through the apps and portals below:

DEWA Website

EasyPay

DEWA Smart App

Empay UAE Application

Frequently Asked Questions

Which neighbourhoods in Dubai have higher service charges?

Dubai's highest service charges are at Al Barari, Jumeirah Bay Island, Palm Jumeirah, Bluewaters Island, and City Walk.

How often are service charges updated?

Dubai Land Department (DLD) periodically updates the service charges based on the market conditions. So, occasionally visit DLD's official website to stay updated on the latest and most accurate service charges.

Can service charges increase over time?

Service charges can change annually based on the costs of maintaining the building and services.

What happens if I don't pay the service charges?

Non-payment of service charges can lead to legal action by the property management company or owners' association, and you may lose access to common facilities.

Conclusion

Service charges are a cornerstone of property management in Dubai, and they ensure your property's comfort, convenience, and upkeep. By gaining clarity on these costs, you can avoid unexpected expenses and fully enjoy the lifestyle or business opportunities your property provides. It is best to review the service charge documents for your property or development to understand the fees you must pay fully.