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 and community. The service charges paid by residents help keep the system running smoothly. They cover:

• 24/7 security 
• Building maintenance (electrical and plumbing systems, lift maintenance, landscaping, managing the 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 in place to ensure transparency in the charging process. They are: 

• Law No. 6 of 2019, also known as the Jointly Owned Property Law, provides a legal framework for managing jointly owned properties. According to Article 25, paragraph (a) of Law No. 6 of 2019, property owners are required to pay their share of annual service charges for the maintenance. This amount is calculated based on the size of their unit compared to the total area of jointly owned property.
• 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 they must pay in service charges 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 fees for a property than less reputable developers.

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

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

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

How to Check Service Charges with the 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 Service Fees Indicator.
• Enter certificate number, certificate year, property type, and budget year.
• Click "Calculate"

2. Inquiry about the Service Fee Indicator Method

• Select "Inquiry about Service Fee Indicator" next to the 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

Conclusion

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

Contact us for more information about the service charges and personalised insights.

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