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Residential property owners in Dubai need not worry about higher maintenance fees in 2023 as the Dubai Land Department and various homeowner association (HMA) management companies are working to keep fees from skyrocketing. If there is an increase in service charges, industry experts say, it will be equal to the inflation expenses.
Content:
- Service fees during the last two years
- Service fees in high-end areas
- What service fees will look like in 2023?
Service fees during the last two years
The cost of maintaining freehold residential complexes in Dubai has remained within acceptable limits for the past two years, despite a sharp increase in rents and property prices. During this period, the authorities announced their intention to maintain the usual level of service fees for property owners.
Housing maintenance debtors will soon need to pay their bills. Continued failure to comply with this requirement can affect homeowners' credit ratings in the same way as any delinquent payments on bank loans, phone, and utility bills. Etihad's custodians and credit bureau are negotiating for unpaid service charges to also be taken into account when calculating a UAE resident's creditworthiness.
There is also discordant information about how the overall housing maintenance fee collection in Dubai is doing. Some in the industry say there was strong growth in the first half of the year, but payments have been declining since October.
Service fees in high-end areas
As per recent rule changes, Dubai Land Department (DLD), in conjunction with audit committees, sets a maintenance fee for a specific building or area each year. By doing so, the authorities intend to reduce the influence of developers and associated public access organizations on setting service fees.
The increase in maintenance service fees per square meter can only be applied to newly commissioned properties at the time of submission of the original budget. For existing residential units, the 2023 budget must be strictly controlled by RERA and can only be changed in case of a change in AD officials and/or after the introduction of new property management services.
For landlords in older, middle-class residential areas that don't see the price of services rise as much as in high-end housing, this is a relief. Given the redundancy of properties due in 2023, amenity management agencies should be able to get a reprieve. However, maintaining the integrity of assets in old homes remains an unresolved challenge.
What service fees will look like in 2023?
Real estate experts believe that maintenance fees in 2023 will stay at the level of the last two years. This is due to the fact that the authorities are making every effort to ensure that inflation does not scare away potential property buyers.
Dubai is expected to have a record number of new residential developments in operation by 2023. In the current market, the maintenance cost of properties in Dubai will remain unchanged after the properties are commissioned, as developers offer flat service fees for maintenance for a period of three to five years. Also, in order to interest buyers, some developers may take on a fee for housing maintenance.
It should also be borne in mind that the decision on a fixed fee for services is at the discretion of the developer and may vary depending on the projects. Would-be homeowners should carefully review the terms of the flat service fee agreement and be aware of possible future changes.
