x Abu Dhabi, UAEFriday 28 July 2017

Resident lock-out is a service fees crisis

Residents getting locked out of their homes in Jumeirah Beach Residence was a symptom of a larger problem in the property sector.

The middle of summer in Dubai is not the best time to be locked out of your home. But combine the heat outside with the knowledge that you did not do anything wrong, and tempers will begin to boil.

As reported earlier this week, dozens of tenants in Sadaf Towers in Jumeirah Beach Residence said they had been blocked by property developers from entering their flats after a row about unpaid service fees. The tenants said in many cases they were scapegoats for their landlords' failure to pay the service fees - which cover security, maintenance of common areas and general upkeep - on time. It is a symptom of problems that have plagued Dubai's property market for years.

The Strata Law, introduced by Dubai's Real Estate Regulatory Agency (Rera) in 2010, was meant to solve this kind of problem. And it did, to a degree. It allowed independent housing committees to set their own service charges - and not a moment too soon for many Dubai residents who were paying in excess of Dh30,000 just for service charges.

For several years, charges had fluctuated with no rhyme or reason. Owners who purchased properties off-plan in 2002, with service charges set as low as Dh8 per square foot, found rates had shot up by the time of delivery. Furthermore, few explanations were given for the fee hikes, which did not necessarily correspond to improvements in services.

The Strata Law should, and does to a degree, give owners more control over fees and, importantly, more transparency about value for money. In reality, the implementation of the law and the establishment of homeowner associations has been far from smooth sailing.

Rera required developers to file paperwork for homeowners associations before the law came into force last October. Just days before the deadline, few had complied. Now Rera faces the challenge of contributing to a framework for fee arbitration and to enforce its own rules.

The Strata Law could be a massive improvement for rational fee structures that could benefit owners and tenants alike. Sometimes, or even often, residents are remiss and service companies have a right to collect on long-overdue charges. It is up to the companies and residents to set fair fees based on reasonable service costs. But for residents stuck outside in Jumeirah Beach, there also needs to be a system of redress if someone violates the terms of the deal.