x Abu Dhabi, UAEThursday 27 July 2017

Dubai landlords may have to be transparent over paid service fees

Rera officials to hold talks next week with landlords, tenants, legal firms and owners' associations to tackle the problem of unpaid fees.

The Marina Residence on The Palm has recently had pools drained by Nakheel because of unpaid fees.
The Marina Residence on The Palm has recently had pools drained by Nakheel because of unpaid fees.

DUBAI // Property owners may be forced to reveal to potential tenants whether they have paid their service fees.

Regulators will hold talks next week with landlords, tenants, legal firms and owners' associations to tackle the problem of unpaid fees.

Tenants and developers have clashed in recent months after companies threatened to cut off services to apartments and block access to facilities because of outstanding community services charges, which should be met by property owners.

The Real Estate Regulatory Agency does not release information about who has paid service fees or not, but if new rules are introduced that could change.

Mohammad bin Hammad, a senior director at Rera, said the information could be beneficial to potential tenants. "I think it's a good idea and something we can study more closely," said Mr bin Hammad.

"We need to solve this issue of non-payment of service fees and this could be a potential way of dealing with it.

"We need to get the views of the main stakeholders and then we can look at the best way forward."

Adnan Khan, who owns an apartment in Al Sheef 2 tower in JLT, said the proposal would benefit prospective tenants.

"Our interim owners' association already informs tenants where they stand regarding the payment of service fees," he said. "As a result we have an almost 100 per cent occupancy rate in our tower.

"I would welcome Rera contacting us about this issue so that we could put our views across."

A British expatriate who lives in Marina Residence on The Palm, which recently had pools drained by Nakheel because of unpaid fees, also backed the plan.

"Anything that can bring better regulation is a good thing," said the woman. "We are looking to move because of the issue, and it would be nice to know if the landlord we will be renting from next has paid before we sign."

Marguerita Haarhooff, a South African who bought an apartment in the Shoreline development on the Palm in 2011, said the proposals "would give tenants a better idea of what the landlord will be like".

She said landlords would be encouraged to pay their fees "if they know they might miss out on tenants because of it".

However, real estate and legal experts have given mixed responses to the proposals.

"Until we see something official from the Land Department or Rera, it's difficult to say much as we don't have a point of reference," said Ludmila Yamalova, a property lawyer. "I'm cautious about speculating until we see something in a more formal form."

She said any new rules need to tackle the underling problems. "This initiative fails to tackle a problem that is at the heart of the issue - namely the ambiguity and lack of accountability in service charges."

She said many owners had legitimate concerns about how service fees are set and how they are spent. "Service fees are high, but the quality of service is far from par."

Dean Cheesley, senior legal consultant at DLA Piper, said the proposals would not affect the buyer/seller relationship.

He said: "The current requirements of the Land Department dictate that a seller will be permitted to transfer property to a buyer only upon presentation of a no-objection certificate from the master developer confirming that all service charges have been paid."

He said this system was working well, provided "sufficient protection" for anyone planning to buy property and reassured them there were no outstanding fees that could result in withdrawal of services.

"In terms of landlord/tenant relationships, this is primarily where the issue lies, and it affects residential lettings the most," he said.

Matt Green, head of research & consultancy UAE for CBRE Middle East, said new rules would protect tenants.

"We have been aware of increasing numbers of service interruptions being imposed on units where service charge obligations have not been met, with pools, parking and other facilities often suffering disruption as a result."

Further tightening of property laws and regulations are expected as Dubai tries to create a more attractive location for investment, he said.

nhanif@thenational.ae