Rera Plans Disclosure Obligation Of Service Charges On Dubai LandlordsThursday, July 26, 2012
According to sources, Landlords in Dubai at the time of signing new rental agreement may soon be required to disclose the current status of their outstanding service charges. The legal consultant at DLA Piper firm mentioned that Real Estate Regularity authority in Dubai is considering the plan to impose such requirement on landlords but nothing can be said for sure, since full information about the plan at this stage is unknown.
He also added that requirement to disclose payment of services charges would play a key role in making tenants aware about the current situation of service charges during the process of entering into lease. This requirement would act as a guide for the tenant because it would lead them to make an informed decision. They would come to know if landlords have cleared their service charges or not.
Head of Research and Consultancy at CBRE (Property Consultancy firm), Matthew Green, said that industry will welcome this move despite the availability of ‘minimal’ information on the proposed plan. He further added that this plan would safeguard tenants against the unscrupulous landlords and improve the transparency in terms of service charges. He also said that more needs to be done to further improve the transparency for investors when they purchase property in Dubai.
As a result of ongoing battle between the developer Nakheel and landlords over service charges, some tenants have been found shunning apartments in Palm Jumeirah Dubai. This battle started back in last December when Nakheel claimed it owes US$ 20 m in service charges in Shoreline Apartments and banned 1,300 residents from using gyms and beaches.
At another development, Marina Residences Towers, Nakheel drained six swimming pools last month and claimed US$ 4 m unpaid service charges. Real estate agents in Dubai are of the view that despite refilling of pools by Nakheel, tenants are shunning Palm Jumeirah property. They also reported that renters in Palm Jumeirah are either asking for rebate from the landlords or looking to relocate in other areas of Dubai.
Mario Volpi, the head of residential sales and leasing at Cluttons also reported that they are noticing tenants’ reluctance towards Palm property and their main concern now is if landlords is up to date with respect to payment of their service charges or not. Assistant manager of sales at Better Homes also highlighted that many tenants are now looking forward to breaking their leases and not willing to renew them because of restricted access to on-site amenities.