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Developers head to court over unpaid service fees

One-third of property owners fail to pay maintenance fees. (AFP)

By Parag Deulgaonkar

Developers in Dubai have taken court action to get apartment owners to pay their annual maintenance fees, industry sources told Emirates Business.

About  a third of property owners have not paid their maintenance fees, said the sources. "We generally take a year's maintenance fee before handover. The problem now is that owners are not paying from the second year onwards," the CEO of a private developer said on condition of anonymity.

"We have moved court (sic) but our legal firm says it will take anywhere between six and 12 months to get an order from the court to get owners pay their dues," he said.

Some of the developers said they were meeting the difference from their own pockets.

"About 70 per cent of our owners have paid, while the rest are non-committal. We do have to provide service to others as they have paid… so we put in our own money, which is an additional burden on us in these tough times," said another developer.

Mostly "single project" developers were the ones who admitted they were finding it difficult to get facilities management (FM) firms to come to the bargaining table.

"It is getting very difficult for us to get reputed FM companies to lower their costs. Although we want to give the best service to our owners, we are finding it hard to pay up the additional cost," he admitted.

Investment Boutique, a real estate consultancy, said recently service charges for some properties range between 18 and 48 per cent of annual rents in Dubai with some developers continuing to charge high service fees.

Rera has warned developers not to raise their maintenance fees, making it obligatory for developers to get their yearly budgets cleared from the agency.


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