Mysterious fees catch UAE residents unawares
Fees are charged for all kinds of services in the UAE. Fair enough in some cases, as nobody likes to work for free. But in many other cases, the work done to deserve the reward is far from obvious. In addition, extra fees are often not mentioned and only to be discovered when ‘the service’ is already delivered.
After going through hundreds of housing ads you think you finally found the apartment of your dreams. And it’s affordable too; the price of the rent suits your budget perfectly. But then, at the verge of making the first payment the financial logic totally abandons you.
The payment is almost twice as much as you had calculated.
The scenario is a very likely one for newcomers who are unaware of the fee-fest that is celebrated in almost every corner of the country. Many expats are attracted by the incentive of tax-free living, but smack their foreheads once they realise that nothing comes for free.
The real estate market is prone to many hidden services. Khaled Al Kurdi, a young Syrian who recently moved to Dubai started off in a shared living accommodation, where his payments included only the monthly rent and a fair share of the Dewa bill. Although this was convenient, he decided he wanted to have a place of his own, so he opted for a one-bedroom apartment.
“I estimated my budget and set my limits. I was able to afford an apartment for no more than Dh50,000 a year. It was not very hard to find. However, when I was ready to move, I realised I would need at least another three months to come up with the sum of money the first payment required - Dh12,800!”
Khaled’s one-bedroom apartment is rented for Dh48,000 per year, to be paid in six installments; Dh8,000 for the first payment. On top of that comes a five per cent deposit fee (Dh2,400) and a five per cent commission fee (Dh2,400) as the contract was mediated by a broker. He did not need to pay for service charges, nor for chiller charges, which are often billed separately by the developer. However, his Dewa bill includes a housing fee (five per cent of the total rent) and a sewerage fee, in addition to electricity and water consumption. On top of that, an internet, TV and phone connection will usually cost around Dh300-500.
The fees mentioned above are accepted by most people. Other than that are banking fees - charges that appear on your monthly statement and have intelligent-sounding names that actually tell you quite little. “I am paying a monthly Dh15 for cash cover charge. I have no idea what that does for me,” says Jenny Olston, a British expat in Dubai. Jenny has a loan with her bank, too, an even bigger source of mystery.
“What in the world do I get for paying a ‘processing fee’?”
Banks and their fees are a big source of frustration for many UAE residents. Credit cards, although offered free-of-charge, are one of the main money-suckers and usually provide a charge-free period only. After that, there is a maintenance fee, late payment fee, over-limit fee, and standard annual fee. For loans, the list is even longer: there can be a processing fee, late payment fee, re-scheduling fee or property valuation fee. In case of insufficient funds on any account the bank can charge you a standing order fee. Furthermore, many banks throw fees for any kind of service: a new cheque book, card replacement, loan clearance clarification or any other statement required.
No standard rule
The ease with which companies are able to generate fees for whatever they like often causes suspicion among UAE residents, especially when they find out that the fee is applied at one company, but not at another that is offering the same services.
“I just wish there was any sort of regulation on these fees,” says SK, a British resident of Dubai. SK is the new owner of a driving licence, for which he laid down Dh8,500. “When I registered for a VIP driving course, I was told that I would pay Dh6,000 in installments, a deal for which I was willing to accept. I was never told that I needed to pay an extra Dh360 for the actual licence, and half-way through the course the highway exam was introduced, which required Dh400. Although some people were exempted from this fee because they registered before it was imposed, I was told that I had to pay for it.”
The surprise effect of the hidden fee makes it difficult for residents to anticipate on their spending. For people earning a fixed salary, important expenditures like a obtaining a driving licence or renting a place can often only be done with the necessary saving. Unexpected charges are then a slap in the face.
“I have been anticipating on getting my driving licence for a while now, and I do not have much time left because I am making use of a voucher that will expire next month. However, I have no idea what I should expect to pay. I know that I will not be told about every fee they have prepared for me,” says Kinana Homsi-Mardini, a Syrian woman in Dubai.
In some cases unexpected expenditures can be avoided by a good reading of the terms and agreements before signing of a deal. Mostly banks will get right back at complaints stating that all information on additional fees is clearly mentioned on the website or in the contract, and that people are to blame when they fail to read these. However, not always are purchases accompanied by contracts and written formulas.
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