Dubai landlords told no renewal of rental contracts allowed if service charges are not paid

Dubai property owners who fail to pay service charges will not be allowed to register or renew rental contracts on their property.

Tougher measures are being enforced to address the problem, with property management companies issuing a warning that the matter could be brought before the courts.

"If an owner fails to pay his contribution of the service fees or any part thereof within 30 days of being notified, the management company shall refer the matter to the executive judge, who has the right to sell the unit for which the fees have not been paid at a public auction to reimburse the fees," a copy of the notice seen by The National states.

The Dubai Land Department confirmed that legal notices had been filed “against those who failed to pay for service charges or common facilities”, citing a law passed last year that governs the joint ownership of property.

The Real Estate Regulatory Agency, an arm of the DLD, said that if the charges were not settled within 30 days of owners being notified, complaints would “be escalated to the Rental Disputes Centre for a final decision”.

While it has yet to receive any such requests, Rera said management companies were reporting that owners in arrears were "being responsive".

Homeowners are expected to pay their service charges on a quarterly basis.

“We have to send the legal notice as a last step to receive the payments,” said Varghese Daize, operations manager of Dubai's Amal Owners Community Management.

"Many people are not paying service charges citing job losses and [a] reduction in salaries."

The company issued notices to more than 500 property owners in seven buildings across the emirate.

“The notices were issued through Mollak, a new feature on Dubai Land Department’s website, that was created to monitor service charge payments by owners," Mr Daize said.

"Many people are coming back to us seeking clarification and with a positive response.”

The DLD said its property regulations were intended to protect “the rights of all real estate parties, including owners, tenants and investors, to achieve a safe investment environment”.

Although some property management companies have sent legal notices, others are still negotiating with landlords in arrears.

“We fully understand that things have not been easy for them over the past months,” said Alan Rowlands, general manager of property management company Three60 Communities.

"This is the reason we have been in regular communication with all of our unit owners to know how we can give them the right assistance."

His company came up with an instalment programme and offered unit owners a chance to adjust payment terms.

However, he stressed that the money still needed to be paid to ensure that buildings are properly serviced and maintained.

“We may be forced to reduce or discontinue these services if the unit owners fail to meet their obligations, which will affect everyone, including those who have already paid the charges," Mr Rowlands said.

"It is not within our mandate to lower the amount or offer discounts because we have to comply with the rate issued by the DLD.”

Landlords have “limited leeway” in delaying payments, with one of the options being to ask Rera to conduct a forensic audit of the fees to ensure that they are fair, according to Hesham El-Samra, a senior associate at law firm Abdulla Alawadi & Associates.

Apart from that, they could also “escalate the issue directly with the authorities and pursue other legal options”, he said.

The law firm is currently handling more than a dozen disputes related to the non-payment of service charges.