Eeyore

A friend bought a 1-bed Old Town garden apartment a couple of years ago and was about to move in last week. He's forked out for complete new sets of furniture, appliances etc. There's just one fly in the ointment... before he moves in, he's got to pay his first year's service charges. That's 32,000dhs in one hit.

To cut a long story short, he can't afford it. He doesn't have that much ready cash available since he put nearly all his savings into buying the apartment in the first place. He acknowledges he could rent it out, but amazingly enough he actually bought it to live in himself because where he lives now in Barsha, his building is completely surrounded by construction.

Is it commonplace in other countries to pay your service charges annually rather than monthly? (I have no idea, I've never lived in an apartment before).

And it has to make you think - if a 1-bed apartment attracts that sort of service charge, what about larger ones in the Burj Dubai area? What about the apartments within the Burj tower itself?

I think the operative word is "ouch"...

jrudofsky

Errrr owch! I live there (renting)....and I have no idea about service charges, but presumably it covers all of the fixing they will need to do to a brand new apartment! They are constantly falling apart.

Jeeper

I believe it's 26 or maybe 28dhs a sq.ft - that was a year ago....might have gone up the girl who owned the place I rented said that emaar had told them that if the service charge collected was more than what emaar actually spend on maitenance there would be a pro-rata refund.....

lol....fat chance i'd say.

buy a place to save rent.?....hmmmm......

Blue Cat

but would you have posted this Eeyore if your friend had infact made a couple of million in it and it was only costing him 80 k a year mortgage? or am I sensing a feeling of gloating?

niddy

In every country in the world I am familiar with you pay your service charges on a monthly basis. I have no idea how or why you have to pay everything here on an annual upfront basis. Its just absurd. Who can afford to do that most of the time?

Jeeper

Do you get 6 months refund of service charge if you sell half way through a year? Or do they keep that AND charge the new owner service charge as well?

Would not surprise me if it's the latter.....another rip!



I'm on a right whingefest today!

benzonar

Service charge is normally made up of several items.

The community charge covers operational costs (street cleaning, waste collection, street lighting, swimming pools etc)

You then may have a building charge if in an apartment block that covers maintenance and cleaning of common areas.

They will then charge you a sinking fund, this is like rainy day money and is put away for future replacement of major plant and equipment etc. This should be held in an escrow account, but if you sell you wouldn't get any part of this back and receive no future benefit from this money.

In my experience service charges are normally charged quarterly in advance, but the norm over here is annually up front. The new Strata Law should provide more transparency on service charges, with each owner having a say in how the money is spent and having full visibility of the service charge budget.

The way to look at it is the community part of the service charge is just like paying council tax, the developer is providing services that your local council would in the UK. In "luxury" developments the level of service should be high so hence the charges are more.

28Dhs does seem somewhat excessive, but then I'd heard The Palm was around 24dhs last year.

Eeyore

Friends don't gloat about friends (at least, I hope they don't, but then this is Dubai). Simply pointing out the lunacy of the system here.

32k in service charges for a 1-bed apartment, which has to be paid upfront? It's only just gone up to 16k for the villas in the Lakes/Meadows/Springs.

niddy

That is an absurd price. It is only justifiable if your friend is living in a truly luxury apartment and is gonna be pampered!

Foxes

i believe the 28 dhs cover district cooling (AC) costs - Any development in burj area you can expect to pay a much higher s/c as they will all include the district cooling charge....only the trade centre area has a similar practice throughout dubai currently

palm s/c costs are on avearge around 12dhs per sq ft....(golden mile 19dhs per sq ft while basri aprtments only 5 dhs per sqft )

Sue_M

I can't talk for the UAE, but my London service charges are around AED30k equivalent p.a. (very small 2 bed apartment), and it is payable 6 monthly in advance by the owner (not the tenant).

Service charges are a rip off, where ever you have to pay them.

twinkle-star

Can he get a bank loan for the amount and pay that back monthly?

He will have to pay the service charges before he can rent it out anyway!
If not perhaps its time to sell up and sack his accountant!

W10

Service charges should always be higher in apartments, there is far more to maintain. But usually you don't have to take it all in one hit.

Border Reiver

Surely your friend knew there was a service charge due and had an idea of how much it would be before he bought the place? If he didn't bother to ask about the service charge I'm afraid I don't have much sympathy- people do have to take some responsibility for their actions.

I agree that paying a year in advance is crazy, but Emaar usually charge 6 months in advance (ie 2 cheques) so I don't know why his place would be different.

My service charge (at the Marina) is way less than I was paying in council tax and service charges for a 2 bed place in Manchester and that didn't have a swimming pool, gym, or 24 hour security.

admon

A friend of mine also bought a 1 bed in old town off plan, however he knew some time ago that the service charges were going to be in the region of 28dhs a foot (I think he knew 9-12 months ago).

Of course certain people like myself have always stated that service charges will be the death of the market as it stagnates and properties become older and more expensive to maintain.

**Note** The term older in property here applies to all buildings generally over 10 years old - with some even falling into the 'old' category at 5 years old.