Dubai considering compelling landlords to make service charge declarations

Dubai’s Real Estate Regulatory Authority is considering introducing a requirement for landlords to declare whether or not they have paid service charges when they set up a new rental agreement with a tenant, according to reports.

Full details have not been released but the move is likely to be welcomed by the lettings market in the emirate.

‘The introduction of a disclosure obligation on landlords is likely to benefit residential tenants in terms of making them aware of the current position at the time of entering into a lease, which is an improvement on the current situation,’ Dean Cheesley, senior legal consultant at DLA Piper legal firm in Dubai told Arabian Business.

‘In theory this will allow tenants to make a more informed decision as to whether they should enter into a lease with that landlord or renew for a further term,’ he added.

Matthew Green, head of research and consultancy at property consultancy firm CBRE, said that there have been various ongoing issues with service charges in the emirate. ‘This will help to safeguard tenants from unscrupulous landlords. It is another step in the right direction and will improve transparency,’ he added.

But the industry would also like to see more transparency over service charges, according to Green.
It has been claimed that some tenants were shunning apartments on Dubai’s Palm Jumeirah developments, for example, as a result of confusion over service charges. There is also a major row with developer Nakheel’s claims that it is owned US$20 million in service charges. It banned more than 1,300 residents from using the beaches and gyms at its Shoreline Apartments residences and drained all six swimming pools at its Marina Residences towers.

While Nakheel has since begun refilling the pools, real estate agents said the ongoing negative publicity has meant renters are now shunning its developments on the Palm and some existing tenants are demanding a rebate on their rent or are seeking to relocate.