What should buyers know about service charges before purchasing?

If you’ve been browsing through property listings in Dubai, you’ve probably come across the term service charges. It sounds simple enough until you start wondering what exactly you’re paying for, how it’s calculated, and who decides those amounts in the first place.

Buying a home is already a big financial commitment, and service charges can quietly shape how affordable that property really is in the long run. Before signing any sales agreement, it’s worth knowing what lies behind those numbers.

So, let’s find out what service charges mean, how Dubai regulates them, and why every buyer should take them seriously before purchasing.

What Are Service Charges?

Service charges cover the costs of maintaining your building or community in a smooth and efficient operation. Service charges don’t go toward your own electricity or water usage. They cover the shared facilities that benefit everyone, such as security, cleaning, elevators, landscaping, swimming pools, and common area lighting.

In a way, it’s like living in a shared house. Everyone uses the kitchen and living room, so everyone contributes to maintaining them. That’s exactly how it works in apartment buildings and gated communities, just on a much larger scale.

In Dubai, service charges are mandatory for all property owners. They’re part of the legal framework for owning real estate in jointly owned properties. The Owners’ Association Management Company collects service charges. These entities are registered and regulated by RERA under Law No. 6 of 2019, discussed below.

The Legal Backbone

Dubai doesn’t leave service charges up to community managers. Everything is governed under Dubai Law No. (6) of 2019 on Ownership of Jointly Owned Properties, commonly referred to as the Jointly Owned Property (JOP) Law.

Here are some of the most important parts of that law you should know about:

• Article 25 states that every property owner is required to contribute to the upkeep of shared spaces. That includes everything from cleaning and security to pool maintenance and landscaping.
• Article 26 expands that idea to master communities like Dubai Marina or Jumeirah Village Circle, where multiple buildings share roads, parks, or other large facilities. Owners contribute a small amount toward maintaining those, too.
• Under Article 27, management companies or Owners’ Association Managers can’t just decide on a number and send out bills. They first have to prepare a detailed annual budget and submit it to RERA through the Mollak system. Once they give it the green light, that’s when owners start getting billed.
• Article 28 outlines the consequences of non-payment. The law gives the management company the right to involve RERA and, if needed, take legal steps to recover overdue amounts.
• Then there’s Article 30, which makes sure your money goes where it should. All collected service charges must be deposited into a dedicated bank account and can only be used for community expenses that have been approved by RERA.
• If owners ignore their payments for too long, Article 32 grants the management company the authority to place a lien on the unit until the dues are paid. It’s a way to keep the system fair for everyone else who’s paying on time.
• Article 33 allows RERA to intervene whenever necessary. They can audit, inspect, or review records to ensure that service charge collections and expenditures are being handled properly.
• Articles 35 and 36 deal with the physical condition of the property. They make it the management’s responsibility to maintain common areas and the developer’s duty to provide guarantees that cover major repairs and defects for a certain period after handover.

So, when you’re buying a property in Dubai, you’re entering into a system that’s built on transparency and regulation, not guesswork.

Mollak

To ensure service charges are fair and transparent, RERA launched an online platform called Mollak, which translates to “Owners” in Arabic. Every year, the building’s Owners’ Association Manager prepares a plan outlining the costs associated with maintaining everything in good working order. He considers things like cleaning, security, electricity for shared spaces, and a little set aside for future repairs. RERA checks the plan and gives it the go-ahead before anyone is billed, so owners know exactly what they’re paying for.

This process ensures two things:

• The charges you pay are based on actual operating costs, not estimates.
• You can verify the approved rate for your building or community online before making a purchase.

It’s one of the reasons Dubai’s property management system is praised for being transparent and fair to owners.

How Service Charges Are Calculated

The calculation of service charges in Dubai is simple and easy. The total approved cost of maintaining the building or community is divided among all owners in proportion to the size of their unit.

So, if the approved rate is AED 15 per square foot and your apartment is 1,200 sq. ft., your annual service charge would be:

1,200 x 15 = AED 18,000 per year.

Payments can be made annually, quarterly, or biannually, depending on your management company.

What’s Included in Service Charges?

Not every dirham goes to the same purpose. RERA divides service charges into categories that cover different parts of maintenance and management:

General Fund: Covers everyday expenses such as cleaning, security, landscaping, pest control, and maintaining shared areas in good condition.

Utilities Fund: Covers electricity, water, and cooling systems for the common spaces.

Management Fee: Paid to the company that runs the building and handles day-to-day operations.

Sinking Fund: A reserve for bigger repairs, like repainting the building, fixing elevators, or replacing the roof.

That sinking fund can be a little confusing. You won’t see it at work every day, but it’s there to make sure you’re not hit with huge surprise costs when something major needs fixing.

Average Service Charges in Dubai (By Area)

Rates vary depending on where you buy and the kind of facilities available. Here’s a rough idea of what owners pay across different communities:

Jumeirah Village Circle (JVC): AED 5–10 per sq. ft. per year

Dubai Marina: AED 15–30 per sq. ft.

Downtown Dubai: AED 20–30 per sq. ft.

Palm Jumeirah: AED 25–40 per sq. ft.

Discovery Gardens: AED 4–8 per sq. ft.

A 1,000 sq. ft. apartment in JVC might cost around AED 6,000 per year, while a similar unit in Downtown could cost AED 25,000 or more due to the higher level of maintenance and services provided. Communities that offer pools, gyms, spas, concierge desks, and landscaped parks cost more to maintain. On the other hand, simpler buildings without high-end features are less expensive to manage.

Freehold vs Leasehold

In freehold properties, the owner pays service charges directly. In leasehold or long-term rental situations, it depends on the contract. Usually, landlords handle these payments, though some may pass on community-related costs to tenants. Always double-check the sale or lease agreement to ensure accuracy.

Disputes and Complaints

If you believe your service charge is too high or services aren’t being delivered as promised, you can file a complaint with RERA under Law No. 6 of 2019. RERA has the authority to audit accounts, investigate irregularities, and ensure that management companies comply with the approved budgets.

In some cases, disputes are referred to the Dubai Real Estate Court, which specialises in property-related matters. So, if you ever feel something’s off, there’s a clear legal path to resolution.

Conclusion

Service charges are an essential part of property ownership. They keep your community functional, safe, and attractive, and they help maintain property value over time. Buildings that are well-maintained usually hold their value, and people notice it. On the other hand, even a great location can feel less appealing if the building isn’t properly maintained. Before you buy, take a few minutes to check the service charges, understand your responsibilities under Law No. 6 of 2019, and factor them into your budget. Doing this makes you a smarter, more prepared homeowner.

If you need help comparing service charges across communities or understanding which properties offer transparent and fair maintenance fees, our team can guide you through the process. Contact us today, and let's find a home that fits your budget.