Strata Law obliges developers to be more open about what constitutes service charges
The Royal Institute of Chartered Surveyors (RICS) is advising the government in Dubai on the implementation on a law that would break open the facilities management (FM) market in the UAE.
Strata Title Law governs the legal rights held by owners and buyers of apartments post-sale, including FM contracts and any legal disputes. The law was passed in 2007 but is currently going through consultation.
Alan England, who heads up RICS African and Middle Eastern Office, said: “What is happening is that a developer builds a development, you buy a house then after a period of time you get a bill for the service charge. But the service charge is opaque and there’s no information about what constitutes it.”
Paul Hillier, asset management firm, Currie and Brown's Dubai divisional director, said the law should bring “clarity and good sense” to property management in the UAE.
The law should bring “clarity and good sense” to property management in the UAE.
Paul Hillier, Currie and Brown
“Prior to the law, owners and tenants were virtually powerless to challenge existing FM service providers often provided by or through the developer, often provided by or through the developer,” he said. This was a problem where: “Sub-standard services may have been previously provided at a high cost.”
Market watchers are hoping that the introduction of Strata Title law will require developers to differentiate themselves in providing quality services. It should also equalise quality standards by giving tenants the right to choose.
“With the projected ‘flight to quality’ that generally comes with an oversupply of a product – in this case homes – consumers will be looking for the whole life cost of ownership of a well-maintained versus a poorly maintained building,” Hillier added.
“More developers may be encouraged to bring FM advisers at an earlier stage, identifying efficiencies during the design and construction phases, reducing capital costs and and helping reduce ongoing [25-30 year] maintenance costs."
