Wednesday, September 23, 2020
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Freehold owners have added expense to deal with

More freehold owners in Dubai are getting a jolt along with their utility charge bills. Some of them found an additional charge — under the heading of ‘Housing Fees’ — along with their October statements, and these were quite substantial.

“The additional charge is a percentage of the value of the freehold property — initially it used to be that only some freehold owners were getting Dewa [Dubai Electricity and Water Authority] statements with this surcharge, but now I believe it’s going to be mandatory for all owners,” said Mohammad Arif Rangari, who owns apartments in Jumeirah Lakes Towers (JLT) and now has a Dh461 charge on a 374 square foot studio bought at Dh500,000 two years ago.

“We are already paying a sizable amount each year as master-community charges — covering a whole lot of expenses — and now to have this as an additional expenditure is a bit of a burden. For those who have just bought properties and which will be registered at a future date, this is an expense they will need to accounting for.”

A similar arrangement is already there for those city residents living in rented properties.

Interestingly, not all owners within a development have received statements incorporating the new charges. At one high-rise, just a handful were paying these over the years; but in October another ten or so unit owners received statements with the new expenses in them. But a lot many are yet to received the recalibrated expenses. “In the latest statement, the actual utility charges at my property were Dh75 and the housing fee Dh475 — that’s a big disconnect,” said Elizabeth George, another unit owner.

The cost of property ownership has been going up in recent weeks, and not just in terms of its overall value. The registration charges were hiked in late September from 2 per cent to 4 per cent, and the mortgage caps have made sure that a buyer’s upfront payments have now become steeper.

According to Niraj Masand, partner at the property services firm Banke, “It is important for buyers to be aware of the costs of buying a property in Dubai, which is relatively lighter compared to other parts of the world but still involves certain additional costs. The transfer charge of 4 per cent is well known; apart from that a buyer should be aware that every transfer now requires a payment of Dh4,000 towards administrative costs for transfer.

“And a developer’s NoC [no-objection certificate] fee can range from Dh1,500 to Dh5,000, mortgage registration of 0.25 per cent on the loan value and a brokerage fee of 1 per cent if there is a broker involved.

“Once the property is transferred, any prospective buyer has to budget for maintenance as well as utilities such as Dewa and chilled water. Typically getting utilities connected also requires a payment of deposits which can vary from Dh1,000 to Dh5,000 depending on the service provider.”