Dubai: Are Tenants Required to Pay Service Charges, Rera Registration Fee?

In Dubai, the tenancy contract takes centre stage in determining the respective rights and obligations of the landlord and the tenant.

Question: I have been staying in a 2-bedroom apartment in Dubai for the last three years. Every year, while renewing the contract, the real estate company charges me what they call 'service charges', which is about 2 percent of the annual rent; and Dh226 as Rera registration fees. Is this legal?

Answer: Pursuant to your question, the provisions of Law No (26) of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai, and Law No (6) of 2019 Concerning Ownership of Jointly Owned Real Property in the Emirate of Dubai will be applicable.

In Dubai, the tenancy contract takes centre stage in determining the respective rights and obligations of the landlord and the tenant with respect to a leased premise. Subject to the terms of the tenancy contract, the various payment obligations (towards government entities in respect of fees and taxes) of the landlord and tenant are determined. In most cases, such obligations lie on the tenant, unless something to the contrary is agreed in the tenancy contract. This follows Article 22 of the Tenancy Law which reads as follows:

“Unless the Lease Contract states otherwise, the tenant must pay all fees and taxes owed to government entities and departments in relation to the use of the real Property, and must pay the fees or taxes prescribed for any sublease of the real property.”

Notably, there are three components to the amounts charged from you by the management entity, during renewal of your tenancy contract. They are

(i) service charges at the rate of 2 percent of the annual rent,

(ii) Dh226, and

(iii) Rera registration fees. We may consider each component in turn, hereinafter.

As to ‘service charges’, it may be noted that the said term is defined in the following manner in Article (2) of the Apartments Law.

“The annual charges collected from Owners to cover the cost of management, operation, maintenance, and repair of Jointly Owned Real Property.”

Furthermore, by the provisions of Article (25) of the Apartments Law, it is the owner of the premises who is required to pay the service charges to the management entity. The provisions of the said Article (25) read as follows.

“a. An owner will pay the management entity his share of the annual service charges to cover the common parts management, operation, maintenance, and repair expenses. This share will be calculated, using the relevant method approved by the director-general, based on the ratio of the area of the owner's unit to the total area of the jointly owned real property. A developer will pay his share of the annual service charges in respect of unsold units and in respect of the sold units for which he undertakes, under the provisions of the sale contract or reservation agreement, to pay the service charges on behalf of the purchaser.

b. For the purposes of application of paragraph (a) of this Article, the owner's share of the service charges will be calculated based on the area of his unit as recorded in the Real Property Register.”

Whereas, by the provisions of the Apartments Law, the owner of the leased property must pay the service charges to the concerned management entity. It is possible that by the terms of your tenancy contract, this responsibility was passed on to you, as the tenant. Consequently, you were required to pay the service charges for the leased property for all the renewals so far. Nonetheless, before the next renewal of the tenancy contract, you may elect to renegotiate the terms of your tenancy contract and request your landlord to bear the service charges.

The Rera registration charges are mandatory fees that are payable to a government entity, and therefore by the provisions of Article (22) of the Tenancy Law, you are obliged to pay the charges unless otherwise mentioned in your tenancy contract.

Finally, the additional amounts charged from you at the time of renewal of your tenancy contract would be legal, if you had agreed to such charges in your tenancy contract.

News Source: Khaleej Times