DUBAI-Hundreds of apartment buildings in Dubai are facing a shortage of maintenance cash because property owners have failed to pay service fees.
The full extent of the default rate, which has reached 75 per cent in some developments, is only now coming to light as developers hand over building management responsibilities to homeowner associations under the recently enacted strata law.
It means that the new homeowner groups could be saddled with debt as soon as they start taking over the management of their buildings.
For example, to replace a basic chiller in a tower building costs up to Dh3 million – and if there is no reserve fund in place because of service charge defaults, owners would have to foot the entire bill when the work was done.
“Service fee arrears is a big issue in many buildings,” said Gary Bugden, the executive chairman of PRDnationwide, a property services company. “A lot of people just aren’t paying.”
The amount paid in service fees has been a bone of contention for residents in some developments, where property prices have fallen by as much as half since the end of 2008.
Service fees surged during the boom years, with some developers charging up to Dh21.85 a square foot in annual fees, or more than Dh20,000 for a typical one-bedroom flat. Property owners started refusing to pay, either for services they felt were not provided or shared amenities that were poorly maintained.
Read full article here
No comments:
Post a Comment