Effective strata law key to future of Dubai real estate (UAE)

The effective introduction of the Strata Law is essential to regulate transparent community service charges which will improve investor confidence especially in the residential market, according to the head of property solutions at Dubai-based MAG Group.

Mazen Falhout

Mazen Falhout.

Mazen Falhout, General Manager of MAGme Property Solutions, a division of MAG Group, said, "The Strata Law will not necessarily mean service charges will come down due to the technical, administrative and legal requirements of the Law but owners will be able to appoint their chosen management company, thus regulating both the cost and level of service required," said Falhout.

The law transfers responsibility for property maintenance from developers to owners through the establishment of owners' associations. The rules are legally binding and give owners a greater say in the management of communal areas, including choosing maintenance companies and helping to solve disputes between owners and developers. Owners also risk losing their property if service fees are not paid. However, there have been suggestions it will renew investor confidence in the Dubai housing market as it will provide transparency across the board.

There has been apprehension among some owners that the Strata Law, will create a potential rift between developers and owners as responsibility for community areas, whether it be in an apartment building or villa complex, are handed-over.

It is understood from the regulations that Owners' Associations will take responsibility for all maintenance issues within six months of a new development project's completion. For existing developments that process will start as soon as practically possible, within the existing time frame.

"It will be interesting to see which existing developments have made adequate provisions, by way of a sinking fund, for major maintenance work such as replacing chiller units or overhauling lifts, which may not normally be required for up to ten years," said Falhout.

In addition the law states that the residents' committee must consist of at least five members but some homeowners are reluctant to sign up because they are cautious about taking responsibility for any issues.

"Current owners want property values to appreciate, so it is vital that developments are maintained professionally, with best value for money and therefore it is within the owners own interests to get involved. As with any new administration it might be time-consuming initially but once policies and procedures are in place the process will become easier," said Falhout.

However, Falhout has warned that owners must address the long-term impact of decisions and Owners' Associations have to choose the best contractors and or service providers, which may not be the cheapest, but will represent best value.

"Because rents have become more competitive over the past 12 months, service charges can, on the surface seem inflated since only about 10% of fees are spent on visible services such as cleaning and security.

But when it comes to air conditioning or swimming pools, preventative maintenance is always the most cost-effective. As a guide, owners should expect to spend between 15

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