New law prevents Dubai developers from collecting service charges on behalf of property owners

• Common Properties Law No. 6 of 2019 came into effect on 19 November
• Property owners or approved property management companies to take up collection activities

Developers in Dubai can no longer collect any service charges on behalf of property owners, according to the Common Properties Law No. 6 of 2019, which came into effect on November 19. Instead, property owners, or approved property management companies who act of their behalf, will take up such collection activities.

Developers now only have a month left to start invoicing all service charges on ready properties through the Mollak electronic service fee payment system operated by Dubai Land Department (DLD) and the Real Estate Regulatory Agency (RERA).

So far, the platform has registered 231,277 real estate units, 1,240 properties, and 89 real estate companies and is expected to record AED 4 billion towards service fees. “At present, the total amount of service fees audited in the system exceed AED 1.3 billion,” according to DLD.

As of now, 10 financial auditors have been approved to handle the books operated by property management companies and 10 banks have been approved by the RERA for depositing the funds collected as service charges. 

Marwan Bin Ghalita, CEO of RERA, said, “From now on, homeowners get to see the breakup of each fil they have paid for the upkeep of their building’s common areas and they will not have to pay for any hike in service charges unless it has been vetted by RERA or its approved financial auditor. We believe the increased transparency of an electronic system and the audits will bring service charges in Dubai down.”

Mollak, which has been designed to be more fair and transparent, comprises an online automation process that requires the developer and the joint ownership property management, through its manager, to provide accurate information regarding the services provided in joint ownership properties so that the RERA can approve the service fees.

The system also assists joint ownership property owners and ascertains smooth and easy operations with property managers as well as provides a new and integrated structure to monitor accounts related to service charges in these projects by relying on the financial accounts that operate as per the mechanism of the escrow account, DLD said.

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