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Service fees start with the design and not after the building has been completed

Marwan bin Ghalita

November 22, 2020

Many investors are wondering about the reason for the discrepancy in service fees and the high cost of administration and maintenance of some buildings, which causes concern to some investors.

Law (6/2019) defines the parts of the common areas to be maintained in the building, and defines the duties and obligations of all parties, including a real estate developer, the director of the common areas administration, and the owners and investor committee, and clarifies the rights and duties of each party in the articles of the law.

The design of the building, the built areas and the materials used in the construction determine the value of the maintenance fees to be paid by the property owners.

The type of building façades, corridors spaces, and common parts of swimming pools, gardens and gyms are all matters included in the cost of the tasks required to be present to manage the common parts of the building.

The building consisting of glass facades needs cleaning operations twice a year at least, which is an additional cost on the service fee, compared to the building with cement facades, which needs maintenance every two or three years, and the type of air conditioning used in the building also contributes to the cost of service fees. Significantly.

Also, buildings that contain swimming pools, gardens, and gyms, require additional funds to maintain and monitor these parts.

Therefore, all expenses for operating, maintaining and repairing the common areas are determined by the design of the building in which the investor decides to own.

Accordingly, the investor must be familiar with the project’s plans, the type of specifications used, and be fully aware of before investing in the project, so that he is not surprised in the future at the cost that he must pay for operating and maintaining the common areas.

The relationship is direct between the specifications of the building and its annexes, and between the service fees imposed.

The more specifications, the more complex the design, and many attachments are added, the higher the service fees, especially in the absence of using technology to serve to reduce costs.

The Real Estate Regulatory Agency launched the “Malak” program, which regulates service fees, in a manner that guarantees full transparency to the investor, so that the expenses of the service bill are clarified in the bank and the method of disbursing these expenses, and the “Malak” system strengthens the governance of tenders for service providers to ensure integrity in presenting prices. It allows the owners committee to see and participate in preparing the annual budget of the building and to consider the terms of the disbursement, which makes the responsibility joint between the management company and the investors, for the management and operation of the common areas, so that the quality and sustainability of services is guaranteed.

Article No. (25) of the law states: “The owner pays to the administration his share of the services allowance to cover the expenses of managing, operating, maintaining and repairing the common parts.” The law did not mention any causal or non-causal relationship between the owner's obligation to pay service fees and the rental return from the real estate unit.

And to talk to complement the proposals and solutions to reduce service fees while ensuring the sustainability and quality of services.

Executive Director of the Real Estate Regulatory Agency (RERA)