Understanding Service Charge Rules in Dubai and Abu Dhabi – A Guide for New Investors

For many first-time property investors in the United Arab Emirates, one of the recurring obligations that often comes as a surprise is the service charge. Frequently mistaken for an additional rent or a profit-making tool for developers, service charges are in fact a regulated legal obligation designed to ensure the proper management, maintenance, and sustainability of real estate communities.

 

This article explains the concept of service charges, the governing laws in Dubai and Abu Dhabi, and recent regulatory developments that investors should be aware of in 2025.

 

What Are Service Charges?

Service charges are annual contributions payable by property owners for the management, maintenance, and operation of shared facilities within a building or master community. These funds are allocated to cover essential services such as:

 

• Security and concierge staff

• Cleaning and landscaping

• Utilities for common areas (lighting, air-conditioning, elevators)

• Repairs and ongoing maintenance of communal facilities

• In some cases, luxury amenities such as swimming pools, gyms, and leisure spaces

 

There are two types of service charges:

 

1. Fixed service charges – Set at a fixed rate, regardless of the actual cost incurred (common in older lease structures).

2. Variable service charges – Adjusted annually depending on actual or forecasted expenses (the standard approach today).

 

Service Charges in Dubai

In Dubai, service charges are governed by Law No. 6 of 2019 on Jointly Owned Property. Oversight is provided by the Real Estate Regulatory Agency (RERA), which has implemented mechanisms to protect investors from arbitrary or inflated charges.

 

Key Provisions

1. Responsibility for Payment

   • The unit owner is primarily responsible for service charges.

     • Even if the lease agreement transfers the obligation to the tenant, the ultimate liability remains with the owner if the tenant defaults.

2. Regulatory Oversight by RERA

   • All service charge budgets must be approved by RERA before they are imposed.

     • This safeguard prevents unjustified or inflated demands by developers or management companies.

3. Consequences of Non-Payment

   • A RERA-approved notice is issued by the management company in cases of non-payment.

     • If unpaid within 30 days, the claim becomes enforceable before the execution judge.

     • The court may register a lien over the property and, in persistent cases, order its sale by public auction to recover outstanding dues.

4. Recent Amendments and Developments (2025)

   • Tayseer Initiative: Introduced to allow installment plans for overdue charges.

     • Cost Revisions: Certain master communities (e.g., Dubai Marina, JLT) have seen reductions of up to 15% due to improved efficiencies, while others face moderate increases.

     • Mollak Platform: A digital system administered by RERA, allowing owners to view approved budgets, track payments, and monitor expenditure with transparency.

 

Service Charges in Abu Dhabi

In Abu Dhabi, the applicable framework is Law No. 3 of 2015 on the Regulation of the Real Estate Sector. The law places strong emphasis on the Owners’ Union, an association of unit owners responsible for managing communal expenses.

 

Key Provisions

1. Liability to Pay
   • Owners must pay service charges to the Owners’ Union, calculated according to their contribution percentage (i.e., the size of their unit relative to the development).
   • Developers remain responsible for charges on unsold units.
2. Default in Payment

   • The Owners’ Union must serve a formal notice by registered mail, granting the owner three months to settle dues.

     • If unpaid, the Union may apply to the courts for an order authorising the judicial sale of the unit to recover the debt.

3. Recent Developments (2025)

   • While Abu Dhabi has not introduced waiver or installment schemes similar to Dubai, amendments have reinforced transparency by requiring Owners’ Unions to maintain detailed accounting records of all collections and expenditures.

Key Legal Terms for Investors

• RERA (Real Estate Regulatory Agency): Dubai’s regulatory authority overseeing real estate matters, including approval of service charge budgets.

• Mollak: A digital platform managed by RERA, ensuring transparency in service charge approvals and collections.

• Lien: A legal encumbrance over a property, restricting its sale or transfer until outstanding charges are paid.

• Owners’ Union: The equivalent of a homeowners’ association in Abu Dhabi, representing owners and administering service charge collections.

• Execution Judge: The judicial authority responsible for enforcing financial claims, including unpaid service charges.

 

Conclusion

For investors, service charges in Dubai and Abu Dhabi are not discretionary payments but statutory obligations tied to ownership. Dubai’s system, under Law No. 6 of 2019, emphasises regulatory oversight through RERA and introduces mechanisms such as Mollak and instalment plans under the Tayseer Initiative. Abu Dhabi, under Law No. 3 of 2015, adopts a more traditional approach, with enforcement rights vested in Owners’ Unions and judicial sale as the ultimate remedy for non-payment.

 

The takeaway is clear: investors must budget for service charges as a fundamental cost of ownership. By doing so, they not only comply with the law but also safeguard the long-term value and habitability of their assets. Timely payment ensures communities remain well-maintained, preserving both investment returns and quality of life.