Buyers usually focus on the purchase price and forget a cost that comes back every year: service charges. They have a big effect on net yield, and over ten years a 'cheap' unit in an expensive building can cost more than a pricier unit in a well-run one. Here is how service charges work in Dubai and Sharjah.
What are service charges?
They are an annual fee owners pay to maintain and manage the shared parts of a building or community. According to Engel & Völkers, they typically cover:
- Cleaning and security
- Maintenance of lifts, building systems and shared facilities
- Landscaping and green areas
- Waste disposal
- Common-area electricity and water
- Management, insurance and a reserve fund for major repairs
How are they calculated?
Usually by multiplying an approved annual rate per square foot by your unit's area. Engel & Völkers gives this example: AED 15 per sq ft × 1,000 sq ft = AED 15,000 a year.
The same source gives indicative ranges: villas and townhouses from about AED 3 to 6 per sq ft, standard apartments AED 15 to 25, and luxury developments AED 30 or more. Treat these as rough guides. The real rate depends on the project.
Dubai: a clearly regulated system
- Law: Dubai Law No. 6 of 2019 on Jointly Owned Property governs owners associations and how charges are worked out.
- Approval: the Real Estate Regulatory Agency (RERA) approves service fees for each project.
- Mollak: the DLD platform used to run owners associations' budgets and invoices.
- Service Charge Index: you can look up the approved fees for any jointly owned project on the DLD website or the Dubai REST app. Pick the project, year and usage type and the result shows straight away.
Master community fees
In large communities you may pay a building charge and a separate master community charge for roads, parks and security. Ask about both, especially in master-planned communities such as Dubai Hills Estate.
Sharjah: check with the developer and SRERD
In Sharjah, charges are usually set by the developer or the project's management company and written into the SPA. Sharjah's Real Estate Registration Department (SRERD) handles project registration, and Executive Council Resolution No. 37 of 2024 regulates real estate development projects. Our advice:
- Ask the developer for the latest approved budget and the expected rate per sq ft after handover.
- Read the service charge clause in the SPA.
- Ask about community-level fees in master developments such as Sharjah Sustainable City or Tilal City.
- Confirm anything unclear directly with SRERD.
Who pays: owner or tenant?
Service charges are generally the owner's responsibility, not the tenant's. In Dubai, tenants pay the Dubai Municipality housing fee instead. Gulf News describes it as 5% of the annual rent, split across monthly DEWA bills.
What if charges go unpaid?
Dubai's framework gives owners associations ways to recover arrears. Owners who don't pay can face legal action and may find it hard to sell or transfer the unit until they settle. On a resale purchase, make sure the seller has cleared all dues before transfer.
Impact on your yield
Illustrative example: an 800 sq ft apartment rents for AED 70,000 a year. At AED 18 per sq ft, service charges come to AED 14,400, about 20% of the rent. Always compare yields after service charges.
Frequently asked questions
Where can I find approved service charges for a Dubai project?
Use the Service Charge Index on the DLD website or the Dubai REST app. Choose the project and year to see the RERA-approved fees.
Does the tenant pay service charges?
Not usually. They fall on the owner. Dubai tenants pay the 5% housing fee through their DEWA bill.
Are service charges fixed?
No. They are reviewed every year against the project budget and can go up or down.
Are Sharjah service charges regulated the same way as Dubai's?
The framework is different. In Sharjah, get the approved budget from the developer, check your SPA and confirm with SRERD.
Want the real service charge figures for a project before you buy, plus a net-yield calculation? Alroya Almomayaza Real Estate Brokers will prepare them for you. WhatsApp: +971 58 558 9894.
