Service charges
Service charges are the annual fees every owner pays, per square foot, towards running, maintaining and insuring the shared parts of a building or community.
What Service charges means for a buyer
Service charges fund everything owners share: security, cleaning, lifts, pools and gyms, landscaping, building insurance, management fees and a contribution to the sinking fund. They are set as a rate per square foot of your unit and usually invoiced quarterly. VAT at 5% is normally added.
In Dubai the system is tightly regulated. The management company prepares a budget, RERA audits and approves it, and only then can owners be billed through the Mollak system. Approved rates for existing buildings are published in the service charge index. In Abu Dhabi, oversight sits with ADREC.
Rates differ widely. A simple mid-rise apartment block costs far less to run than a tower with extensive facilities, a branded residence or a building where cooling is included. Villas and townhouses usually pay a lower rate per square foot but on a larger area, and many communities add a separate master community fee. Check whether the chiller fee is inside the service charge or billed on top.
For an investor, service charges are the largest recurring cost and the main difference between gross and net yield. They are paid by the owner, not the tenant, whether or not the unit is let. With off-plan, the developer's figure is an estimate; the real rate is set after completion. Unpaid charges block the NOC needed to sell.
Guides that use this term
Where Service charges comes up in practice, with the costs, rules and steps around it.
Questions about the buying process?
An adviser can explain how this applies to the property you're considering.
- Current price list and availability, direct from the developer
- No fee to you on off-plan purchases: the developer pays us
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