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Understanding Service Charges in Dubai

What you pay, what it covers and how it impacts your net yield.

Splendid HomesProperty advisors
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Updated
Understanding Service Charges in Dubai

In short

Service charges are yearly fees, charged per square foot, that owners pay for the upkeep of their building and community. Budgets are approved by RERA and published in the Dubai Land Department’s Service Charge Index, so you can check a building’s rate before you buy.

Service charges are set per square foot and published by RERA. Always factor them into your yield calculation. They are one of the biggest running costs of owning property in Dubai, and they vary a lot from one building to the next.

What service charges are

Every building and master community has shared areas that need to be run and maintained: lobbies, lifts, pools, gyms, gardens, security and so on. Owners share these costs through a yearly service charge, worked out per square foot of each unit. The owners' association, run by a registered management company, sets the budget, and RERA reviews and approves it.

What they cover

  • Cleaning, security and maintenance of shared areas
  • Lifts, pools, gyms and other shared facilities
  • Building insurance
  • Utilities for shared areas, such as lobby lighting and air conditioning
  • A reserve fund for major repairs and replacements in the future
  • The management company's fees

They do not cover anything inside your own unit, or your own electricity and water bills. In some buildings, district cooling (chiller) charges are billed separately, so always ask.

How they are calculated

The yearly charge is the approved rate per square foot multiplied by the size of your unit. For example, a 1,000 sq ft apartment in a building with a rate of AED 15 per sq ft pays AED 15,000 a year. Rates are often billed quarterly.

Master communities may add a separate master community charge for roads, landscaping and shared amenities across the wider area.

Why rates differ so much

Buildings with more facilities, such as concierge, large pools, spas or extensive landscaping, cost more to run. Hotel-style and branded residences sit at the top of the range. Older buildings may also have higher charges as major systems need replacing.

How to check before you buy

The Dubai Land Department publishes approved rates in its Service Charge Index, so you can look up a building before you make an offer. Also ask the seller for a no-objection letter showing there are no unpaid charges, because the transfer cannot go ahead until they are settled.

How they affect your yield

Gross yield is the yearly rent divided by the price. Net yield deducts running costs, and service charges are usually the largest of them. Two apartments with the same rent and price can have very different net yields if one has much higher service charges, so compare buildings on net, not gross, yield.

Key takeaways

  • The owner pays service charges, not the tenant.
  • Rates are set per sq ft of your unit and can change each year with the approved budget.
  • Always deduct them when you work out net rental yield.

Step by step

  1. 1

    Find the rate. Look up the building in the DLD Service Charge Index for the approved rate per sq ft.

  2. 2

    Multiply by size. Rate × unit size (sq ft) gives the yearly charge, for example AED 15 × 1,000 sq ft = AED 15,000.

  3. 3

    Deduct from rent. Net yield = (annual rent − service charge − other costs) ÷ price. On AED 1.5M with AED 100,000 rent: (100,000 − 15,000) ÷ 1,500,000 ≈ 5.7%.

Sources

  1. Dubai Land Department (DLD)

Rules and fees change; this article reflects them as of . Check the official source before acting.

Frequently asked questions

Who pays service charges in Dubai, the owner or the tenant?

The owner. Tenants pay rent (and utilities); building service charges stay with the landlord.

How are service charges calculated?

Each building’s owners’ association sets a yearly budget, RERA approves it, and it is divided by the total floor area to give a rate per sq ft. Your bill is that rate times your unit’s size.

Where can I check a building’s service charges?

In the Dubai Land Department’s Service Charge Index, available on the DLD website and the Dubai REST app.

What do service charges cover?

Maintenance of common areas and facilities, security, cleaning, shared utilities, insurance of the building and a reserve fund for major repairs.

Can service charges go up?

Yes. The budget is set each year, so the rate can rise or fall, but every change must be approved by RERA.

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