Who manages your building? Who appoints them and whose interests do they serve?
The Building Reviews section on propertyfinder.ae is full of colourful anecdotes about the professionalism, or lack thereof, of building management services around the country. It is by far our single most commented theme and makes for entertaining reading. Some of it, unfortunately, is unfit for publication. But what’s clear is that for residents here in the UAE, good building management equals a good building.
The breakneck pace of development in this exciting part of the world comes with its own unique set of challenges. The vast majority of Dubai’s freehold housing stock is less than ten years old. The laws governing them are even younger, and the application of these laws are younger still.
for residents here in the UAE, good building management equals a good building
How your building is managed and by whom is important; it can make a big difference to your quality of life. For owners, the short and long-term viability of your investment lies in the hands of those responsible for its ongoing maintenance. Technically that’s the owners themselves and the Owners’ Association (OA), which is responsible for all common areas of the building such as lifts, re and safety equipment, lighting, and power. The OA is a representative group of owners who act on behalf of all owners. They are also responsible for the setting and collection of building fees from owners, managing the budget, making payments to suppliers and the administration of the communal reserve fund to cover any future maintenance costs. Not a small responsibility and one which increases significantly for taller and older buildings.
Strata law regulation, based upon international best practice, aims to protect the interests of all stakeholders and has existed in Dubai since 2010. Once a new project is complete and handed over, the developer is required to register a Jointly Owned Property Declaration (JOPD) with Dubai’s Real Estate Regulatory Agency. You can check with RERA to make sure your property developer has done so. Thereafter, homeowners then manage their property through an OA.
The OA may assign a building facilities manager of their choice, and may choose to raise fees or lower fees as they see fit to properly manage and maintain the building. At least that’s how it’s supposed to work.
Owners’ Associations do exist but in practice their influence is limited, and legally they are not a registered recognizable entity, which makes it almost impossible for them to recoup unpaid building fees from owners via the courts.
Developers continue to yield the most power and commonly make unilateral decisions; assign Building Manager rights to their preferred suppliers without the input, or in direct contradiction to the wishes of the OA. All of which frustrates owners and raises legitimate questions about whose interests are being served. Particularly if the developer no longer owns property within the development.
Proponents may claim that while OAs are good in theory and should be part of the discussion, in practice individual owners lack the education, experience and expertise to handle such a responsibility. Dubai is full the world’s tallest skyscrapers jam-packed with complicated, expensive machinery and facilities.
Oversight and maintenance of fire safety systems for a 90 storey building is not for the fainthearted.
Many of Dubai’s freehold property owners are nonresidents and others are less than fully engaged in their building and community. OAs have reportedly struggled to achieve enough attendees at Annual General Meetings to reach the minimum required for a quorum.
Undoubtedly the developer knows the building intimately and from a technical expertise perspective is far better equipped to service its needs. And regardless of how much stock within the project they retain, developers will forever hold a vested interest in the building as it carries their brand and reputation.
Critics will claim that developers maintaining such influence is illegal, a serious conflict of interest and is prone to abuse. Much has been written about unreasonable fee hikes, residents being locked out from buildings and facilities, pools being drained in ongoing battles between developers and owners over the years, mainly over unpaid maintenance fees and NOCs.
Requiring NOCs for building work should be a safety mechanism to protect the building from faulty workmanship for major work being done. But when building security who have been appointed by the developer requests an NOC for a single curtain rod installation by IKEA, extortion is the word that comes to mind.
The good and bad guys in this debate depend much upon your perspective, but these are clear examples of what happens when the interests of owners and developers don’t align. For now, developers are winning most of these arguments and more needs to be done to legitimise OAs, their legal status, and rights of owners.
OAs need to play the role that they were intended to do: Represent owners interests in the ongoing management and policies of their building. The system is not perfect but it is evolving. Positive strides have been made but there is clear room for improvement.
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By Lukman Hajje, CCO of the Propertyfinder Group.
This article appeared in Prestige Magazine November/ December 2017 issue.
