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What the service charge pays for
In a jointly owned property — an apartment building, a branded residence, a gated villa community — the parts nobody owns individually still have to be run. The service charge is each owner's share of that cost, in proportion to the size of their unit.
A typical budget covers:
- Common-area maintenance: lobbies, corridors, car parks, lifts, pumps, generators, fire and life-safety systems, gates and barriers.
- Security and cleaning of shared areas, and waste management.
- Landscaping and irrigation of common grounds, and in villa communities the roads, parks and streetlighting inside the community.
- Shared facilities: pools, gyms, community centres, beach access and, in branded residences, the operator's services.
- Building insurance for the structure and common areas.
- Management fees for the company that runs the property, plus audit and regulatory costs.
- The reserve or sinking fund — money set aside for major works that will fall due years from now.
Two things are normally not in the service charge and must be budgeted separately: your own DEWA account, and district cooling, which most chilled-water schemes bill directly to the occupier. In a villa with a private pool, private landscaping or beach frontage, your own maintenance contracts are also additional.
How charges are set and approved: RERA and Mollak
Since Law No. 6 of 2019 on the Ownership of Jointly Owned Real Property, the framework has been strict. A management entity prepares an annual budget for the building or community, has it audited, and submits it to RERA through Mollak, the Dubai Land Department's service-charge platform. Until RERA approves the budget, the manager cannot lawfully impose or collect the charge.
Mollak does several things at once:
- It holds the approved budget and the per-square-foot rate for each jointly owned property.
- It generates the invoices, so a compliant invoice carries a Mollak reference that you can check against the approved budget.
- It routes collections into escrow accounts held for the owners' benefit, so the money is ring-fenced from the management company's own funds.
- It underpins the service-charge index the DLD publishes, which lets an owner compare the rate on their building against what is approved elsewhere.
What this means for a buyer is simple: there is always an approved figure, it is documented, and anyone who cannot produce it for the property you are considering is either not looking or not telling you.
How the charge is calculated and billed
The mechanism is per square foot of your unit's registered area:
Annual service charge = approved rate per sq ft × the unit area on your title deed
So in a building with an approved rate of, say, AED 20 per square foot, a 2,000 sq ft apartment would be billed AED 40,000 for the year and a 6,000 sq ft unit AED 120,000. Those figures are arithmetic, not market data — approved rates differ enormously between a simple villa community and a serviced branded residence with concierge, valet and resort facilities, and the only rate that matters is the one approved for your specific building.
Billing is usually quarterly in advance, occasionally annually. The budget itself is split into two parts, and the distinction is worth understanding:
| Operating budget | Reserve (sinking) fund | |
|---|---|---|
| What it pays for | Day-to-day running: cleaning, security, utilities for common areas, routine maintenance, management fee, insurance | Major capital works: lift replacement, facade refurbishment, chiller and fire-system overhauls, roof works |
| When it is spent | Within the same year | Years later, when the item reaches the end of its life |
| What to watch | Sharp year-on-year jumps, or a manager who never varies the figure | A fund that is too small for the age and complexity of the building — the shortfall becomes a special levy on owners |
An under-funded reserve is the classic hidden liability in an ageing tower. A building with a low headline charge and no meaningful reserve is deferring cost, not avoiding it.
How to check a building's history before you buy
Ask for the following, in writing, before you sign Form F. A seller who owns the unit can obtain all of it, and a serious listing broker will have most of it already.
- The current approved service-charge rate for the building or community, per square foot, and the resulting annual figure for the specific unit.
- The last two to three years of approved budgets, so you can see the trend rather than one number. A 30% jump in a single year has a reason; find out what it is.
- A statement of account for the unit, showing that there are no arrears. This is not optional: unpaid service charges attach to the property, the management entity has a lien over the unit, and the developer will not issue the No Objection Certificate needed for transfer until they are cleared.
- The reserve fund balance and any planned major works. Ask specifically whether a special levy has been discussed.
- Who the management company is, and whether the property is billed through Mollak. If invoices carry no Mollak reference, ask why.
- Minutes of the most recent owners' meeting, which will tell you more about how the building is actually run than any brochure.
- The district cooling arrangement: which provider, whether capacity charges apply when the unit is empty, and whether any connection fee is outstanding.
This is the same discipline we apply on a prime villa purchase, and it is one of the items in our guide to the mistakes buyers make in Dubai.
Disputes and unpaid charges
If you believe a charge is wrong, the sequence is procedural rather than adversarial, and it usually works.
- Ask the management entity for the approved budget and the breakdown, in writing, and check the invoice against the Mollak reference. A good proportion of disputes are billing errors on unit area.
- Raise it with RERA through the Dubai Land Department if the charge does not match an approved budget, or if the manager cannot show approval. RERA regulates the manager, not just the building.
- Use the formal dispute channels for anything that cannot be resolved with the manager. The DLD operates routes for service-charge arrears and owner disputes, with escalation to the Rental Disputes Settlement Centre; as of 2026, confirm the current channel with the DLD before filing.
Withholding payment is a poor tactic. Arrears accrue against the unit, block the NOC and therefore block any sale, and expose the owner to enforcement. If you are selling, clear them early — see selling a luxury home in Dubai.
Why a low price with high charges can cost more
Buyers compare purchase prices to two decimal places and treat the service charge as a footnote. Over a holding period it is the other way round.
Work it through for any two properties you are comparing: take the difference in the annual charge, multiply by the number of years you expect to hold, and set that against the difference in price. On a large unit in a heavily serviced building, the running cost over a decade can be a substantial fraction of the discount that attracted you in the first place. If the property is let, the effect is sharper still: the service charge is paid by the owner, not the tenant, and it comes straight off the net yield — which is why our note on Dubai property investment basics insists on net rather than gross figures.
None of this argues against well-run buildings. A high charge that funds genuine service, a properly maintained facade and a healthy reserve protects value; a low charge that funds neither destroys it slowly. What matters is knowing which one you are buying. If you would like us to pull the approved charge and arrears position on a specific villa or apartment, tell us the property.