What Service Charges Are and Who Sets Them
Service charges (also called Owners Association fees or strata fees) are the annual costs that all unit owners in a jointly owned property (strata building or master community) pay to cover the building's shared expenses — maintenance, cleaning, security, landscaping, common area utilities, insurance, and reserve fund contributions.
In Dubai, the Owners Association (OA) framework is governed by Law No. 27 of 2007 Concerning Ownership of Jointly Owned Properties in the Emirate of Dubai, implemented through RERA. Key structural points:
- Every strata building must have a registered Owners Association managed by RERA
- The OA is responsible for setting the annual service charge budget and levying charges on owners
- OA management is typically contracted to a RERA-registered Owners Association Management (OAM) company
- Service charges are paid through the MOLLAK system — RERA's online payment and management platform for OA finances
The MOLLAK System
MOLLAK is RERA's centralised Owners Association management and payment platform. It is the mandatory system for all OA financial management in Dubai, and it serves several important functions for property owners:
- Transparent budgeting: Annual OA budgets must be submitted and approved through MOLLAK — owners can access their OA's approved budget
- Online payment: Service charge payments are made through the MOLLAK portal — removing cash handling from the OA process
- Statement of account: Owners can view their service charge balance and payment history through MOLLAK
- Dispute integration: Service charge disputes are initiated through RERA's OA dispute process, linked to MOLLAK records
How Service Charges Are Calculated
Service charges are calculated on a per-square-foot basis — the total annual OA budget is divided by the total built-up area of the building, resulting in a per-square-foot rate. Each unit's charge is then: Unit size (sqft) × Rate (AED/sqft/yr) = Annual service charge.
| Community Type | Typical Service Charge Rate | Factors Affecting Rate |
|---|---|---|
| Low-rise affordable apartments | AED 6–12/sqft | No podium, limited amenities, lower-cost areas |
| Mid-rise community apartments | AED 10–16/sqft | Pool, gym, security; standard amenity level |
| High-rise apartments (standard) | AED 14–20/sqft | Lifts, podium, higher security staffing |
| Premium high-rise / tower | AED 20–30/sqft | Multiple pools, concierge, valet, luxury amenities |
| Master community villas | AED 4–8/sqft (plot) | Roads, landscaping, community facilities |
| Branded residences / hotel-serviced | AED 30–60/sqft+ | Hotel-level services, full concierge, F&B inclusion |
Reserve Fund: The Building's Financial Health Indicator
RERA requires OAs to maintain a reserve fund — a savings pool for major future maintenance expenditures (façade replacement, lift refurbishment, major plant and machinery). The reserve fund is distinct from the operating budget and is funded through a separate levy within the annual service charge.
Before buying a resale property in a strata building, request information on the OA's reserve fund balance. A building with a depleted reserve fund and aging infrastructure is a potential future liability — major works will require either a special levy on owners or a drawdown that exceeds available reserves. A building with a healthy reserve fund relative to its age and maintenance history is a more defensible investment. MOLLAK-registered OA accounts should show reserve fund status.
When Service Charges Are Not Paid: What Happens
Service charges are a financial liability that runs with the unit — not with the owner. Outstanding service charges must be cleared before any Dubai Land Department transfer can take place. The practical effect:
- An owner who fails to pay service charges accumulates a debt registered against the unit in MOLLAK
- The OA can (under the law) place restrictions on the unit — including preventing the owner from obtaining a NOC for sale until charges are cleared
- Buyers of resale properties should always verify service charge clearance status before paying a deposit — a large accumulated debt discovered late in the transaction creates either renegotiation leverage or a blocked transfer
- The OA can pursue service charge debts through RERA's dispute process and ultimately through the courts
Disputing Service Charges
Owners who believe their service charge is incorrectly calculated, improperly levied, or excessive have formal dispute rights through RERA. The process:
- Raise the issue formally in writing with the OAM (Owners Association Management company)
- Request a copy of the approved annual budget from MOLLAK to verify the charge against the approved rate
- If the OAM does not resolve the dispute, file a complaint with RERA's OA department
- RERA can investigate the OA's compliance with approved budgets and registered rates; non-compliant OAs face regulatory action
Service Charge Due Diligence Checklist for Buyers
- Request the MOLLAK-registered service charge rate for the specific unit and building — verify it matches what the seller or agent is quoting
- Request the service charge clearance certificate (confirming no outstanding arrears) from the OA
- Ask for the OA's most recent approved annual budget — review actual vs budgeted expenditure
- Ask for the reserve fund balance — compare against the building's age and condition
- Check the OA management company's RERA registration
- Review any special levies that have been passed or are under consideration
- For off-plan purchases: the developer initially manages OA obligations; verify the RERA-registered service charge rate for the project in the SPA
Service charges are the cost that most investors underanalyse before purchase and overpay attention to after — by which point the choice has been made. A building with a AED 30/sqft service charge on a 1,000 sqft apartment costs AED 30,000/year before any other expense; that changes the net yield picture significantly. Is there a specific building or development where you want to verify the service charge rate?
Managing Dubai Property Ownership Costs?
Get guidance on service charge verification, OA due diligence, and property selection — book a conversation with Sandeep Pandey, RERA-certified senior advisor.
Book a Private Call →This content is for informational and educational purposes only. It does not constitute financial, legal, or investment advice.