Guide
Service charges
What the owners of a building pay each year for its upkeep. It is charged per square foot, it differs widely between buildings, and it comes straight off the yield.
Reviewed
Each term is defined in the glossary. All guides.
What a service charge is
A service charge is what the owners of a building pay each year for its upkeep: cleaning, security, lifts, the pool, the gardens and a reserve for large repairs.
It is charged per square foot of your own property, and it is the owner’s cost. A tenant does not pay it.
Yearly service charge = rate per sq ft × floor area
The calculator starts an apartment in Dubai at AED 17 a sq ft. On a flat of 750 sq ft that is AED 12,750 a year.
In Dubai the Land Department publishes each building’s service charges through Data Dubai, the emirate’s open-data portal. That is where a report reads them from.
Why it differs between buildings
The charge pays for what the building has. A tower with lifts, pools, a gym and a concierge has more to run than a row of townhouses with a shared garden.
| Kind of home | Service charge, AED a sq ft | Maintenance, AED a sq ft |
|---|---|---|
| Apartment | 17.00 | 4.00 |
| Villa | 4.00 | 6.00 |
| Townhouse | 6.00 | 5.00 |
Source: YieldPulse starting assumptions for Dubai, set from published market reports, read . Both are for a year. They are a place for the calculator to start, not any building’s figure.
Maintenance runs the other way. The owner of a villa pays for the roof, the garden and the pool directly, so the service charge is low and the maintenance is high.
Within one kind of home the charge still differs widely from one building to the next. An assumed figure is a weak basis for a purchase.
Cooling
Ask whether the charge includes cooling. In some buildings a district cooling company bills the owner or the tenant separately, and two charges that look alike are then not alike.
What it does to net yield
Every dirham of service charge comes off net operating income, so it comes straight off net yield.
A higher charge leaves gross yield exactly where it was. Only net yield shows it.
How to check it before you buy
- Ask the seller for the latest service charge invoice. Check the rate per square foot and the floor area on it.
- Ask for earlier years as well, to see which way the charge has moved.
- Ask what it covers, and whether cooling is billed apart.
- Ask whether anything is unpaid, and have it settled before the transfer.
Do this before you rely on any figure, ours included.
What a report does with it
A report uses the building’s own filed charge where there is one. It shows each budget year on file, so you can read the direction as well as the level, and it uses the latest year in every sum that follows.
For a property outside Dubai, or a building with nothing on file, a report works on the charge you enter and says so.
The sample report shows the part in full.