Liwan service charges: which lines of the building budget drive the fee

Two neighbouring buildings of the same age can have noticeably different service charges. A few budget lines explain the gap, and you can see them if you ask for the breakdown rather than the total.

The lines that decide it

• Cooling and energy for common areas. Usually the biggest item. A building with poor insulation and old equipment pays more for the same set of services.
• Lifts. The maintenance contract and the condition of the equipment: worn lifts need frequent call-outs and expensive parts.
• Security and cleaning. The number of posts and the schedule — easy to inflate and easy to cut, and this line shows where savings are being made.
• The management company’s fee. Comparable between buildings and open to discussion at the general meeting.
• Insurance and its excess.
• The reserve fund contribution. The most important line over the long run: a building that does not fund it looks cheaper today and will issue a special levy tomorrow.

How to read it

• Take the breakdown for three years, not just the current one: the trend matters, and so does what caused any jumps.
• Compare line by line with a neighbouring building of the same size — that shows exactly where the difference lies.
• Look at the collection rate. The budget can be sensible and still fall short if not everyone pays; then maintenance gets cut or the reserve gets spent.
• Check whether routine works are being paid for out of the reserve — that is a warning sign.

What to do with it

• Treat the service charge as part of the price. A difference of a few dirhams per square foot over ten years is comparable to haggling over the price of the apartment.
• Go to the general meeting. Management, cleaning and security contracts get renewed, and those who turn up decide.
• Do not confuse a low charge with efficiency. In an ageing building, a charge that has not risen for years usually means nothing is being funded.

Based on the framework for Dubai owners associations. Request the budget breakdown from the management of the specific building.