Wednesday, April 24, 2024

Service charges and higher rental values


Service charges have a significant impact on the rental income of any property and are linked to rental values ​​in the direct equation because this fee increase by some real estate developers makes the owner stick to higher rental values. Compensate the rental income ratio.

Also high rental values, unhealthy situation in the rental market, high fees aside, and some landlords trying to maintain the profitability of their real estate investments. Therefore, maintenance and service charges are still at a high rate in many areas which can only be solved by fixing this problem.

The service charge greatly affects the rental income of any property, and high rent leads to the investor or landlord not wanting to lose a large portion of his investment income for the benefit of the lessee.

The landlord’s failure to reduce the rental value in the old contracts and the need for higher values ​​in the new contracts are mainly caused by these fees charged to the tenant to protect the investment income from the landlord.

Despite the effects of the growing corona virus crisis, a large group of landowners are still sticking with the option of a higher rental value in favor of demand as it creates a balance in the rental equation, with many vacant housing units, according to recent reports of interest in the rental industry.

Fees for services, maintenance and rental values ​​are directly related to the real estate market because of the higher fees, higher rental values, and lower and better rates, and lower rental values, which are inherently linked to the benefit of the real estate industry as a whole, because it “invests” rent. “Cannot be separated from, and vice versa.

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There are some areas where service charges are very high, which reduces investment returns and greatly affects the rental value of the real estate unit. In some areas, the service charge is 55 dirhams per square foot, meaning you pay a total of 55 thousand dirhams per 1000 square feet, which reduces your investment return as an owner and prompts you to raise the rental value to a level that is detrimental to you and the real estate market.

In addition to service charges, the real estate market in the UAE is seeing a new recovery, as real estate sales have increased by up to 50% and are entering an “opportunity-taking” position, and one of the main reasons for this increase is the restrictions imposed due to the outbreak of the new Corona virus (Govt-19) worldwide. And the start of easing operations and the implementation of investment decisions was postponed due to conditions experienced by the world and the region. Factors contributing to the movement of real estate sales, the most important of which is that the presence of price revision has contributed to the provision of good opportunities in the market, facilities for real estate developers and government incentives.

There are areas that cover very high service charges, which reduces the return on investment.

CEO of Port Real Estate

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Nadia Barnett
Nadia Barnett
"Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

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