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EXCLUSIVE: Nakheel’s Lootah talks tough on service fee saga

EXCLUSIVE: Nakheel’s Lootah talks tough on service fee saga

“[Nakheel is] going to chase [its] money right and left. Nakheel cannot afford (not) to,” its chairman Ali Lootah tells Kipp’s Eva Fernandes exclusively.

January 29, 2012 6:37 by

The long drawn out and much publicised Shoreline apartment service fee debacle could very well become a reality for tenants in other Nakheel developments including Discovery Gardens and International City, Ali Lootah, Chairman of Nakheel told Kippreport earlier today.

“[Nakheel is] going to chase [its] money right and left. Nakheel cannot afford (not) to… What should I do? Just keep quiet on my money and not collect my money because of the negative (attention)? It is a serious issue, how can we continue servicing them if they don’t pay?” said Lootah in an exclusive to Kipp. “We are following all of our communities—Discovery Gardens, International City –but we focused on our Shoreline Apartments because it was big amount and some of it was outstanding from 2008.”

Since last month, Nakheel has blocked beach and pool access to those tenants residing in those Shoreline Apartments on the Palm Jumeirah that have not paid their service fees. The move came as part of a bid to collect Dh72 million in unpaid fees.

Since the ban, Nakheel has collected 40 percent of what is owed to them, the chairman said. Effective as the measures might be, it also attracted a lot of negative press for Nakheel, including reports of tenants calling the police to unlock doors.

“We are just using the soft approach actually, we can go much tougher (…) all we’ve done is cut off the access to the beach. The residents still have access to their apartments, they can still live in their apartments. We haven’t done anything as drastic as other communities—some who have switched the AC off—no, we have been more patient” said Lootah.

While the real effectiveness of Nakheel’s tough love strategy perhaps remains to be determined, an unfortunate victim caught in the middle of this rather ugly dispute between the developer and the owner is the tenant. Tenants, for example, who have paid their entire rent for a year in one go, have found themselves denied access to the beach and pool because their landlord has not paid the service fee.

Lootah, though sympathetic towards these tenants, is unrelenting:

“I was personally astonished that so many tenants did not check the service fees [before signing the lease]…Why do people go out and get a clearance of DEWA bills and not get a clearance on Nakheel service charge? It doesn’t make sense to me.”

“Tenants should be careful. What can you do? They didn’t do their due diligence, or they were shy to ask these questions… If I was in their place I would ask my landlord, please confirm that the service charge has been paid.”

Perhaps, tenants were not aware of the service fees? “I don’t think the tenant is so naive. Why didn’t they ask? Why didn’t they check?” says Lootah, pointing out that Nakheel is not the only developer in Dubai charging a service fee—a standard for special developed areas in Dubai. As precautionary measure for future tenants, Nakheel has now set up a new facility which allows a potential Shoreline renter to phone Nakheel to verify whether the service fees for the particular apartment of their interest has been paid or not. Essentially the onus is on the tenant to check before signing the lease.

The real culprit in this story, Lootah says, is the landlord: “It is the landlords who are not living here (who) are to blame…Let’s not forget, it is a business. Landlords are collecting rent. They are collecting money. It is just greed. They just don’t want to pay part of that as service charge. It is not that apartment is empty-no, they are collecting rent. Where is the money going?”

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  1. Nancy Smith on January 30, 2012 9:03 am

    A truly substandard piece of journalism. Homeowners are withholding their service fees because Nakheel has failed – for years! – to maintain the properties. They are paying for nothing! Why did you utterly fail to ask about the fact that there has been no maintenance for the past two years as Nakheel ran out of cash and failed to pay the contractors. This means homeowners paid service fees for nothing. People are withholding their money for good reason!

  2. p.deleon on January 30, 2012 9:40 am

    Hi Nancy,
    Thank you for your comments. We always try to be as objective as possible, and for that we need to show all the sides of a story. Looking back at our history of covering the property sector in the UAE, you’ll see that we’ve put Nakheel and other property developers under the microscope a number of times. We would be more than happy to hear your side of the story (and the rest of the tenants’) and give it the same amount of coverage. You can contact us at [email protected].

  3. Amuzed on January 30, 2012 9:55 am

    I am shocked by this interview. Nakheel denies the real issue. Lack of transparency with the accounts, none registered HOA’s, shortfalls in delivering the project, abusive change in the jOPD, poor quality services, etc… No homeowner is refusing to pay fair SC’s for good quality services to a registered HOA who has audited accounts presented during an AGM.
    As far as developers around Dubai refuse to recognize that their own greed and an ethical behaviour is the source of the problem, that they are the only root cause, that they bring bad reputation to the RE market, no recovery is possible. Maybe Mr Lotah is not aware of the issue and should ask his middle management to report the truth to him.

  4. Ben on January 30, 2012 11:37 am

    I would like to respectfully correct the statment made by Mr Lootah. The money collected does not belong to Nakheel. Nakheel is collecting on behalf of owners the money because they refused so far to register the HOA. They have appointed them self as the Manager and service providers for the place. Nakheel has an obvious conflict of interest shown by the poor services while over charging for SC’s. The money collected belongs to the HOA for the upkeep of the building and not for Nakheel to use as they wish. Dubai developers willingly misunderstanding of the situation is and using the service charges as income is the main issue faced by all owners and the origin of the conflicts in RE. When will RERA step in a fair way and put an end to developer abusive policies by educating them on what the Law says. Owners have a better understanding and respect of the Law than developers. It is time the market is cleaned from these bad practices for a better Dubai

  5. Ronman on January 30, 2012 1:58 pm

    @ Ben, most definitely agree with what you say, but homeowners cannot go on an keep putting unsuspecting tennants in a bad fix just because they do not agree what the developer is doing. The ownership contract stipulates that you pay x amount to developer and to the HOA by proxy if approved by former (I’m may be wrong, please correct me). however the criminality of tenants being left without services and facility access lies in the Landlord’s hands… I’m a tenant who’s landlord has paid his fees to the T, yet the developer is failing to pay DEWA, and the latter is threatening to cut the power, all because a lot of other Landlords are not paying. who is it logical to blame in this issue? the developer wont release the funds (if it;s got them all) to DEWA because they want to twist the landlord’s collective arms, and at the same time Landlord’s are not paying because they think if they pay nothing will change… it’s a serious Catch 22 that only a RERA with proper executive authority can solve, and that i’m afraid is a dream.

    Tenants should do their due diligence i admit, but they can do it for one apartment, not the entire tower!

  6. Guss on January 30, 2012 3:24 pm

    Nakheel was supposed to complete and deliver our villa in Jumeirah Village on 31 December 2008 with the right to extend it by a period of up to 12 months to 31 December 2009. 2 years plus and we are still awaiting completion with no official word from Nakheel and no compensation whatsoever!!! As owners we also have to chase our money right and left. We cannot afford not to but Nakheel a deaf ear!!! Would like to hear Mr. Lootah’s reply???

  7. SS Dubai on January 30, 2012 6:59 pm

    Mr Lootah is ignoring the SPA – a legal document under the laws of Dubai and UAE. The sales and purchase agreement clearly states that owners have full ownership and right of use for common facilities. This is written as clear as day for those lucky enough to receive a contract from Nakheel on purcahse. Simply, Nakheel’s actions are illegal. It is not theirs to block. The police have been called in and the implicated person as head of Nakheel is Mr Lootah. Nakheel is out of money – the headline says it all that they will collect money wherever they can. A company normally should be trying to put a better public image – i.e. ‘we care about customers’. Mr Lootah says a lot to the press and is creating a bad image for Dubai – people are smart enough to see past Nakheel’s greedy ways.

  8. Kassem on January 30, 2012 10:47 pm

    I wonder why there was no mentioning of The Gardens. How could Mr. Loutah justifies the increase of cooling charge and service fee for up to 150%? with no clear justification but to colled money left and right!!

  9. chaz on January 31, 2012 4:40 am

    wow. I am so glad I didnt buy from Nakheel.
    The negative press they get is self perpetuating and now we know where it starts from, reading this article.
    So many other questions could have been asked but juding by the few utterances here, it would not have made for pleasant reading even if you managed to get an answer!

  10. egp on February 2, 2012 2:52 pm

    Mr Lootah, you deliver services – we pay, not a problem. Why Emaar doesn’t have such problems? Go and live yourself in Shoreline or Discovery Gardens, not to mention International City and see by yourself what life is there like!!!


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