Commercial service charges: review the bill before buying

Commercial service charges should be checked at the level of the building, unit usage and budget year. Applying an apartment's charge rate to an office or shop can distort both the purchase budget and the expected income.

Reconcile the rate and the actual bill

Obtain the current approved budget or index result, the unit's statement of account and the seller's recent invoices. Record the chargeable area and the measurement unit used. Ask why any invoice differs from the indexed calculation.

The Dubai Land Department's Service Charge Index allows checks by project, usage and year. Its results state that service charges do not include arrears. Keep historical outstanding balances separate from recurring annual costs.

Identify what the owner must carry

Cost line	Question for the documents
Common building services	What period and area does the invoice cover?
Reserve or sinking-fund contribution	Is it included in the quoted total?
Cooling and utilities	Are these separate from building charges?
Existing arrears	What must be settled and by whom?
Tenant recoveries	What does the lease permit, and what was collected?
Planned major work	Is there a documented future contribution?

A lease saying that a tenant pays certain expenses is different from evidence that those expenses have been recovered. For an income property, reconcile the lease, invoices and receipts.

Translate a change into investment impact

Assume a hypothetical office incurs AED 72,000 of annual owner-paid charges. If the verified cost becomes AED 90,000 and the lease does not allow recovery, annual operating income falls by AED 18,000. On an assumed AED 6 million total investment, that is 0.3 percentage points of return. This is arithmetic, not a forecast of charge increases.

Test the actual property's known obligations rather than applying this example as a market norm. Discuss uncertain allocations with the management company and your transaction adviser.

Before committing, keep a dated account statement and a written explanation of unusual charges in the due-diligence file. If the seller supplies only a verbal annual estimate, mark the income calculation provisional. Resolving a cost gap before the offer is more useful than discovering it after the price has been agreed.

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Related guide: How to check a commercial property's rent roll.

Sources and scope

Official references checked on 29 October 2026: DLD: Service Charge Index. The comparison methods and hypothetical examples are Livrichy planning aids. Official sources do not endorse the examples; confirm current requirements for the actual transaction.