Abu Dhabi backdates new municipality fee payments for renters to February

The Abu Dhabi government has backdated a newly introduced municipality fee for expat tenants until February last year.

The National reports that the new fee, equivalent to 3 per cent of a tenant’s annual rent, is now appearing in water and electricity bills from Abu Dhabi Distribution Company.

Read: Abu Dhabi introduces 3% tax on expat property rentals

It was first announced in the February 2016 edition of the Official Gazette and reported on in April but few expected the fee to be backdated after being introduced.

The backdating terms mean that tenants will need to pay the entire 11 months of payments for last year in one payment as well as payments for this year, according to the publication.

The fee comes at a time of rising household costs and tough market conditions in the UAE capital, which has been hit hard by the drop in oil prices since the summer of 2014.

Office and residential rents continued to slide in the third quarter of 2016 as the impact of job losses and cost sensitivity hit the sector, according to CBRE.

The firm said office and residential rentals were down 9 per cent and 5 per cent respectively during the period.

Read: Economic slowdown continues to hit Abu Dhabi rents in Q3

The new fee is expected to encourage tenants to ask for rental decreases, according to some agents.

The system will bring Abu Dhabi in line with neighbouring Dubai where rentals are subject to a 5 per cent housing tax through bills from Dubai Water and Electricity Authority.