More balanced regulation to resolve vacant units


Property Talk: A weekly column by S.C. Cheah

A WOMAN from Cheras bought an office lot in Bandar Country Homes, Rawang, in 1997 for RM73,800.  

She must have been quite happy because she had apparently got a RM2,000 discount as the brochure at her front office, a second-floor unit at the Celebration Mall, showed that the price was supposed to be RM75,800. 

She, however, could not service her loan and her bank had put her freehold unit up for auction several times. The 786-sq ft unit was finally sold in July this year to a bidder who bought it at the reserved price of RM35,872. 

Part of the Celebration Mall in Bandar Country Homes, Rawang.

The woman, who had not even gone to collect her keys for her office unit when it was completed in 1999, had failed to pay about RM5,190 in service charges and other expenses to the developer. She also owes the Selayang Municipal Council nearly RM900 in unpaid assessment charges. 

There are several similar cases of property put up for auction at the nice mall in this medium-sized township about 8km from Rawang town. 

Those who had bought the shop and office units thought that businesses would be set up in Bandar Country Homes.  

However, the 1997 recession and other adverse factors, including the property overhang, saw many remaining vacant units several years after completion. Several shop office blocks in the town centre are also vacant now. 

For the successful bidder he could be optimistic that the office unit would gradually appreciate in value as several new developments are coming up around Bandar Country Homes.  

He reckons that he can afford to hold the property even up to 10 years as an investment, after taking into account service charges, amounting to only about RM66,000. 

The rental is quite low, around RM350 to RM450 for his unit. The ground-floor shop unit is being rented out for a mere RM500 a month. Many of the shops facing a field have been rented out to the Ikhwan group, which has its own clinics, nurseries, kindergartens, hostels, car workshop, IT centre, maternity clinics, mini markets, travel firm and restaurants. 

The bidder, however, is worried over two things: (a) the maintenance like many other places is not up to the mark and (b) although the Ikhwan group renting units in this shop-office complex has helped purchasers earn some rental income, the entire atmosphere of a modern business hub is somewhat missing. It may not attract the right tenants in future. 

There is no signboard to indicate that this place is called Celebration Mall. 

In its place are frequent sounds of wailing babies from the maternity wards. The office units, too, have been turned into hostels. Children's desks block part of the wide corridors of the first-floor shop units. Vandalism is rife.  

I am giving this example to show that there are many such cases all over the country, where commercial properties are either left to rot, or turned into other uses.  

It is a crying shame to see nicely designed commercial buildings, be they shop offices or complexes, deteriorated with poor management and maintenance. 

There are thousands of purchasers who have found themselves in dire financial straits after making wrong decisions or were just plain unlucky in their property investments. 

Glossy brochures extolling how good a location is have lured many investors to buy properties that turn out to be “cold”. The problem is compounded when you have a “chicken-and- egg” situation in property management. 

The developer will say that it could not provide proper services because owners are not paying up. The poor collection is not enough to hire sufficient workers to maintain the place.  

Property owners blame the developer for dragging its feet in getting the strata titles. So long as the strata titles are not issued, the developer can continue managing the property and collecting the maintenance charges.  

Many owners have refused to pay these charges citing poor service as the reason. Caught in between are the responsible owners who continue to pay, but they also end up not doing so, as they feel that the others are not paying, so why should they. 

Personally, I feel there should be a more balanced regulation requiring all parties concerned to shoulder responsibilities and make some sacrifices.  

When strata-titled properties fall into disrepair, it will do the developer no good, especially if it still has other products to sell.  

Local authorities, meanwhile, continue to impose assessment rates on empty buildings. Although owners of vacant units could ask for a rebate, many either do not know, or do not care. Many property owners do not understand why they should pay assessment rates as no rubbish is collected or hardly any services provided by the authorities. 

Certainly, purchasers of vacant units would be happy if their assessment rates could be waived entirely, if not substantially, and the developer voluntarily or by law should give some form of guarantee that when the property is sold, there is proper management and promotion to bring in tenants.  

I recently visited Lembah Beringin and was shocked to find that many completed and uncompleted shop offices were overgrown with weeds. However, there is consolation to find that there is a security post there. 

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