Property management takes on new perspective under revised Act
THE property market has slowed down and is expected to remain soft for a while.
In this kind of market, how properties are managed becomes more conspicuous as it will affect its value.
Take two similar projects and asset types and have them side by side. The one that is better managed will naturally fetch a better value. Besides that, a good property manager is able to cut costs and wastages as the operating environment gets challenging amid rising costs.
This may sound straightforward but many home buyers and investors overlook some of their rights in ensuring that their properties are in the hands of good property managers. Under the revised Strata Title Act, effective last June, property management has taken a new perspective.
In an interview with StarBizWeek, Malaysian Institute of Professional Property Managers (MIPPM) president Sarkunan Subramaniam (pic) reminds house owners to understand their rights under the new regulation and exercise them accordingly.
To begin with, developers, who are usually the first property managers of a strata project, are now required to list down service charges, item by item, in the sales and purchase agreement for the primary market.
The amended act also stated that 0.5% of the construction cost of the project should be deposited and used for the common area defects upon a handover.
Should any dispute arise, the case can be taken to the Commissioner of Building.
Due to the importance of property management, developers have to allocate an office for the property manager at a common area for high-rise properties.
Now, developers are also required to call for an AGM 12 months from the date the property is delivered vacant.
“Home buyers must be wary of who they are buying their units from as reputable developers will adhere to the requirements,” Sarkunan says.
In the secondary market, owners need to know some of the changes in the Act that could protect them from unnecessary problems.
For example, the new Act allows parties not registered with the board of valuers and appraisers to practise property management and collect a fee.
“It is stated that people who are not registered with the board will have to pay a bond to the joint management bodies (JMB) and management corporations,” he says.
The bond should be one year’s worth of the management fees collected by the service provider. The minimum value of the bond is RM50,000.
“The bond serves as a professional liability and public protection. Compared to professional and registered property managers, those who are not registered are not covered by professional indemnity insurance,” he says.
A good manager is crucial to avoid complications. For instance, some owners do not know that they are liable for debts accrued by the JMB.
What makes a good manager?
Sarkunan points out that there is a need for quality property management services and there is room for further improvement in this area.
One of the important areas overlooked by some property managers is support from the headquarters.
A centralised and systematic infrastructure enables the property manager to provide better support for the sites it manages.
Some of the essential types of support include engineering, procurement, audit, accounts and software.
“The headquarters can perform random checks and audits at the sites to ensure that the services provided are satisfactory,” he says.
There is savings from economies of scale if there is centralised support from headquarters which can be passed on to property owners. Services will also be more standardised across the different sites managed by the company.
“When markets are soft, it is even more important for good management to minimise wastage. People who run this business should treat property management with integrity.
“When they’re up-to-date with the employment of new technology or methods, they’ll be able to manage costs better too,” he adds.
Amendments for betterment
Another update on the regulation is how a mixed project can now be managed by several sub-management corporations while the overall management comes under the same manager.
During the AGM, all the sub-management corporations can come together to decide on issues regarding the common area.
With this new structure, various components of a mixed development can be managed more efficiently. There are processes to go through before forming the sub-management corporations.
The act also sets out clearer provisions for issues related to piping leakages.
Once a complaint is made regarding a leakage, a notice will be given to the neighbour and the property manager can investigate the case and give notice to the neighbour to rectify the problem.
On top of that, it gives the management the access rights to address the leakage issues if no actions were to be taken by the neighbour involved.
Strata management tribunals are also established as a result of the amended act.
“They’re supposedly faster and cheaper and the house owner can present themselves for their cases without having to hire a lawyer.”
They are available in the northern, southern, eastern and central regions. Developers, purchasers, proprietors, joint management bodies, management corporations, subsidiary management corporations, managing agents and other interested individuals or parties can make a claim with the tribunals.
The amendments provide better protection for owners as well as penalise uncooperative property owners such as those who default on their service maintenance fees and sinking fund.
“Property managers can now get tenants to pay for the service charges owed by the defaulters. They can suspend them from using the common facilities as well as to bill the charges to the banks where they get their loans from,” he explains.
“In conclusion, we welcome the new amendments, which are much clearer and well-defined. This provide transparency and prescription to matters relating to strata properties,” he says.
Going forward, he hopes that there will be a way to recognise and reward good property managers.
Formed in 2011, MIPPM aims to promote the role of professional property managers as well as to uphold the integrity of the profession of property managers and the Board of Valuers, Appraisers and Estate Agents Malaysia. It also targets to promote education and training for its members and to keep abreast with the latest industry practice.