Laws lacking bite

THERE are currently no specific laws governing the property management industry in Malaysia.

Some of the better property management practices can be found in Japan, Hong Kong, Singapore, Australia and the United Kingdom.

In Malaysia, property management is governed primarily by the Strata Titles Act 1985.

Companies in this industry manage residential and non-residential real estate for property owners.

Their responsibilities relate to the overall operations of a property, including maintenance, rent collection, trash removal, security and some renovation activities.

Industry players may also help manage a property’s accounts, but operations related to the transaction of properties or real estate investments are not in cluded in this industry.

Pangsapuri Serina Bay George Town joint management body (JBM) chairman Marwan Syed Mohamed said most highrise property owners did not realise the importance of good property management until their building and common facilities started to deteriorate.

“It is a common problem that some owners do not pay for their maintenance and service charges. It is normal to see at least 40 per cent defaulters who are owners of low-cost, low medium-cost and medium-cost apartments because most of them do not understand the basic concept of high-rise living.

“In fact, most of these high-rise apartments house former squatters who had to make way for development and they continue with their ‘free-for-all’ lifestyle and do not want to pay the monthly maintenance charges.

“For the high-end properties, the percentage of defaulters is lower at about 10 per cent, not because they cannot afford to pay but because they just do not want to pay as the laws governing property management here are toothless.

“When defaulters don’t pay, they derail the monthly budget for operating expenses (management fund) and capital expenses (sinking fund).”

Marwan, who is chief caretaker at Texchem Holdings Sdn Bhd, said there should be stricter enforcement to penalise defaulters.

The government should provide free legal service for JMB or the management to recover outstanding dues and consider blacklisting hardcore defaulters under the Central Credit Reference Information System, just like what they plan to do for the National Higher Education Fund Corporation defaulters starting next year, he said.

“For example, if you don’t pay the utility bills for landed properties, services would be interrupted. If you don’t pay your taxes, you cannot go overseas. If you don’t pay your mortgage timely, the banks will blacklist you.

“But if you don’t pay the monthly maintenance charges, what measures are there, other than the arduous legal process, to recover the dues? Apparently, there is none. In the worst-case scenario, the JMB may have to wait for 15 to 20 years to recover the outstanding amount.

“The property management industry needs a strong political will to come down hard on defaulters. It is ironic that many defaulting owners even let out their units and enjoy the rental. Instead of so many laws or guidelines on recovery, let’s see some action, and that is enforcement.”

Marwan suggested that after the issuance of the certificate of fitness and occupancy, a developer should continue to co-manage the high-rise property with a neutral party, which is a licensed registered property manager, and the owners, at least for the first 36 months or during the defects liability period (DLP).

This is to avoid any conflict of interest while giving time to the owners to establish a strong JMB or management corporation.

After the expiry of the DLP, the developer must hand over the management and maintenance of the high-rise property with a healthy account to the residents, who are the owners. It is then the duty of the owners to appoint a licensed registered property manager to continue maintaining the high-rise property, he added.

“Having chaired the JMB at Pangsapuri Serina Bay since January, I can vouch that every month, we struggle to pay the essential bills, quit rent, insurance and others. We owe almost every service provider money because of recalcitrant defaulters. Some service providers have even initiated legal action against us.

“The point is, many residents have the resources to pay the monthly maintenance charges, and in our case, it is RM110, including RM10 for sinking fund, but they choose not to.

“If we take tough legal action against them, the recalcitrant defaulters may cause us trouble.

“To manage the situation, we give discounts for advanced payments although we can’t really afford to. This gesture does help the management meet its monthly expenses for essential services,” he said.

~ By BUSINESS TIMES