Right to manage properties must stay with owners

THE SUN 4/10/2005

I READ with great concern recent news reports on the efforts of the Board of Valuers, Appraisers and Estate Agents (Board) and the Institution of Surveyors Malaysia (ISM) to amend the Valuers, Appraisers and Estate Agents Act, 1981 (VAEA Act) with the view to opening a separate register for property managers under the VAEA Act.

As apartment owners, we strongly object to their efforts in this regard, as it is tantamount to taking away the rights of owners to decide who should manage their properties.

These professional bodies cannot dictate to the owners, represented by the Management Corporation (MC), established under Section 39(1) of the Strata Titles Act, 1985 (ST Act), that they should only engage the services of pro- perty managers registered under the proposed amended VAEA Act.

The ST Act clearly states that the basic objective of establishing the MC (upon the issuance of strata titles), with an elected Management Committee, is to hand over control of the management and maintenance of the subject properties from the developers to the owners.

In other words, the owners shall assume full responsibility for the upkeep of their properties without interference or hindrance from third parties.

Property management and building facilities maintenance and administration in Malaysia are in a perpetual state of flux and uncertainty, often with overlapping and highly reticular jurisdictions.

For example, quit rent and assessment are collected separately by the Land Office and local authority, respectively.

Land and strata titles are issued by the Land Office, while Certificates of Fitness (CF) are issued
by the local authorities.

This list of "organised and legalised confusion" is endless.

Stratified properties in the country are owned and managed by the following parties:

Properties owned by federal ministries and departments;
Properties owned by state governments;
Properties owned by state-owned companies such as State Economic Development Corporations
(PKNS, PKNJ, etc);
Properties, particularly abandoned and revived projects, currently owned by state-owned asset management companies such as Danaharta, Danamodal, Syarikat Perumahan Negara, Syarikat Prasarana Negara, etc, under the aegis of Khazanah Nasional of the Ministry of Finance;
Properties held in trust by the Public Trustee, private property trusts, property investment trusts such as the Real Estate Investment Trust (REIT), nominee companies and by solicitors' firms as stakeholders (pending a sub-sale of the unit) on behalf of investors, living or deceased persons, charity organisations, foundations, etc. duly facilitated through an agreement, trust deed or will.

In all these cases, the authorised representative, executor or administrator acts for and on behalf of the owners and takes all decisions with regard to the leasing, management and maintenance of the subject properties.

Why should all these entities, including the MC, be subservient to the Board/ISM and be required to take directives from them?

The ST Act clearly states that the MC has the right to make ALL decisions, including but not limited to determining the monthly service charges, sinking fund, in-house rules and the appointment of a management agent to manage the subject properties.

The appointment of the management agent is purely an internal matter between the MC and the agent concerned, and has nothing whatsoever to do with third parties, which includes the local authorities and the Board.

It should be remembered that the ST Act also allows the MC to manage and maintain the subject properties on its own if it so wishes.

Apartment owners, who mostly belong to the low and middle income groups, are worried that the Board's/ISM's move to force them to only engage the services of registered property managers will inevitably result in an immediate 30 to 50% across-the-board increase in their monthly maintenance charges.

We will soon see an upsurge in urban stratified slums countrywide, as more owners default on their payments and facilities deteriorate rapidly, with a more than corresponding overall decrease in the quality of life.

The proposed amendments to the VAEA Act, if approved by Parliament, will only encourage corruption and rent seeking.

Well connected businessmen, former politicians and retired senior civil servants will lobby for registration and jostle for top positions in property management companies.

They know fully well that property management is indeed a very lucrative business in Malaysia, as more stratified properties are being built to accommodate a growing population due to shortage of land.

It has been estimated that more than RM300 million was collected as management fees countrywide last year, and they want a big share of the cake. It certainly does not bode well for Vision 2020.

S. Venkateswaran
Secretary
Bunga Raya Management Corporation
Pandan Indah, Ampang