Uproar over ruling on flat-rate charges

Uproar over ruling on flat-rate charges

Wednesday, 16 Oct 2019

By THEAN LEE CHENG

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Likely issues: Adzman says MIPFM foresees there will be issues between developers, JMBs, MCs and owners

PETALING JAYA: Owners of high-rise projects in mixed-use projects will likely have to pay more for their monthly maintenance charges and sinking fund as a result of a court ruling on a flat management rate for different components.

Chaos and confusion have already resulted from The Star’s article entitled ‘Flat rate for all in mixed-use property’ published on Oct 14.

Higher default rates are expected, followed by more lawsuits following the ruling by the Court of Appeal that a flat rate be charged for all mixed-used projects that have yet to receive their strata titles.

Even as the various parties try to seek a solution from the Housing and Local Government Ministry, service providers in such projects will have to be paid as an equitable solution is sought, said Malaysian Institute of Property and Facility Managers (MIPFM) president Adzman Shah Mohd Ariffin at a press conference.

“We are not siding anyone, we respect clients be they developers, joint management bodies (JMBs), management corporations (MCs) or owners. But what is the practical situation at the moment on the site?” Adzman asked.

Also present were the National House Buyers Association (HBA), the property survey division of the Royal Institution of Surveyors Malaysia, and the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS).

They have yet to seek a meeting with Housing and Local Government Minister Zuraida Kamaruddin.

An example would be a project with a mall, serviced apartments and offices on the same commercial land title, Adzman said.

Let’s say the mall’s operational cost is between RM2 and RM3 per square foot (psf) per month, against the serviced apartment’s 30 sen to 40 sen psf and the office at between 80 sen and RM1 psf.

It would be “highly inequitable” and will cause much disharmony if all three parties were to have to pay the same rate.

“The office and mall people would demand to use the swimming pool and gym, while the serviced apartment dwellers will not want to pay a higher rate, ” he said.

Yet another example would be a residential-titled project, where high-cost facilities in a condominium are not shared with owners of low-cost flats.

The Strata Management Act 2013 (Act 757) and Strata Management Regulations 2015 are the governing legislation for strata management-related matters.

“Unfortunately, Act 757 did not foresee the evolution of property development, which has increasingly involved more components with exclusive facilities and amenities being constructed on the same land title for different components, ” Adzman said.

Some of these more recent developments have several components, comprising serviced apartments, hotels, offices, malls, retail shops, and hospital and educational facilities.

Another related issue is Act 757, Section 60 (3) (b) which allows MCs to determine different rates but is silent about JMBs.

The spirit of this provision clearly shows that the act recognises problems, as inequitable treatment may occur. Having recognised the problem, commissioners of buildings (COBs) have also allowed owners and JMBs to decide on the rates as part of the democratic process in an annual general meeting.

MIPFM urges the Housing and Local Government Minister to quickly provide an amicable solution, which may involve, among others, amending the act to make Section 60 (3) (b) consistent for both MCs and JMBs and ensuring an equitable solution for all parties.

Adzman said MIPFM has yet to see the grounds of this judgment and neither can it make any statement related to the judgment.

“But we foresee that there will be issues between the developers, JMBs, MCs and owners, ” he said.

At the same event, Wong Kok Soo from the HBA said having taken into account the diversity and complications in mixed-use strata developments, “it is crystal clear that one uniform rate of maintenance charges will not be applicable equally to all the different types of mixed-use strata developments.

“One size does not fit all, ” Wong said.

“The recent judgment in the Court of Appeal has created confusion, ” he said.

The Oct 4 ruling by the Court of Appeal affects properties without strata titles and managed by JMBs.

However, even after the owners of a property have obtained strata titles, less than 25% have actually got the physical titles.

“So, the property is still bound by the Court of Appeal’s ruling, ” Law Hock Hua, the Strata Property Owners Association chairman, reportedly said

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