Housing maintenance in Penang


Proper management and maintenance of high rise buildings are key to good living and good household economics. Some rethinking and restructuring needs doing on that front.

A well-managed and maintained housing development can enhance quality of life and wellbeing, promote neighbourliness and strengthen community ties. Poorly maintained developments do just the opposite: damage health from poor living conditions, break down social cohesion and contribute to environmentally unsustainable practices.

The best kinds of management systems are proactive by nature. Such systems are able to take preventative measures and significantly reduce costs by detecting problems and responding to them early. Reactive systems, on the other hand, are limited to dealing with the day-to-day manoeuvring of problems. The failure to invest adequately in repairs and maintenance lead, over time, to the early erosion of housing developments and the need to renovate or demolish and rebuild housing developments before their expected lifetime.

Residential buildings should have a lifetime of at least 60 years. However, a portion of the low cost housing stock in Penang (and Malaysia as a whole) is severely degraded, and in some instances last only 10 years. Despite the obvious benefits of proactive management systems, Malaysia’s state-subsidised housing is managed by Joint Management Boards (JMBs) and Management Corporations (MCs) which are isolated from each other and receive little state support2.

Design for lower maintenance

The problem can partly be addressed at the design stage. The extent of the required technical management in a building is to a significant extent influenced by its original design and construction. Unfortunately, the minimum construction standards for low cost housing3 do not mandate design and building specification that reduce the costs of technical management in the longer term. Designers often consider maintenance to be the responsibility of the building owner once the housing development is completed.

Instead, we should be designing and building for durability and sustainability. A durable structure requires minimal maintenance over its anticipated life. However, when poor quality building materials are used in construction, the durability is likely to decline quickly.

Electricity costs generally count for 25% of a development’s maintenance4. Low cost design features can reduce energy requirements without significantly adding to building cost; for example, maximising natural ventilation to reduce the need for air conditioners, and design for motion sensors and dimmers to reduce energy use in communal areas where the return-oninvestment (ROI) makes it feasible. To ensure that sustainable maintenance aspects are built into design, close collaboration needs to occur between architects, structural engineers and maintenance professionals.

Economies of scale in technical management

Social housing providers in the UK and the US are able to effectively manage both planned and responsive maintenance through economies of scale, through a singlemanagement organisation that is responsible for thousands of units. These bodies have subsequently organised themselves into sub-regional consortia and partnerships to generate even greater procurement efficiencies. Penang can develop such an approach by bringing together individual JMBs and MCs of LC and LMC5 housing developments into consortia to support each other and undertake large maintenance projects.

PDC Setia Urus Sdn Bhd (Setia Urus), a wholly owned subsidiary company of Penang Development Corporation (PDC) Premier Holdings Sdn Bhd, can be used as a model for the management of all low cost housing in the state. Setia Urus currently manages just over 6,000 units across Penang. Maintenance works are performed on a large scale across a number of housing developments, cutting down on the administration costs of several maintenance work orders.

Supporting JMBs/MCs

The current process of developing an MC or JMB to manage LC and LMC housing developments has been ineffective. It assumes that, collectively, from the low income households will emerge a committee with the desire, time, skills, confidence and competence to take on management responsibilities with no reward. Assuming that MCs can be easily formed6, they are grossly underfinanced due to non-payment of maintenance fees by residents, and they have no enforcement powers (or will) to collect monies due. It is hardly surprising that maintenance is poor.

JMBs and MCs, from the outset, are relatively unsupported in making decisions on the technical maintenance of their housing developments. The Commissioner of Buildings (CoB)7 needs to be strengthened and brought forward as an independent third party to oversee and support JMBs/ MCs. A Housing Support Centre can be the focus for providing training courses and bringing together networks of JMBs and MCs, improving the overall knowledge of Penang’s housing management bodies.

The state government, CoB and local authorities need to work together to understand the stock condition of all People's Housing Project (PPR – a federal housing project), LC and LMC housing in Penang. Undertaking a stock condition survey and regular audits is necessary as the true condition of many of Penang’s housing developments is unknown.

Financial management

The majority of JMBs and MCs lack the enforcement power to collect maintenance fees from households who refuse to pay. The most common complaints from residents are that service charges are too high or that the level of service does not provide value for money. This is a chicken and egg situation, where a lack of enforcement leads to many residents not paying, resulting in low collection rates and poor levels of service.

Setting appropriate maintenance fees

It is the responsibility of the developer to set the initial maintenance fee, which then can be reconsidered during the first AGM and readjusted at subsequent AGMs or meetings. Since owners have to vote in changes in maintenance fees, it is critical that the initial maintenance fee is set at a level sufficient enough to maintain the building, since property owners are unlikely to vote in favour of increasing charges. A significant problem of both private and state-subsidised housing developments is that maintenance fees are based on a 100% collection rate and have no provision for poor collection rates.

The CoB, however, has the power to force a review of the maintenance accounts and should begin to systematically evaluate the accounts of housing developments that have fallen into disrepair.

Maintenance fees vary considerably, but those set in LC and LMC housing are generally set below cost, even as low as tens of ringgit. The state government, therefore, has to subsidise LC and LMC housing developments. Instead, we should be subsidising households in need by using means-testing.

State bodies in charge of LC/LMC/MC housing are dis-incentivised to act strongly against those in maintenance arrears because of the potential political repercussions. By allowing a non-governmental body to take over the role potentially allows for stronger enforcement to take place. A non-governmental, non-profit organisation may be able to work closer with households (working in partnership with the Welfare Department) to support them with advice and guidance if they are unable to afford their maintenance fees.

Collecting fees

The least we can do is make it easy for owners to pay maintenance fees. Many LC and LMC developments have onsite management offices but they are often limited to traditional working hours. Many LC developments do not even have functioning management offices. Although each development is required to operate an administrative office, low collection rates make it hard to staff such an office, and many developments are without active JMCs/ MCs to coordinate efforts to establish one.

Again, based on the model that Setia Urus uses, a network of community-based collection centres can be established. These can be expanded to take in privately constructed low cost developments that have no onsite facilities, with the locations and opening times of collection centres reviewed to ensure these are convenient facilities for residents. Payments can also be made online, but this practice can incur barriers of use by residents who do not use bank cards or are not technically savvy.

Another route is to make maintenance payments upfront, added into the purchase price of LC housing. This provides JMBs and MCs a guaranteed source of funding, allowing management to move towards a proactive system and remove collection costs. The feasibility of such an approach requires further study; a sufficient mechanism is required to collect the money from mortgage providers who may not be open to such a programme as it increases the risk profile of the mortgage. The impact of raising the price may also have an impact on access for those on the edge of affordability. An understanding of how maintenance is collected after the initial 10 years from households who have no history of making regular payments needs to be considered.

Shifting to leasehold

Underpinning many maintenance problems in Penang is the lack of control the state has. State-subsidised housing is sold as freehold, meaning that the household obtains the property and the rights to land in perpetuity and this has therefore limited control. This results in problems such as overcrowding, third-party subletting to non-eligibles and non-payment of maintenance fees.

Newly constructed PDC property is already sold as leasehold, but it is not current practice to add any special conditions in the leasehold titles. Therefore, legally enforcing the conditions that are agreed upon allocation of the unit becomes more difficult.

Shifting to leasehold for all future statesubsidised housing means that enforceable conditions on the lease can be added, which include maintenance fee collection, with the ultimate sanction being the forfeit of the property. This will significantly strengthen the enforcement powers of the authorities and motivate those who can afford to pay to keep up to date with their maintenance charges.


The maintenance and management of Penang’s LC and LMC housing developments are indeed a complex and politically-sensitive issue. By shifting towards a proactive maintenance and management system that recognises maintenance issues at the design stage, adopts new governance structures to gain from economies of scale, supports JMBs/ MCs and pushes for stronger action against those unwilling to pay, the benefits of better maintained and managed housing can be realised.

1 Narendra K. Gosain, "The High Cost of Low Maintenance and Design Mistakes", www. structuremag.org/article. aspx?articleID=710
2JMBs and MCs are statutory bodies formed to manage and maintain subdivided buildings and common property in Strata developments. A JMB is formed as a temporary measure until a permanent MC can be established. An MC can be formed only after the original proprietor of the land on which the Strata development stands, who is normally the developer, successfully applies for subdivision of the building and the Land Office (PTG) issues the Strata titles for the respective parcels in the building.
3 Construction Industry Standards 2, set by the Construction Industry Development Board (CIDB) Malaysia.
4 In housing developments managed by PDC Setia Urus Sdn Bhd.
5 Low cost, low-medium cost and medium cost state subsidised housing
6 Even to form an MC there must be enough people to vote, owners need paid-up maintenance fees to be eligible to vote, and consequently many of Penang’s low cost developments are without such committees.
7 It is the presidents of Penang’s two municipal councils (MPPP and MPSP) who perform the dual duty as head of the CoB under each of the local councils in the Penang. A position introduced in the Building and Common Property (Maintenance and Management) Act 2007, the CoB oversees the JMBs and MCs, and has the responsibility to ensure that proper financial accounts are being kept and that property owners also fulfil their legal obligations.

Maxine Carr is a research analyst at the Penang Institute.

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