Managing your own high-rise

Buying and owning an apartment is easy enough for those who can afford it, but after that comes a string of worries. As always, maintenance is a problem, and one should know as much as one can about what property management involves.

Penang has one of the highest densities of apartments and condominiums in Malaysia, and this is set to increase as more and more developments are constructed and completed. In a practical sense, this means that there are not enough qualified property managers to cover all these properties in the state alone, leading to a growth in illegal or unqualified property managers. This is despite the many graduates coming into this industry over the past few years.

There simply aren’t enough people with hands-on experience to fill the gap.

However, more and more owners are becoming aware of the benefits of engaging a truly qualified property manager.

As the country continues to develop and grow, there will be more and more stratified development heading towards self-management, as owners look towards keeping costs down and begin to understand the management process. Most owners are primarily interested in knowing what and how their monthly maintenance fees are being spent, and whether there are adequate checks and balances in place to protect their money when contracts are awarded.

There is a perception that owners have no choice but to engage registered valuers to manage their condominiums or apartments. This is not true. The fact is, owners are free to employ their own building supervisor or building manager and other site staff without needing to engage a qualified property manager.

They are well within their rights to self-manage; they can engage whoever they want.

The industry can be split into commercial and residential management. The controversy in the market on who is more qualified or competent has everything to do with who charges the more lucrative fees for managing commercial sites versus those managing low and medium cost residential units, which are generally less profitable compared to managing, say, shopping malls.

Serving on a joint management committee or management corporation is entirely voluntary and also very thankless. Those brave enough to serve on behalf of their fellow owners tend to receive a lot of grief. In 90% of cases these grievances are grossly unjustified, but the remaining 10% are the ones that can create a bad impression for everyone to see.

If owners decide to manage their own buildings, there are a few things they should look out for:

1) Ensure that all committee and council members are covered by insurance under the Errors and Omission coverage, which, in general, is an insurance policy taken out by the committee or management council to protect its serving members from legal suits. A normal coverage of RM1mil to RM5mil will attract a yearly premium of between RM2,000 and RM5,000.

The re are two main Acts of Parliament covering property management in general: the Building and Common Property (Maintenance and Management) Act 2007 (BCPA) and the Strata Title Act 1985/2007 (STA). As long as the committee or council members follow the two Acts, any legal suit against them will be covered by their insurance if they did not break any laws.

2) Come up with a preventive maintenance plan for future works to the building’s common areas.

3) Buildings over 15 years old require extra planning to replace major parts, such as water tanks and pipes, and lift components.

4) Structural engineer recertification is required for buildings that are 10 years old or older.

Regrettably, some high-end condominiums are managed by persons with borrowed licenses. (Basically, this means borrowing someone else’s license to set up your own property management, and paying the actual license holder a fixed fee every month, as long as both parties aren’t practicing in the same area.) On the surface, they appear to be doing well, but there are likely to be numerous issues that will crop up in the future as a result of non-routine maintenance not being carried out.

Any amendments and replacement of the BCPA and STA to the Strata Management Act 2012, along with the planned amendments to the VAEA will result in a new playing field. It is planned for non-licensed property managers to be allowed to register under the BOVAE provided they meet certain qualifying conditions. This whole dimension will allow the industry to find its equilibrium and ensure better protection for owners who are currently at the mercy of unscrupulous individuals and companies. Joint management committees, management councils and owners will have better recourse for action against errant registered property managers if this amendment is approved.

The role of a property manager should be one of independence but at the same time, one that gives professional and impartial advice to owners. There are times when there will be differences of opinion but ultimately as the client, i.e. the majority owners, is represented by the committee or council, the decision will be made by them.

Licensed versus unlicensed or borrowed licensed property managers

a) Check to see if the company or person is registered with the Board of Valuers, Appraisers and Estate Agents (BOVAE). If a person is registered with the Building Management Association of Malaysia (BMAM) it does not necessarily mean the company or person is registered with the Board. BMAM is simply an association representing owners and multi-stakeholders, including unlicensed members who are as defined under the Valuers, Appraisers and Estate Agents Act 1981 (VAEA Act), which is looking to liberalise the property management industry.

b) If a company or person is registered then there is recourse for the joint management committee or management corporation to make a legitimate complaint to the Professional Body. Whereas if the company or person is not licensed then there would be no recourse nor accountability.

c) It’s a good idea to check with the Registrar of Companies and the BOVAE to see if the firm is on the level.

Mark Saw is an executive director of PPC International and heads its Penang office. He is a fellow of the Royal Institution of Surveyors, Malaysia and member of the Royal Institution of Chartered Surveyors, UK.

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