Shifting Of Mindset Is Key In Property Management

Shifting Of Mindset Is Key In Property Management

The quality of property management in Malaysia, however, is still sadly below par, as highlighted by several industry experts during a forum at the inaugural Malaysian Institute of Professional Property Managers (MIPPM) conference.

Ambiguity in Standards and Professionalism

Adzman Shah, Chief Consultant at Exastrata Solutions Sdn Bhd shared that property management in Malaysia is governed by the Valuers, Appraisers and Estate Agents Act 1981 (VAEA) (Act 242) and Strata Title Act (STA)1985 and covers the management and control of any land, building and any interest therein. 

However, there has never been a standard guideline to ensure that high-rise residential properties are managed in a professional manner. Thus, some property managers can be careless in handling properties under their care. 

Additionally, as registered property managers under the Board of Valuers, Appraisers and Estate Agents Malaysia (BOVAEA) command high professional fees, the management of medium and lower-cost buildings usually resort to hiring unlicensed ‘managers’. 

Further compounding the matter is – for many years, developers who are just looking to fulfil their legal responsibility (to manage the building before the issuance of strata titles to unit owners) will tender contracts to property management companies, who in turn will outsource ‘managers’ who do not have valuable hands-on experience and the necessary technical knowledge related to facility management.

As highlighted in the research paper, Managing High-Rise Residential Building in Malaysia: Where Are We?(2009), carried out by Dr Tiun LT, the STA 1985 and the Housing Developers (Control and Licensing) Act 1966 have many loopholes and tend to be biased towards developers especially before the issuance of the strata titles. 

Some developers have even established their own subsidiaries to manage the building – where the staff, often sourced from family members or close acquaintances lack the proper training and experience to carry out property management efficiently and ethically.

There have been many instances of unscrupulous parties trying to make profits by cutting corners and providing low-quality management services in return for high service fees. 

Admittedly, the poor industry standards have been exacerbated due to ignorance from buyers and a third world mentality when it comes to maintenance.

Many do not understand the basic concept of high-rise/strata living – as clearly shown by the high percentage of maintenance fee defaulters among strata owners. This, in turn, derails the monthly budget for operating and upkeep expenses, leading to disrepair. 

New Act to Address Problems

Sarkunan Subramaniam, MIPPM’s president says that there is an urgent need for quality property management services. It is with some relief that the industry will see some of its loopholes addressed, with the introduction of the Strata Management Act 2013 (SMA 2013) last year. The Act was drafted to address the problems of unregulated property management, i.e, the many cases of mismanaged funds and poor services rendered.

As Sarkunan explained, developers who usually manage the building for the first year are now required to list down service charges item by item, in the sales and purchase agreement for the primary properties. 

Besides that, 0.5% of the project’s construction cost must be deposited with the Commissioner of Buildings (COB); to be used for the common area defects upon a handover. Any issues that arise can be brought to the COB. 

Also under the Act, parties not registered with the board (BOVAEA), will have to pay a bond to the Joint Management Body (JMB) or Management Committee (MC). This will serve as a professional liability and public protection. Compared to their registered counterparts, these managers are not covered by the professional indemnity insurance. 

Shifting from Corrective to Preventative Maintenance

Property management is almost always not taken into consideration during the planning stages of development for most projects in Malaysia. Instead, the emphasis is on cutting costs as well as location and aesthetics of the building that can attract buyers. 

Julian Cheng, GM of Sunway Group’s Property Management Division stressed that right product planning is vital in keeping (future) residents satisfied. A qualified property manager himself, he shared that numerous complaints have been filed by residents over high service charges and defects and disrepair after the Defects Liability Period.

A high number of buildings call for unwarranted expenses due to high consumption of energy and water as well as major defects in common areas as the building ages.

Developers should consult property managers during the project planning stage – consideration on issues relating to building management which can reduce future management workload must be taken care of from the design and construction stages.

These include the adoption of good quality building materials, provision of access to parts of the building that requires regular maintenance and high quality of workmanship. As Sunway has committed to this procedure, Julian Cheng shared that most of the developers manage to achieve an average of 93% in maintenance fee collections for most of their projects.

Besides that, management methods currently being applied in most strata developments across Malaysia only involve routine management, i.e – daily maintenance activities such as security, garbage disposal and cleaning of common areas.

Necessary actions will only be taken as and when problems arise or when facilities break down. There is no apparent effort at regular intervals or contingency plans to identify problems before they actually occur – a prime example being regularly broken down elevators. 

Preventive maintenance, a series of time-based maintenance executions such as adjusting, lubricating, cleaning and replacing components – if carried out properly will result in minimal equipment breakdowns and disrepair. Not only that, but pecuniary benefits include an extension of equipment life and life cycle cost savings. 

Stepping Up To the Plate

Adzman Shah agrees that there is a need for an uplift in industry standards – sands of time are shifting and a growing number of owners are now getting more knowledgeable and are aware of their rights as unit owners, hence demanding proper management services. 

Owners might be satisfied with basic cleaning and security services in the past, but with the SMA 2013 coming into play, more owners are realising their rights, and will exercise them accordingly. According to Datuk Pretam Singh, a partner at Pretam Singh & Co, over 1,200 cases have been filed with the Strata Management Tribunal (SMT) this year itself.

Hence, the time to improve industry quality is now, before the gap in property management capacity and market expectation gets too far apart.

Dr Lim Lan Yuan, President of Singapore Association of Property and Facility Managers believes that shifting of mindset is key towards steering the industry in the right direction. He stressed that property management is all about human management. Providing proper and prompt response to residents’ complaints and taking into consideration owners’ feedback and suggestions go a long way in keeping tenants happy and satisfied tenants will not dither to pay their service charges. 

One way to facilitate engagement with tenants is to leverage on information technology, shared Julian Cheng. Some developers have taken the step to introduce phone apps and utilizing online platforms to assist in communication.

Communicating with tenants via Facebook or Twitter could help strengthen relationships – property managers could even use their Twitter accounts to communicate directly with tenants about repairs and other concerns.

Current and Future Challenges

The new Act (SMA 2013) may have provided more protection for strata owners, but its clause which states that only those admitted as registered valuers under Section 21(1) of VAEA (Act 242) has sparked a debate among industry players.

The main concern being will existing non-registered albeit experienced property managers lose their jobs and will there be enough registered property managers to cater to the demand?

In supporting a level playing field and to support non-valuers who have the means and capabilities to be a professional property manager, Sarkunan Subramaniam shared that MIPPM has proposed to the Board that registration should be opened to managers with suitable qualifications and industrial training under a new Register of Property Managers.

The proposal is currently under discussion and a decision on the aforementioned Section 21(1) amendment is to made in 2017. 

On standardising the country’s property management industry and improving regulations, Dr Lim Lan Yuan said that there is no need to reinvent the wheel and suggested that Malaysia should review and adopt the strata management acts of neighbouring countries. 

Even Singapore studied and adopted Australia’s New South Wales’ Act according to suitability and requirement of the local industry. 

Reinvention is Key

The level of professionalism and the management approach practiced by more than half of the property managers in the country is questionable, as noted by Datuk Pretam Singh. He said that many do not have knowledge of relevant Acts related to management and facilities maintenance and fully depend on service contractors and their supervisor instead. 

On boosting the industry standards, Kamarulzaman Mat Salleh, Head of COB at DBKL lauds MIPPM’s efforts in providing training and creating awareness on the importance of professionalism in property management.

He stressed that property managers should reinvent themselves and to enhance their capacity to meet market expectations. Equipping themselves with the proper practices and keeping updated with current laws is a must.

Sharing this sentiment is Adzman Shah, who explained that new expectations by owners mean that property managers have to partake in lifelong learning –  attending training sessions and keeping abreast with the market are vital steps. 

After all, real estate investors would opt for managers with the necessary knowledge and experience to ensure that their investments are protected and will grow in value.

 

This article was first published in the iProperty.com Malaysia December 2016 Magazine. Get your copy from selected news stands or view the magazine online for free at www.iproperty.com.my/magazine.  Better yet, order a discounted subscription by putting in your details in the form below!

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