Maintenance fee defaulters may increase due to flat rate, says MIPFM

The flat rate will result in a lot of confusion and uncertainty among strata owners


THERE may be an increase in property owners who neglect their maintenance charges or sinking funds in mixed-use strata developments if they need to pay the same rate as other parcel holders.

The Malaysian Institute of Property and Facility Managers (MIPFM) president Adzman Shah Mohd Ariffin (picture) said the flat rate will result in a lot of confusion and uncertainty among strata owners.

“The rates have to be different because there are different relevant expenses. You cannot have one rate while not having to pay the same expenses. It is about paying what you are using.

“The implications of this new blanket rule include a hike in defaulters as they might want to wait for the new rate. Some property managers are also getting legal advice to challenge the court decision,” he said at a press conference in Petaling Jaya yesterday.

Adzman Shah added that the practitioners and strata property owners have long recognised the vast differences in the cost of managing and maintaining mixed-use developments from a single tower with different uses to several buildings/towers on top of podium building to enbloc/freestanding buildings situated on the same land title.

For example, there is a retail mall, serviced apartments and office units within a mixed development on the same land title.

The operational cost for the retail mall is RM2 to RM3 per sq ft per month (psf pm) against a serviced apartment at 30 sen to 40 sen psf pm and an office unit at 80 sen to RM1 psf pm.

He said the conversion to share units at the same rate will be highly inequitable and will cause disharmony among owners and joint management bodies (JMBs) as there will be an element of subsidisation between the parties.

“If the fund is inadequate because people want to wait for the new rate, certain facilities may not be available for use. The service vendors including the security, cleaning, lift maintenance and utilities must be paid. In the meantime, somebody must fork out money to pay the service providers.

“If the owners who used to pay the previous rate of maintenance fee and sinking fund now become defaulters because of the flat rate, property managers will have a lot more problems,” he said.

Adzman Shah added that generally, there is not much of a challenge in managing a building which is 80% occupied. However, if the occupancy rate is 60% or below, there is definitely a list of defaulters.

MIPFM secretary general Nageswaran Muniandy said the growing number of defaulters will cause the value of the property to depreciate due to poor maintenance.

“A lot of prospective buyers, especially the younger generations are now more aware of the maintenance of strata properties. They will go to the JMB office and request to look at the financial information of the property before buying it.

“Investors who want to sell their properties in three years would not want the property to be slapped with decreasing funds for maintenance, as property that is badly maintained will definitely be reduced in value,” he said.

MIPFM urged the Housing and Local Government Ministry to urgently look into the matter and provide an amicable solution to the issue which may involve, among others, amending the Strata Management Act 2013 (Act 757) to make Section 60(3)(b) consistent for both management corporations and JMBs, and reviewing the share units formula under First Schedule to ensure equitable treatment for all parties.