More will default on maintenance fees in these trying times

Payment for maintenance fees and other related charges will not be looked at as a priority during MCO


THE number of strata property owners who do not fully pay for their respective maintenance fees and related charges is expected to increase amid Movement Control Order (MCO) and the slowing economy.

Malaysian Institute of Property and Facility Managers president Adzman Shah Mohd Ariffin said several joint management bodies (JMB), management corps (MCs) and resident associations (RAs) have already experienced difficulty in collecting fees over the last few weeks.

“The obvious impact (of the challenging economy) is that the payment for maintenance fees and other related charges will not be looked at as a priority during this period.

“JMBs, MCs and RAs are already bracing themselves to face lower collections in the next few weeks due to the poor economic situation. In this aspect, it is important for them to have control over expenses and only spend on essential items such as utilities and critical service contract fees,” he told The Malaysian Reserve.

Adzman Shah added that landlords, especially for malls and strata retail units, are expecting a drop in rental collection due to stores closure.

Under the MCO, only essential services such as grocers and restaurants are allowed to remain open, albeit with limited operating hours.

Even then, some food and beverages players have chosen to close shop temporarily as sales are insufficient to cover operating costs, given that people are not allowed to leave their homes except for valid essential needs.

Adzman Shah said property and facility management service providers — which are included in the small and medium enterprise (SME) category — are also facing financial challenges due to the prolonged Covid-19 pandemic.

The service providers, including security, cleaning, building services maintenance and management office operations, among others, will be facing difficulties as clients attempt to reduce operating costs by limiting the headcount onsite.

“These companies still have to pay the employees’ salary which is a fixed cost to the companies. The recent assistance package announced by the government seems to offer a lot to the individuals, but unfortunately, such companies which fall under the SME category do not derive much benefit.

“If the government does not address the dilemma faced by the SMEs which are already badly affected by the poor economic conditions, these SMEs will not be able to sustain their business operations or it can afford to employ staff for the medium and long term,” he said.

Adzman Shah said the government should urgently look at the problems SMEs face since they form the bulk of taxpayers in terms of corporate tax and Sales and Services Tax (SST).

He added that some of the assistance for SMEs could include 50% discounts of commercial tariff electricity bills for the next three months, maintaining of 20% of SST payable for the next six months and moratorium of interest payments for the next six months for overdrafts and loans.

He also hopes that employers’ Employees Provident Fund (EPF) contribution for SMEs will be reduced by 50%, and employers’ Social Security Organisation (Socso) contribution will be borne by the government for six months.

Additionally, the assessment rate for all commercial and industrial properties for the second half of 2020 could be reduced by 50%, he added.