Contributed by Mary Lau

Singapore apparently has a proven solution to all this. So why is there so much resistance towards mirroring the Singaporean equivalent of the Strata Management Act 2013 (SMA 2013) – the Building Maintenance and Strata Management Act (BMSMA)?

Photo by Peter Nguyen on Unsplash.

In 2009, Professor Alice Christudason wrote about the usage of different rates in Singapore and that the "pay for what you use" model could lead to fragmented communal living, to the extreme that the maintenance of the roof may be thought to be the responsibility of owners living at the top.

From my research, there is a number of notable mixed developments in Kuala Lumpur that are using one rate even after the Management Corporation (MC) is formed, instead of different rates under one main committee.

I am involved in another mixed development with a business hotel component and it has been practical for us to use one rate, which is about 40 cents per square foot. We give and take within a tolerable variance. If using different rates, owners of the office suites would pay less than the residential owners as the latter enjoys more facilities. However, without the other components, the office component might not be valued as highly.

The concept and functions of management corporations (MCs) and subsidiary management corporations (Sub MCs) under our SMA 2013 are similar to the ones provided by the BMSMA. Under our current legislation, the stringent requirements to form the two-tier management are not encouraging. To date, only one mixed project has it.

Recognising the problems associated with two-tier management, Christudason recommended an alternative solution for mixed projects to use a unified MC. However, the MC must be arbitrated by an external party, like a government unit, in the event of disputes among the component owners. Moreover, this is to have proper representation of the various components in the MC, using a formula linked to share value and monetary contribution.

Among the recent amendments to BMSMA is that one seat be automatically allocated to each user group under a single-tier management so that the different classes of users have a voice in the council. We don’t have this provision in the SMA for the single-tier management.

On Sept 12, 2019, I gave a presentation on this issue at the Real Estate and Housing Developers' Association Strata Planning and Management event. If different rates are to be used, I recommended empowering the Commissioner of Buildings (COB) to determine the rates if owners are not agreeable to them. Under the SMA 2013, the COB has that authority only during the developer-managed period.

Owners need to understand that without the two-tier management, the simplistic and liberal granting of exclusive common property and categorisation of shared common property, as carried out in my mixed development, are not right.

After the MCs are formed, legislation requires them to be clearly defined and marked on a special plan.

After that, they need the consent of proprietors whose combined number of share units has to be at two-thirds of the total number of share units in the development and not just based on the number of members present at the AGM.

Why do some people feel so strongly against uniform rates? They are concerned for the component owners who would incur higher rates of maintenance charges should a uniform rate be used.

In the article "Lacuna in the Strata Management Legislation (Part 1)" dated Jan 3, 2018, a number of proposals were submitted to the Ministry of Urban Wellbeing, Housing, and Local Government in 2017 by a few organisations jointly including the National House Buyers Association.

One of the proposals was to extend Section 60 of the SMA 2013, which allows the usage of different rates during the Management Corporation period to JMBs and developer-managed period.

I understand proposals have been submitted for the amendment of the SMA 2013 to include the formation of Sub-JMBs.

Read a primer on different and uniform rates, or find out what you should know when buying into strata living.

About the contributor

Mary Lau graduated from the University of Reading, England, with a BSc Land Management (Valuation Specialisation) in 1991. In 2002, she was appointed High Court Assessor in Sarawak for compulsory acquisition and compensation cases and sat on the bench with the judge. She began her training with CH Williams and later held senior positions in valuation firms such as Henry Butcher, City Valuers and was a Director at Hasmi and Associates in 1999. She began her own setups in real estate investment and other ventures by 2007. She is a licenced valuer with the Board of Valuers in Malaysia.

Disclaimer

This article is intended to convey general information only. It does not constitute advice for your specific needs. This article cannot disclose all of the risks and other factors necessary to evaluate a particular situation.

Any interested party should study each situation carefully. You should seek and obtain independent professional advice for your specific needs and situation.

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