Contributed by Lai Chee Hoe
(This is part 2 of an 8-part series. The link to the part 1 is here.)
As a backdrop, the current Strata Management Act 2013 (SMA 2013) came into force in most states in West Malaysia on June 1, 2015, and in Penang on June 12, 2015.
The Strata Management (Maintenance and Management) Regulations 2015 (SMR 2015), were introduced on June 2, 2015. Subsequently, on July 1, 2015, the Strata Management (Strata Management Tribunal) Regulations 2015 (SMTR 2015) came into force. Later, on May 2, 2019, the Strata Management (Compounding of Offences) Regulations 2019 was introduced.
At the time of writing, Sarawak has similarly amended its Strata Titles Ordinance 1995, splitting it into two separate pieces of legislation: the Strata (Subsidiary) Ordinance 2019 and the Strata Management Ordinance 2022, both of which came into effect on March 1, 2022.
In Sabah, efforts are underway to draft the Building Management Enactment, and it is understood that the Bill may be ready by 2025.
Chart 1
Relationship with other legislations
As mentioned in last week’s article published in Star Biz7 on Jan 18, SMA 2013 is not a standalone piece of legislation. It has a close nexus with other legislations (see chart 2).
Chart 2 illustrates the connection among the National Land Code, Housing Development (Control and Licensing) Act 1966, Street, Drainage and Building Act 1974, Local Government Act 1976, Town and Country Planning Act 1976 and Strata Titles Act 1985.
The National Land Code consolidates the laws related to land and land tenure, the registration of land titles and dealings with land. The Housing Development (Control and Licensing) Act 1966 provides for the control and licensing of the housing development business and ensures the protection of purchasers' interests.
The Street, Drainage and Building Act 1974 consolidates the laws governing streets, drainage, and buildings in various local authority areas within Peninsular Malaysia. It also addresses matters related to certificates of completion and compliance, as well as building plans for strata schemes.
The Local Government Act 1976 consolidates the laws concerning local government. It covers issues related to sanitation and nuisances within houses or buildings, including overcrowding, which is often prevalent in properties used as hostels or dormitories for students or workers.
The Town and Country Planning Act 1976 governs the control and regulation of town and country planning in Peninsular Malaysia. Among other provisions, it addresses the structure plan, local plans and planning permission for strata schemes.
The Strata Titles Act 1985 is the primary legislation for the subdivision of buildings or land into parcels. It outlines the process by which the original proprietor of the land can subdivide it into distinct parcels, ensuring strata titles can be issued to individual proprietors.
Chart 2
Since these legislations are interconnected, amending the Strata Management Act 2013 (SMA 2013) requires a thorough understanding of these related laws. Amending SMA 2013 in isolation is unwise, as any changes should harmonize with the existing legal framework. Amendments should avoid overlapping or encroaching on the domains of other legislation to prevent complications.
For instance, the authority to issue demolition notices for illegal extensions within a strata scheme currently resides with the local authority. The COB (Commissioner of Buildings), JMB (Joint Management Body), or MC (Management Corporation) do not possess such powers. Overstepping or conflicting with these boundaries could have disastrous consequences.
As of this writing, the Strata Titles Act 1985 is also undergoing amendments, spearheaded by the Ministry of Natural Resources and Environmental Sustainability.
Flow of events to complete a strata scheme
The general sequence of events for a developer to construct a strata scheme, from the initial stage up to the issuance of strata titles, is outlined in Chart 2.
As of this writing, although the Strata Management Act 2013 (SMA 2013) does not specifically address the sale of parcels, it imposes a precondition requiring developers to file a schedule of parcels with the Commissioner of Buildings (COB) before any parcel can be sold. This requirement also applies to amended schedules of parcels in the case of phased developments.
As illustrated in Chart 1, the full lifecycle of a strata scheme intersects with multiple legislations and is governed by various ministries and authorities. Consequently, amendments to matters related solely to strata management—generally regarded as covering the period after vacant possession is delivered to purchasers—must be carefully coordinated. Broader amendments may require collaboration and approval from other ministries to ensure alignment with the existing legislative framework.
Having been tasked with reviewing these legislations, I find it essential to establish the parameters and principles that will guide our approach. Where necessary, I will provide explanations for the rationale behind specific provisions to ensure accurate messaging and to prevent fundamental misconceptions.
In interpreting the provisions of these laws, we should consider whether a rigid or liberal approach is more appropriate, rather than relying solely on the Hansard, which often does not fully capture the legislative intent. This is not unusual, given the bureaucracy involved and the multiple layers of approvals required during the drafting and legislative process.
Guiding principles for amendment
The guiding principles in the proposed amendments aim to establish a well-structured self-regulatory mechanism that strikes a balance between being overly prescriptive and allowing excessive leniency.
A pertinent example illustrates this balance: while we seek to encourage phased developments to flourish in the current climate, it is equally important to safeguard the interests of both developers and purchasers. To achieve this, the following considerations will be explored:
- Transparent notification: Ensuring that a complete set of the schedule of parcels is provided to purchasers before the sale of parcels begins.
- Flexibility in amendments: Allowing a more adaptable approach to amending the legend and/or schedule of parcels for phased developments, accommodating changes while maintaining clarity and compliance.
- Equitable charges for provisional blocks: Mandating that the proprietor of a provisional block contributes to the payment of charges, albeit at a discounted rate. This discount would reflect the key principle that charges must correspond to the actual or anticipated expenditures required to maintain and manage the common property linked to the specific component.
These principles aim to create a fair and sustainable framework that ensures mutual benefit for all stakeholders involved in the development and management of strata schemes.
Parameters
When one mentions a strata scheme, one always views it as a high rise building seated on a piece of land. This generalisation is not wrong since it comprises the majority of the strata schemes in the peninsula Malaysia.
The reality however when proposing amendments needs to be able to cater to the multi-faceted types of developments which may include:
(a) Government housing;
(b) Low and mid cost;
(c) Old scheme without share units assigned;
(d) Strata schemes where the developer has wound up;
(e) Lease schemes;
(f) Rent to own schemes;
(g) Land held through donation or bequeathed held in trust;
(h) Wakaf;
(i) Transit oriented development;
(j) Township development;
(k) Strata warehouses;
(l) Strata industrial;
(m) Strata shop houses
Procedures in amending
To provide an understanding of how the amendment process works, I have outlined the steps below:
(a) Small group discussions
We have prepared targeted questions for specific stakeholders, identified as follows:
- COBs of DBKL
- Lembaga Perumahan Hartanah Selangor
- COBs across Selangor
- REHDA members
At the time of writing, we have conducted small group discussions with the above stakeholders. We plan to engage the remaining stakeholders by the first quarter of 2025.
These meetings are conducted exclusively with one stakeholder group at a time. The specific questions prepared are designed to elicit detailed views and an understanding of the underlying reasons behind their responses. This approach ensures a focused and in-depth exchange tailored to each stakeholder’s expertise and perspective.
(b) Focus group discussions
Focus group discussions will address specific subject matters in detail. These sessions will bring together multiple stakeholders involved in a particular issue to encourage dialogue between those with differing perspectives. This approach helps us gain a deeper understanding of the dynamics and viewpoints of both supporters and dissenters on critical topics.
(c) Working/technical committee
Once all reports are compiled, they will be reviewed by the working/technical committee. This committee will analyse the findings in depth and deliberate on policy issues. It serves as an intermediary step to refine and shape the proposed amendments based on the collected feedback.
(d) Steering committee
At the top of the hierarchy is the steering committee, comprising policymakers from the Ministry of Housing and Local Government (KPKT). This committee has the ultimate authority to determine the policies, set the direction, and approve the amendments.
Lai Chee Hoe is the litigation partner of Chee Hoe and Associates (CHA).
* If you have any specific subject matter you feel strongly about which requires amendment, kindly email to info@cheehoe.com OR izzah@kpkt.gov.my.
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