'Property management lacks proper financial planning'
14/04/2004
NST By Sadna Saifuddin
Malaysian's property management industry is too
profit-oriented and lacks proper financial planning, according to a
study by Universiti Sains Malaysia.
Lecturers Dr Nor Malina Malek and Dr Tiun Ling Ta showed in the
study that some developers and property managers are taking
advantage of loopholes in the law.
The loopholes in the Strata Title Act 1985 and the Housing
Developers (Control and Licensing) Act 1966 have resulted in
countless unethical conducts by developers and property managers,
they said.
"The seriousness of these problems is reflected in the growing
number of complaints against errant developers or property managers
" Nor Malina and Tiun said in a jointly prepared research paper for
the International Real, Estate Research Symposium 2004 in Kuala
Lumpur yesterday.
The weakness of the property management system in the country begins
as early as at the planning and design stage, where the role of
building management will be taken into consideration only after the
construction is completed and the certificate of fitness is issued.
They said it has also become a trend in Malaysia for the property
developers to emphasise on the aesthetic aspects of a building so as
to promote Wes, but neglect the local climate as well as social and
spiritual needs of residents.
For example, according to a survey done for the study, in Penang,
which has the highest number of high-rise residential complexes, 52
per cent of the complexes do not have facilities
for social activities.
The needs of the unfortunate and the elderly, especially in-terms of
accessibility around the complexes, are often neglected during the
designing and planning stage of buildings even though it is stated
in the Uniform Building By-Laws 1984.
Although guidelines indicate that unit owners are to be informed of
the portion, of the management fee the y should pay and how the
money collected is managed, the lack of transparency has denied
"residents of these rights.
"Due to the problems of management transparency, most of the
high-rise owners are not aware of how the money collected is
utilised," they added.
In Penang, only 32.6 per cent of the 133 high-rise residential
complexes surveyed displayed their monthly accounts to unit owners,
while 55.8 per cent never provided any information.
The similar problem is also faced in relation to the "sinking fund",
which is collected during the hand-over of vacant possessions, where
rampant misuse of the fund amounted to more than millions of
ringgit.
The researchers also found out that only 44.2 per cent of the
Residents Association representatives said that their property
managers disclosed the account for the sinking fund.
In Hong Kong, proper guidelines on budget and account management are
provided in the Building Management Ordinance (BMO).
The BMO requires the management corporations to prepare an annual
budget based on the amount to be paid by individual owners, in
addition to maintaining a contingency fund to provide for
deficiencies in a general fund.
The management corporations must also maintain proper records that
should be audited by established accountants, and the summary of the
income and expenditure has to be displayed in a prominent place in
the building.
These measures, the study stated, are seldom practised in Malaysia,
leading to sticky situations especially before the establishment of
management corporations.
It said measures must also be taken to prevent corruption cases in
property management.
Previous studies have shown that there is a high tendency of
corruption practices committed in building management, particularly
pertaining to contracts, procurement of services and goods and
financial management. |
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