Hot debate on 'illegal' property managers
01/12/2006 www. theedge.daily By Au Foong Yee

Roundtable discussions are forums where panellists — experts in their respective fields — can speak their mind to exchange, understand, echo or oppose viewpoints expressed, explicitly or perhaps implied.
Spontaneity is demanded. Inevitably, emotions can run high, particularly when panel members are passionate about the issue at hand, as it may have a direct impact on them, on a particular industry or on the public.

This sums up the 2½-hour The Edge Roundtable on Property Management on Dec 1. The no-holds barred forum witnessed red faces with occasional outbursts by panellists trying to talk at the same time, perhaps to drown out dissenting views.

The "hot" issue was none other than the proposed amendments to the Valuers, Appraisers and Estate Agents Act 1981. The proposed changes as well as the existing Act irk those who do not qualify to be called property managers in the eyes of the law and are therefore deemed illegal.

Kudos must go to the Director-General of Valuation and Property Services Department, Ministry of Finance, Haji Abdullah Thalith Md Thani, at whom most of the queries were directed.

That Abdullah had consented to take part in the roundtable speaks volumes of the man, who was promoted to the position only earlier in the year. Not many senior civil servants would allow themselves to be queried by those opposing a set of regulations, let alone be willing to go on record.

Abdullah's stand is clear — the law is already there, and he is proposing to open it up so as to enable the property management pie (worth several hundred million ringgit and fast growing) to be shared by more! Abdullah explained the rationale behind the law and the proposed amendments. Backing him were Sarkunan Subramaniam, chairman of Property Consultancy & Valuation Surveying Division, Institution of Surveyors, Malaysia, and Wong Kok Soo, managing director of Yap Burgess Rawson International.

On the other side were Datuk Alan Tong (president of the International Real Estate Federation (Fiabci) Asia-Pacific regional secretariat), Datuk Teo Chiang Kok (adviser to the Malaysian Association of Shopping & Highrise Complex Management or PPK) and Joyce Yap (president of PPK). Tong, a veteran developer, is also known to the Malaysian property fraternity as Malaysia's Condo King, for his successful building and management of condos.

The contention of Tong, Teo and Yap is — why have such a law in the first place, a law they feel goes against free market enterprise. As for the intended opening up of the law via the proposed amendments, they say these don't go far enough nor are fair to those outside the valuation fraternity.

The trio wanted to know why can't owners of buildings (for example shopping malls and, collectively, owners of condominiums/apartments) decide for themselves whom they want to manage their respective real estate? Property management, they contend, is a business and not a profession. And, this is one business that not only registered valuers or certified real estate agents can undertake. They also ask why have such regulations when globalisation means a dismantling of barriers and the promotion of competition?

Abdullah sincere
The arguments aside, there is no doubting the sincerity of the affable Abdullah. The law was put into place before his time and he wishes that more professionals would manage buildings. At the same time, he is wary of property owners being fleeced by fly-by-night operations. Thus the purpose of the law to protect these owners.

Towards this end, it is worthwhile pondering whether forcing all condo/apartment owners to appoint only registered property valuers and real estate agents as property managers is indeed the solution to such problems (read inferior upkeep of buildings for various reasons, including poor collection of maintenance fees and misappropriation of funds).

As the law now stands, the developer of a strata-titled project is to manage the property from when it is handed over to purchasers to the time when the strata title is issued. Upon issuance of the strata title, the property is to be run by a management corporation (MC) comprising owners of the project itself. And MCs can only appoint those registered by the Board of Valuers, Appraisers and Estate Agents to manage the property on their behalf. MCs are not even allowed to, for instance, retain the services of the developer (assuming the latter wishes to continue providing the service) to continue to manage the property.

One of the main concerns of the government is that unregistered property managers may dip their fingers into a project's sinking fund, which can run into millions of ringgit. But is forcing real estate owners to only appoint registered valuers or real estate agents the only solution? Why should property managers have control of the sinking fund in the first place? Shouldn't there be checks and balances put in place by the MCs? Why permit cash transactions? Who are the joint signatories to the fund's account?
In a property market environment that is seeing more and more luxurious homes being built, it is difficult to perceive that discerning investors would wish to surrender their right to appoint a property manager of their choice to look after what is after all, their investments.

It would be a different case altogether with low-cost or perhaps medium-cost apartments. And this appears to be the segment of the market where property managment-related problems are plentiful. This is one area that the soon-to-be set up Commissioner of Buildings (COB) can serve to address. However, for this to be a reality, the government must demonstrate its seriousness in getting feedback from the property fraternity on the parameters of the COB, including the potential pitfalls. It is vital that the government open up its channel of communication to listen (and not merely hear) what the players have to offer. After waiting years for its fruition, the COB must not disappoint.

Back to the Valuers, Appraisers and Estate Agents Act 1981; to borrow some words of wisdom from an elderly member of my family — "Why chop off the legs to get away from the worms?" Why decide who should and can have a slice of the property management business pie? Why not open up the market and show no mercy to those guilty of criminal offences? As for property owners, since you hold your destiny in your hands, be accountable for your actions. Don't go running to the authorities with your woes should you err when you make a decision on a property investment. Now isn't this the interpretation of free enterprise?