It was a very packed hall. Full of people wanting to learn how to stay ahead with their property investments. kopiandproperty.com was invited to write about the event. The occasion was EdgeProp.my Symposium on Excellent Property Management 2019 “Is your investment future-proof?” Many interesting topics were covered by the many invited distinguished speakers from the industry. Perhaps we start by covering someone from the buyers’ side. He is The National House Buyers Association honorary secretary-general Datuk Chang Kim Loong.
Maintenance fee is a very important issue because any property which is well maintained will continue to increase in price. Properties where the buyers refuse to pay the maintenance fees with the excuse that they will pay when they sell their properties in the future will be actually ‘destroying’ the value of the properties they stay in. However, what if the potential buyers are offered this seemingly attractive offer? ‘No maintenance fees for xxx number of months”
The National House Buyers Association honorary secretary-general Datuk Chang Kim Loong gave his frank assessment of such an offer. He says that buyers must beware of such sales pitches. He said, “A developer may promise at the time of sale, things like free maintenance fees for three years, but the reality is that the Strata Management Act 2013 (SMA 2013) says that a developer must form the Joint Management Body (JMB) within 12 months from the date of Vacant Possession (VP). Accordingly, the developer must pay the maintenance charge to the JMB for the second and third year, after having lapsed the developer’s management period of the first year.”
He shared that one reason the developer is able to honour such offer; free maintenance fee is because of factors such as no big capital expenses during the first few years since it’s a new building and only minimum expenses are incurred such as paying the salaries of only a few management staff. “Thus, it is not wrong or misleading for the developer’s creativity in offering to pay the maintenance charges in the first year (developer’s managing period) but in the second and third year, it becomes apparently difficult when the JMB takes over the management control. The JMB is an entirely new set up, whether the fellow owners run it or they employ licensed property managers. Can they sustain?” To read more, click here:Article in edgeprop.my here.
The basic idea of maintenance fee is that everyone (owner) contributes so that everything will always be in working order. Just remember that the more facilities or extravagant such facilities are, making sure they stay the same will be harder than the simpler ones. As for major works like malfunctioning lifts, the sinking fund may be needed. For condos, after 12-15 years, a repainting of the whole building may also be necessary so that it does not become an eye sore and potential buyers shun the project even before they inspect the unit. Without sufficient funds, the project will not just look bad but it will also be losing its value too. That’s a real pity because the HDB flats in Singapore continue to increase in price because the maintenance was done right. Happy understanding.
<Featured Image is courtesy of Stock Photos from Yeexin Richelle >
Article written and edited by Charles. News article summarised by Dina Batrisyia.
Next suggested article: Leaking units and maintenance fee defaulters?