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Higher maintenance fees due to GST

Until today whenever anyone were to ask me if a certain condo is worth buying, I have always asked them to look at the maintenance of the condo. Even if it is a 10 year old project, if the maintenance is ok, they should go ahead. However, for a new condo, if the maintenance starts to deteriorate, better skip until they improve. There are not many cases where ‘sleeping’ management committees suddenly wake up and become first class. However, for a good management committee to keep doing a good job, that’s pretty normal. The reason is, once established and done right, the maintenance is really just maintenance. No one is talking about building a new condo block!
Thus, whenever I hear of any news report saying that the maintenance charges would have to increase due to GST, I always smile. For these management committees, even without GST I think they would already be struggling every month. Are the service providers being engaged by them today really have a very low margin and thus would be out of business as soon as GST kicks in? These management committees really could not engage another vendor who would be willing to charge lower? If GST is the sole reason why these vendors would close shop, then I think it may be best to let them close shop. Looking at even the traditional businesses being listed in BURSA, none of them are aiming for a margin of just 6%. I repeat, NONE are aiming at just 6% margin.
Come on, GST would definitely be implemented. Take steps to prepare for it. This has been delayed and was one of the major reason why rating agencies rated Malaysia lower previously. Get just a few quotations, it would already reveal price differences and for some vendors who are more efficient than others, they would be able to offer a lower rate. Use them. In any business, competition allows everyone to improve and in the future, all the businesses become more resilient. There is also the suggestion that with GST, software and even personnel would have to be hired and this would meant an additional RM4,000 – RM5,000 per month. If only this is true, I think GST would mean the end of all SMEs in Malaysia. If you believe, then better start selling everything you have today before GST and keep cash.
For condos with ‘not so efficient’ management committees, take them out and vote new ones in. There are bound to be successful examples that everyone can follow. My personal conclusion, GST is not going to be that game changer. Other more important stuffs such as ensuring all maintenance fees are collected, making sure vendors are not chosen because of CONNECTIONS, taking serious measures against those who did not pay on time and more. These would be much more important and will ensure the condo continues to increase in price in future. GST would be just a one time adjustment. Happy finding a nice condo with an efficient condo management committee. If not, then good luck.
written on 1 March 2015
Next suggested article: GST: Prices down vs Prices up.

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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