Managing Buildings Well
by Rozi Ali, NST Property Times 30-Oct-2005
It's not just about collecting maintenance fees and
keeping the lifts clean. There is more to property management, writes
ROZI ALI.
PROPERTY management
is not a subject that occupies centre stage in the public
consciousness. But two recent fatal incidents bring it to the fore.
In early August, eight-year-old Bianca Thio Yee Shen drowned in the
swimming pool at the Kelana Mahkota condominium in Petaling Jaya.
Her left leg reportedly got sucked into a drainage hole at the
1.2-metre end of the pool, causing her to be trapped underwater.
More recently, 10-year-old Fong Wei Xiong plunged to his death in the
lift shaft when attempting to jump out from a lift stalled between
floors.
Such incidents put a question mark on the kind of management and
maintenance provided by building owners. What kind of services and
standards should consumers expect from property managers?
Equally crucial is whether the residents, be they owners or tenants,
can hold the property managers accountable for any injuries or
fatalities.
According to Sarkunan Subramaniam, deputy chairman of the Property
Consultancy and Valuation Surveying Division of the Institution of
Surveyors Malaysia (ISM), the role of property managers is to achieve
optimum returns on behalf of building owners with maximum occupation
satisfaction for the residents, be they unit owners or tenants.
A tough balancing act? Evidently not - that is, if the property
managers are professional. And no, it is not just a matter of knowing
how to sponge off kiddy fingerprints from the granite pillars or
collecting service charges.
According to ISM, it entails the "formulation of value accretion
strategies, improving revenue flows, unlocking latent real estate
values while giving unit owners, tenants and users maximum
satisfaction."
But sadly, the profession is in a free-for-all. Any Ahmad, Muthu and Ah
Chong can put on a tie, bark at the guards or cleaners and, with a
puff, call himself property manager. Should this be allowed?
Apparently, the law says yes.
Under Section 21 of the Valuers, Appraisers and Estate Agents Act,
1981, only registered valuers and appraisers are allowed to manage a
property on behalf of the owner for a fee.
However, this does not preclude owners from managing the property
themselves.
"So, building owners have the prerogative to employ anyone to manage
their properties," says Sarkunan. "Some set up subsidiary management
companies where managers don?t charge a fee but are paid salaries.
"Some are doing a good job which explains why the law should be amended
to include professionals such as engineers and architects.
"What we don't want is fly-by-night consultants who run off with the
owners' deposits, or untrained and incompetent managers who give the
property management profession a bad name."
Professionally trained property managers are not a rare specie in
Malaysia. Local universities offer property management degree courses
where students learn all aspects of property, including estate agency
and valuation as well as the law, and principles and mechanics of
maintenance.
Unfortunately, an overwhelming number of graduates choose to go into
valuation. This may be due to the fact that building owners prefer to
manage on their own rather than engaging a property manager.
Consequently, the country is faced with a situation where some world-
class buildings retain their status quo while others deteriorate to the
level of Third World facilities.
Much to the dismay of the licensed and registered property managers,
the foregone conclusion by visitors is that the country's architectural
landscape is not matched by standards in property management.
Registered property managers will not compromise their duties in
managing the property and keeping a proper account as they may end up
losing their licence and, thus, their means of livelihood.
They are also covered by a mandatory professional liability insurance.
"In the event of an accident or negligence, the public can seek legal
recourse and avail themselves of the liability insurance," says
Sarkunan.
"Building owners should have a public liability insurance but who's
checking? Some would rather be declared bankrupt than pay compensation
from their own pocket."
But what happens if residents fail to pay the service charge? Would
this affect the property manager from discharging his duties?
"It's a chicken and egg situation. But moral and professional ethics
dictate that we should not compromise public safety," says a property
manager of a shopping complex.
An engineer who manages a commercial complex suggests that the public
should be educated on the principles behind the service charge and
contributions to a sinking fund.
"A resident would not want his property to erode in terms of asset
value. There's hidden economic loss behind non-payment and, of course,
you wouldn't want your safety and security to be jeopardised."
The lack of accountability in accounting for outgoings and service
charge accounts is not new. This has led to disputes between management
corporations, tenants and residents.
The bottom line here is accountability and transparency, says Sarkunan.
While registered property managers can be held accountable for
irregularities in the management of the building and accounts, it is
not always easy to prove irregularities by the management corporations
or building owners? agents.
Insurance Coverage
MOST apartment buildings have public liability insurance. Should
someone be injured while in the corridor, they can make a claim.
Usually, it is the property manager - management corporation - which
takes public liability insurance to protect itself against accidents
and mishaps that may happen in the public areas of a condominium. These
include the corridors, stairs and car parks.
Why the property manager? Because they are the party entrusted to
manage the property. Residents pay a monthly fee to the management
company.
In Malaysia, insurance cover for apartment buildings ranges from
RM500,000 to RM5 million.