Flat Rate for All Mixed-Use Property
MIPFM views the recent judgement made in the Court of Appeal as a landmark decision which will result in a lot of confusion and uncertainty in the strata owner’s community.
The practitioners and strata property owners have long recognised the vast difference in the cost of managing and maintaining mixed-use developments from a single tower with different uses to several buildings/towers on top of podium building to enbloc/freestanding buildings situated on the same land title.
The Strata Management Act 2013 (Act 757) and Strata Management Regulations 2015 are the governing legislation for strata management related matters. Act 757, unfortunately, did not foresee the evolution of property development which involved more and more different components with exclusive facilities and amenities being constructed on the same land title.
Following the various complications faced by Joint Management Bodies (JMB), strata owners and developers in relation to this problem, even the Ministry of Housing and Local Government has even recognised this issue which needs to be addressed for long term solution.
A good example is when there is a Mall, Service Apartment and Office within a mixed development on the same land title. The operational cost for Mall is RM 2.00 -3.00 psf pm against Service Apartment at RM 0.30 - 0.40 psf pm and Office at RM 0.80 - 1.00 psf pm. The conversion to share units at the same rate will be highly inequitable and will cause disharmony
among owners and JMBs as there will be an element of subsidisation between the parties.
Act 757, however, allows under Section 60 (3) (b) for Management Corporation (MC) (but silent for JMB) to determine different rates. The spirit of this provision clearly shows that the Act recognises such problem as inequitable treatment may occur. Having recognised the problem, Commissioners of Building (COB) have also allowed owners and JMBs, to decide in AGM on the rates as part of the democratic process.
As such, MIPFM wishes to urge the custodian of the Act, the Ministry of Housing and Local Government, to quickly look into the matter and provide an amicable solution to the issue which may involve, among others, amending the Act to make Section 60 (3) (b) consistent for both MC and JMB and review of the share units formula under First Schedule to ensure equitableness for all parties.