Is property building management a professional?

Have separate board 

WE refer to the letter “Leave it to professionals”, (see article below) on the issue of strata management.

Building management is not a profession: it is a multi-disciplinary management function encompassing a wide range of skills such as engineering, architecture, accounting, law, vocational skills, etc.

It cannot and should not be the exclusive domain of any particular profession like registered valuers.

No country has laws that specify that only registered valuers admitted as property managers pursuant to Section 21(1)(a) of the Valuers, Appraisers and Estate Agents Act, 1981 (VAEA Act) can undertake property management.

To put things in perspective, the Building Management Association of Malaysia (BMAM) is not objecting to registered valuers managing stratified properties.

What we are strongly opposed to is the creation of a monopoly favouring registered valuers if the Bill is signed into law in its present form.

The Board of Valuers, Appraisers and Estate Agents is offering to open a sub-register for non-valuer managing agents to be admitted as property managers.

We are not accepting the board’s proposal as it would only further entrench its monopoly over property management, given that the admission, suspension and even eventual deregistration of non-valuer property managers will be at the sole discretion of the board.

We are calling for the establishment of a separate multi-disciplinary Board of Building Managers under the jurisdiction of the Housing and Local Government Ministry with regulatory support from the Commissioner of Buildings (COB).

There are more than 4,000 stratified projects (80% of them residential) in Malaysia at the moment, and about five million Malaysians belonging to the low and middle income groups live in them.

Since the common properties and facilities in the flat and apartment premises cannot be sold or subdivided and are meant for the exclusive use of the residents, all that the owners need is a building manager to maintain the common areas and facilities, and not a property manager whose portfolio includes leasing, collection of rent, promotion of sales, etc.

A building manager appointed by the joint management body (JMB) or management corporation (MC) upon mutually agreed terms and conditions of scope of work and remuneration would be significantly cheaper than a property manager whose fees are subject to a schedule under the VAEA Act.

The building manager is only expected to carry out his duties and responsibilities according to the terms and conditions of his appointment as well as the instructions of the JMB or MC Management Committee.

All fiduciary responsibilities, particularly the management of the Building Fund Account, are undertaken by the JMB or MC pursuant to the Building and Common Property (Maintenance and Management) Act, 2007 and the Strata Titles Act, 1985.

These records are submitted to the COB every year after the annual general meeting.

PROF S. VENKATESWARAN
Secretary General
Building Management Association of Malaysia

Leave it to professionals

THE public deserves an unbiased understanding beyond the shadow play leading up to the third reading of the Strata Management Bill 2012 in parliament.

The proposed Act stipulates that a managing agent for stratified property must first be free from any potential conflict of interest (i.e. independent) and secondly, a registered property manager.

The Act replaces the Building and Common Property Act, which did not emphasise that such functions are to be performed by a registered property manager.

The key problem is that property management at present is also practised by an unregulated group and such parties are not accountable to a regulatory body unlike registered persons i.e. property professionals or chartered surveyors.

The new Act aims to rectify this disparity by uniformly regulating all property managers of stratified properties.

Under the Valuers, Appraisers and Estate Agents Act (VAEA), a Registered Property Manager must possess:

1) An academic qualification from an approved institution of higher learning or recognised professional examinations; and

2) Pass the Test of Professional Competence set by the regulating body.

These robust standards and established processes are aimed towards registering professionals of sound qualifications and adequate competency levels.

A registered property manager is continuously subjected to a code of conduct, professional standards and various stipulations under VAEA to ensure they discharge their duties in a manner that serves the public adequately and to the highest possible industry standards.

The registration of property managers and firms is undertaken by the Board of Valuers, Appraisers and Estate Agents Malaysia (board).

The board, a governmental regulatory body under the purview of the Finance Ministry, was set up in 1981 to regulate Estate Agents, Valuers, Appraisers and Property Managers in Malaysia.

It is legislatively empowered to deal with complaints from the public and take disciplinary action against any errant registered persons or firms, including stripping them of their licence and barring them from further practice, amongst other possible disciplinary measures.

Given the established competency requirements and standards imposed on registered property managers, I cannot see beyond reasonable logic for such professionals to utterly fail in their professional duties to a joint management corporation, management corporation or individual owner.

The board, in the spirit of laissez-faire, has opened the registration of property managers to include these non-regulated practitioners.

Property management was always the domain of property professionals but only in recent history, primarily property developers and others have set up property management businesses to rival property professionals for the property management trade but in an unregulated fashion, taking advantage of the limitations of statutes. This is where the battle lies and the public should take notice.

If a non-regulated practitioner wishes to practise as a property manager in efforts to legally comply with the greater standards as demanded by the new Act, I cannot see why they should shy away and not readily subject themselves through the established process and competency test in order to become a registered property manager.

The process is not designed to penalise individuals but to assess if a candidate has the required level of competency, in order to be accountable to the public as a practising professional.

The merit of regulating the property management profession far outweighs any self-serving agenda, and the public must insist for high standards in lieu of the nation’s Vision 2020 agenda.

To the lawmakers and members of Parliament, my plea is to make the right decisions in cognisance of standards, accountability and professionalism.

The last thing we want is a mushrooming of “urban slums” in our beautiful country.

A. PADMAN  Kuala Lumpur - The Star, Nov 5 2012

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Managing strata properties in Malaysia
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Managing strata properties in Malaysia

I LIKE to highlight the rather difficult and controversial issue of the management (and maintenance) of stratified properties, particularly flats, apartments and condominiums, in the context of the proposed Strata Management Act, 2012 which is expected to be tabled during the upcoming session of Parliament.

The Building Management Association of Malaysia (BMAM) is the only multi-stakeholder organisation (established in 2009) representing the collective interests of chambers of commerce, developers, engineers, architects, shopping and high-rise complex managers, management corporations (MCs), joint management bodies (JMBs) and managing agents.

However, BMAM was not nvited to participate in the workshops and discussions held by the National Land Council and the Housing and Local Government Ministry when the draft Bill was deliberated, although the implementation of the Act will have consequences that will directly affect BMAM stakeholder-member organisations.

According to the information available to us, the Bill states that only licenced valuers who have been admitted as Property Managers pursuant to Section 21(1)(a) of the Valuers, Appraisers and Estate Agents Act, 1981 (VAEA Act) to manage and maintain stratified (or subdivided) buildings as managing agents.

No such restrictions exist in the current laws that regulate building management, namely the Strata Titles Act, 1985 (ST Act) and the Building and Common Property (Maintenance and Management) Act, 2007 (BCPMM Act).

Building management is a multi-disciplinary occupation and cannot be exclusive to the valuers alone.

The JMBs and MCs want to have the independence and opportunity to appoint any fit and proper person, or appropriate entity, as managing agent on a “willing seller-willing buyer” basis on mutually agreed terms and conditions.

The Bill, by restricting building management and maintenance to valuers, would create a monopoly, and is inconsistent with the spirit of the Competition Act, 2010, which clearly discourages the creation of monopolies.

Though building owners (JMBs and MCs) and Real Estate Investment Trusts (REITs) have been exempted from this ruling, most JMBs and MCs, led by volunteers, do not have the time, skill, expertise or experience to manage and maintain their buildings, and neither can they afford to appoint a registered property manager as a managing agent.

JMBs and MCs would be required to pay a management fee in compliance with their Fee Schedule, excluding other operating costs such as staff salaries, electricity, water, cleaning, security, etc.

We will soon see the mushrooming of more urban stratified slums and ghettos, thereby defeating the objectives of the Government’s squatter resettlement programmes and public housing projects.

The fiduciary responsibilities of the MCs and JMBs have been clearly stated in the ST Act and the BCPMM Act on the management of the Building Maintenance Fund and the Sinking Fund.

The managing agent appointed by the JMB or MC to manage and maintain the subject properties is only required to perform these functions for and on behalf of the JMB or MC. A registered property manager is therefore not required.

The MCs and JMBs only need building and facilities management for their common properties.

Since common properties and facilities cannot be sold, and most residential building owners do not lease their common properties to third parties as they would need them for their own use.

Many non-valuer managing agents have several years of experience in building and facilities management.

They have also been admitted as members and registered building managers by BMAM upon satisfying the required admission criteria.

They are qualified and skilled in building management, operations and facilities maintenance, and have also subscribed to a professional building management liability insurance policy entered into between a local insurance company and BMAM.

Any attempt by the ST Act to split managing agents as valuers and non-valuers will be detrimental to the growth and development of the building management industry in Malaysia.

It will result in the loss of valuable management talent in the industry. It will also have serious social implications on the upward career mobility of qualified and experienced local building managers, many of whom are bumiputras.

The Commissioner of Buildings (COB) should be the sole regulatory body to
supervise and oversee the management and maintenance of stratified buildings in Malaysia.

The involvement of third parties, who have no ownership interests in the properties, will not only erode the COB’s authority but may also result in unnecessary layering, additional costs (with no proportionate increase in service quality), corruption, rent seeking and abuse of power.

PROF S. VENKATESWARAN
Secretary-general
Building Management Association of Malaysia