FREE COPY | The Iskandarian ISSUE 67 | MAR 2018 www.facebook.com/theiskandarian | www.theiskandarian.com @home Understanding Strata Living and Quality of Management

trata living is fast becoming a way of life operation of their community. In the case of mixed Some say that certain requirements under the current in Malaysia; currently about 30% of the use projects, this can be quite complicated, with the Strata Act may not be practical- do you agree? country’s population is living in strata- introduction of Subsidiary Management Corporations I don’t agree. The local Strata Law is very practical but title buildings. The term strata was first (sub MC’s) for each parcel or component of the project adaptation to changing needs is key and as I was saying, Sintroduced legally in 1985 in response to the - and so the declarations by the developer must be the recognition of electronic means of communication mushrooming of multi-strorey structures as a result transparent, clear and definite is just one practical change that could be implemented. of urbanisation taking place in major cities like Kuala The law also allows up to 14 people to sit on the MC. Lumpur, Penang, and Johor Bahru. What are the powers granted to the MC or Sub MC This is interpreted that 14 committee members is It is vital to understand the function of the under the Act? best. But, in fact, so many members can hinder the management bodies stipulated in the Strata Act to The function of the management bodies is process of reaching a decision. In a mature strata get a better comprehension of strata living. Beyond unquestionably to manage the development to environment, the appointed Strata Manager should the initial management period by the developer upon maximise the long term value of real estate for all act on behalf of the committee like a CEO reporting vacant possession, there are three bodies that a strata owners within the community. This is more than to a board of directors. But certain conditions – an Alastair McCracken owner needs to know: the Joint Management Body just delivering maintenance services to its common immature property management industry, a severe seek ways to earn an income. The authorities are very (JMB), the Management Corp (MC) and the Subsidiary property. The management bodies collect ‘Service shortage of property management professionals, and aware of this fact. The safety of visitors and residents Management Corp (Sub MC). The members of the Charges’ and ‘Contributions to Sinking Fund’, to limited Manager tenure (1 year), hampers the ability in short term letting properties must be ensured. JMC, MC and Sub MC are made up of solely strata owners cover the costs of managing the community. The to strategically manage mixed or large developments. Committee members and their Property Managers while the JMB involves the joint participation of the management bodies manage the way in which these are all responsible to ensure safety and emergency developer and owners. Both the JMB and MC have funds are spent. The MC can also form Sub MC’s to Can you elaborate on the roles of a property response standards are maintained in their buildings. the same function, which is to manage the common oversee different parcels of complex developments. manager? Property managers advise Committee members on properties of a strata development. The JMB is formed They can also make additional by-laws to provide The problem we have seen in Malaysia is that this and it is one reason you don’t want the cheapest within one year from when vacant possession is guidelines for owners and visitors that maintain committees believe it is wise to hire the cheapest property manager but you want the one with delivered to the strata owners pending the issuance of standards, behaviour and access rights within the property manager, not the one with the best professional training and experience. strata titles, while the MC is formed upon the issuance community. ability. Property Management is an important of strata titles. The MC comes into effect once the first In many countries, the Strata Law is further and skilled profession. A property that is better Do you think the Airbnb operators should pay more Annual General Meeting (AGM) is conducted. developed, and the role and purpose of Sub MC’s are managed will naturally fetch a better value. A good for the extra service? To get a better understanding of the Act, we declared early, and formed simultaneously to the property manager with a clear strategy for the I absolutely do. Our recommendation as a speak to Alastair McCracken, Director, Edgenta TMS formation of the MC. The holistic role of all MC’s and community will more than recover his fee through management company is that buildings impose a Sdn. Bhd, a township and community management Sub MC’s is to protect the interest of all the owners effective cost management, reducing wastage and surcharge to cover the cost of an additional reception services company set up for the Iskandar Puteri and to ensure the value of the entire development. so on. Owners who spend a bit more in hiring a or concierge process. If there is a separate residential region via joint venture by Medini Iskandar Malaysia competent property manager with good hospitality wing and a serviced apartment wing, the serviced Sdn Bhd, UEM Sunrise Berhad and UEM Edgenta What are the general issues faced in Strata Living? skills, people skills and problem-solving skills, apartment wing must pay more for the services Berhad. Under the brand “Communa”, the company Separate objectives of ownership is the cause of the benefit in community quality and value growth. that their guests or tenants exclusively benefit uses its community web portals (www.communa.my) greatest conflict in community living in Iskandar. The from. Residential owners should not subsidise the to provide residents of Iskandar Puteri with instant needs of an owner/investor to maximise his income Iskandar Puteri and very much most of the new additional demands and expense of security, cleaning access to smart services, community events and are often quite different to those of residents who development in the state has given growth to and other services caused by short term stays. information, online payments as well as a range of make the community their permanent home. This Airbnb. However, there seems to be a lot of grey lifestyle services and solutions. leads to conflict in the community, at meetings and area when it comes to the rules. Do you think All laws are only validated by the enforcement misunderstandings of the rights of owners. One Airbnb operators should inform their management it comes with. What happens when there is a What are the benefits of strata living and what are of the biggest issues is ignorance of the Strata Law regarding their activities? violation of the law? the rights granted to the buyers under the Strata and misunderstanding of the rights and obligations Airbnb is here to stay. Hoteliers accept it. Investors need The Strata Management Act (Act 757) which came Management Act (SMA)? of owners in a community. Often, Malaysian owners it and so property owners must learn to work with the into effect in July 1, 2015 introduced the Strata Malaysia has some of the largest and most complex lack an understanding of the new Strata Law 757, reality, not against it. We must respect the right of Management Tribunal to handle violations and developments in the world. We have a lot of mixed while foreign owners often incorrectly assume owners to earn income of their property. The Strata disputes. The Tribunal has the jurisdiction to hear used developments which blend residential, that Malaysian Law is the same as they are used to Act By-laws in place are already adequate to control and determine any claims specified in Part 1 of the commercial and retail in one mixed complex. The back home. Malaysia’s Strata Law is quite specific. the proper use of units if they are properly applied. Fourth Schedule and where the total amount in Strata Law helps these owners, often with different It codifies and regulates matters that are usually There are existing regulations which require the proper respect of which an award of the Tribunal is sought needs and objectives, to live and work cohesively. open to interpretation in other jurisdictions. A clear registration of Airbnb tenants just as they must in a does not exceed RM250, 000. Strata Law is about ensuring all owners are treated understanding of the Strata Law, its application and hotel. Upon registration, they will be given the house with fairness and equity and giving all owners an intent is needed for communities to succeed. rules. The problems arise when these rules are not When owners don’t understand their rights and equal voice in how they shape their community. followed, and an owner feels he or she has to sneak think that the solution to their problems will be to How do you resolve the issue of collecting their tenant into a building and from there, it takes its leak it to the press or via social media, what are the What is the role of the JMB in a mixed and large maintenance fees from foreign owners? own course. There have been cases in Iskandar Puteri repercussions from that? development? First and foremost, legal recognition of electronic where management committees have attempted to If owners are approaching the press with their The new Strata Law 757 introduces improved means as a proper service of notices and impose a ban on Airbnb in its building. This will only issues, they are acting directly against their own regulation on the handover and transition of a project introduction of electronic voting platforms as lead to conflict, argument and a reversion to illegal interests, their neighbours, and even the developer to joint management of the Developer and owners seen in Strata Acts in many countries is necessary means. As of July 2017, Airbnb has about 18,000 active as they can cause a direct negative effect on – the JMB. According to the Strata Management to enable foreign owners to participate in their listings in Malaysia, which is a 130% growth in one year, perceived property value. I’ve seen cases overseas Act 2013 (SMA 2013), the first AGM of the JMB must community. The current laws in Malaysia require so instead of fighting it, embrace it with regulations in where owners have taken legal action against be convened no later than 12 months from the physical posting of notices on notice boards which place and it’ll be a win- win situation. Committee members and other owners whose delivery of vacant possession. The intention of the poses a lot of challenges in buildings with a majority However, there is a key issue which requires actions have caused commercial detriment to law is to ensure the developers clearly declare the of foreign owners. Dubai faced similar issues to regulatory action. Hotel accommodation must meet property values. It’s a no-win situation to publicly management arrangements to their community Iskandar Malaysia where a majority of the buyers standards of construction quality, fire safety, and air grievances. You don’t need to take these upfront. Developers should ensure that everything were foreigners and they overcame that problem by other standards that are not imposed on residential measures if you understand your rights and if you from their marketing collaterals to their Sales recognising electronic means of communications as buildings. There are examples of residential buildings have a good property manager who can help to Agreements explain to buyers in detail the intended a valid process. being turned into unregulated hotels, as investors resolve issues amicably.