YAP Rony Property and Real Estate in Malaysia

Ashraf Wahab

16 JUN 2020

© Jonathan Cant, EyeEm/ gettyimages
Living in a strata development means living in a community with some shared resources. To ensure a harmonious living environment, the Strata Management Act (SMA) 2013 was created. But what does it cover?
Introduced in 2013, the Strata Management Act 2013 (SMA) is to provide proper maintenance and management for buildings and common property and its related matters.
Strata property is defined as development or scheme where the building or land is carved out into different lots of ‘parcels’. Highrise residences such as flats, apartments, condominiums and townhouses are typical strata properties. However, landed homes in gated and guarded (G&G) communities are also included in this category. An example of the latter is Desa ParkCity in Kepong.
As a strata property owner, you need to understand the Strata Management Act (SMA) 2013 and its role. Let’s have a look!
1. How is SMA administered?The duty of overseeing, administering and enforcing the provisions of the SMA falls under an officer known as the Commissioner of Buildings (COB). This person is appointed by the State Authority and may also investigate any potential breaches in the act. If a breach has been committed, the COB can penalise the individuals or organisations responsible.
2. How is SMA enforced?In the event of a complaint or dispute, an individual unitholder has a right to claim under the SMA. These complaints can be handled at a minimum cost as no legal representation is allowed. This eliminates high legal costs. It is also faster and has cheaper filing fees compared to a court proceeding. However, the SMA has a pecuniary jurisdiction not exceeding RM 250,000.
READ: A beginner’s guide for strata property owners in Malaysia
3. What are the management bodies?

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Under the SMA, there are three types of management bodies:
Joint Management Body (JMB) This is the collaboration between the developer and owners of the strata property. This is an interim body formed before the title of the property is handed to the owner.
Management Corporation (MC) This comprises unit owners who are voted in by other residents who attend the Annual General Meeting (AGM) of a strata development. It can only be established after strata titles have been issued, and at least a quarter (25%) of the aggregate share units has been transferred to unit owners.
Subsidiary Management Corporation (Sub-MC) This is set up when there is a need for separate management such as when there are limited common properties. The SMC has its maintenance duties designated for only this specific area of development.
4. What are the main responsibilities of these management bodies?The three management bodies mentioned above are responsible for the following:
Maintaining an appropriate register of all owners.
Complying with building regulations and notices enforced by local authorities.
Maintaining and managing common shared areas.
Ensuring the property is appropriately insured and protected.
Determining, billing and enforcing the collection of management fees.
Ensuring financial transparency of maintenance accounts.
Enforcing relevant by-laws or rules.


5. How can the management bodies exercise their powers?Your management committee is empowered to make additional by-laws such as rules on the keeping of pets. This is done via a special resolution during a general meeting and must not contradict the existing by-laws.
6. What are the fees that owners need to pay?

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To keep the maintenance of the building and common properties running, each unitholder needs to pay management fees. There are typically two types of fees:
Service chargeMonthly payments for maintaining common facilities and common property in the development such as swimming pools, elevators and security services. Also known as maintenance fees.
Sinking fundA reserve fund collected from the strata owner for future expenditure. Examples include the painting of the facade, refurbishment works or replacement of fixtures.
7. What happens when you fail to pay fees?If a unitholder fails to pay the fees, his or her name may be displayed on the defaulter list in common areas and services to his or her unit will be suspended. The JMB or MC can also stop him or her from using common facilities and even enforce a ban on entering the building.
Should a defaulter still refuse to pay the amount due, the management body will then file a claim with the Strata Management Tribunal (SMT). The errant strata owner will be brought before the SMT for an order to pay up. The management could even obtain a warrant from the Commissioner of Building (COB) that allows them to rescind movable property from the defaulter’s unit (television set, refrigerator, etc.) and auction them off.
8. How do you know you are not overpaying the fees?

© Hafiz Ismail/ gettyimages
To derive the share units in a strata scheme, there is a standard formula under the Fourth Schedule of the Strata Titles Rules 2015. It is as follows:
Operating expenditure / Total share units in condo development = Maintenance fee to be paid
A unitholder can request a review from the commissioner if he or she is unhappy with the maintenance fees determined by the developer or JMB. The commissioner will then determine or instruct the JMB or developer to appoint a property manager to recommend the maintenance fees.

9. Quit rent vs parcel rentQuit rent is a form of land tax which owners of local properties have to pay to the Malaysian government through the Land Office, or Pejabat Tanah Dan Galian (PTG). It is commonly known as “cukai tanah” in Malay.
In June 2018, the Selangor Land and Mines Office (PTGS) replaced quit rent with parcel rent billing for stratified buildings. The change was made to help unit owners who want to sell or transfer ownership of the property. There have been incidents where unitholders were unable to sell their units because neighbours failed to pay their quit rent.
Parcel rent is a type of quit rent that is specifically meant for strata properties. It is governed by the Strata Management Act (SMA) 2013 and the Strata Titles Act (STA) 1985. Parcel rent only applies to those who have separate strata titles. With this type of billing, the onus is on the unit owner to pay his or her quit rent.
There you have it! Living in a strata development means living in a community with some shared resources. The Strata Management Acts ensures everything in this community is order. It helps create a harmonious environment.