When purchasing high-rise residential properties, most investors and homebuyers are aware of the typical factors that will affect property value such as location, accessibility, connectivity and amenities. However, majority are not aware of one of the most important factor that dictates the rental return and capital appreciation in the long term, which is effective property management.
In Malaysia the management and maintenance of high-rise residential building can be divided into two stages. The first stage is before the issuance of Strata Title where the property is under the responsibility of the developer. The second stage is after the issuance of Strata Title, where the property will be under the responsibility of the Management Corporation (MC) and the licensed property manager appointed by the MC. Property managers help owners to preserve or increase their property values and returns through one essential service: preventative maintenance. We will outline the implications of improper preventive maintenance and it affects your property.
Implication #1 Security and Safety Issues
While most high-rise developments offer multi-tiered level security, it can only be promising if the security system is up and running. Security is not only depending on the security guards to be vigilant at the guardhouse, but also on the closed circuit cameras (CCTVs), access card systems and other security softwares. Tenants are unwilling to rent in a place that make them vulnerable to criminal activities.
Moreover, to reduce the risk of fire, most high-rise properties are equipped with fire extinguisher, hose reels, sprinkler systems, fire or smoke alarm at each floor. Regular preventive maintenance is required to ensure that there are no false alarms and these fire-fighting systems can function optimally when there is a fire happening. You wouldn't want to come home to see that your property has been burnt to crisp due to malfunctioning fire-fighting systems as a result of poor maintenance and management.
Implication #2: Never-ending lift breakdowns
Lift systems are basically the backbone of a high-rise property. Therefore, prompt execution of preventive maintenance is a must to keep its day-to-day operation as smooth as possible. Can you imagine yourself walking up and down the stairs everyday especially if you are staying at high floors? Similar to how we are advised to have regular medical check-up and do not seek medical care only when our illness became serious, the MC or property manager must have similar mindset when maintaining and upkeep the lift systems. This is vital as the cost to repair for lift breakdowns are a substantial amount. If this issue is left unsolved, it will lead to the third implication which is irreversible and unwanted by all owners.
Implication #3 Higher maintenance fee, service charge and sinking fund
If the preventive maintenance of the above mentioned systems are not well implemented, the MC could have a proposal to increase the maintenance fee, service charge and sinking fund payable by each unit owner during the Annual General Meeting (AGM). Simply speaking, unit owners or their proxies must attend AGM annually. The business transacted at an AGM includes considering the audited annual accounts, election of the management committee and other matters related to the management and maintenance of the common property in the development. Since we all know that most people will definitely refuse to cough up more money, there will be increasing arrears in such fees. In the end, many facilities in the condominium will break down more frequently or be totally unusable, which makes it difficult for owners to sell or rent their property, ultimately leading to plunging property price and rental return.
(Edit: This is you when being asked to pay more fees by the MC).
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