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JMBs will need to comply with flat rate maintenance fee ruling

PETALING JAYA (May 21): In light of the Federal Court's decision today to dismiss an application to appeal a Court of Appeal (COA) ruling on flat rate maintenance charge for mixed strata developments, the Malaysia Institute of Property and Facility Managers (MIPFM) president Adzman Shah Mohd Ariffin has advised Joint Management Bodies (JMBs) of such developments that are charging different maintenance rates for different parcels, to comply with the ruling.

He said they should draw up a standard flat rate at their upcoming annual general meetings (AGM).

This comes after the Federal Court today refused to grant leave to an application to appeal against the COA's ruling in the Menara Rajawali case. To recap, the COA on Oct 4, 2019 decided that the Joint Management Body (JMB) of the mixed strata development is required to determine a uniform rate of maintenance fees for all the parcels in the project.

The COA’s ruling overturned a High Court decision earlier that JMBs are permitted to fix different maintenance rates for different parcels in a mixed strata development.

“It’s truly a sad outcome. For the JMBs, I personally suggest that they procure their strata titles as soon as possible and once they have set up a Management Corporation (MC), it can then be decided in an AGM to have different rates.

"Whereas for those who presently have different rates on maintenance fees, I suggest they comply with the ruling and work out the standard rate at the next AGM,” he told EdgeProp.my.

He added that based on past consultative sessions conducted by the Ministry of Housing and Local Government (KPKT), a majority of stakeholders were aware of the possible issues that might arise in mixed strata developments should a standard rate be applied.

He believes that the best approach is for KPKT to amend the Strata Management Act 2013 so that the JMBs could have the same power as MCs to determine different rates on maintenance charges in mixed developments. Section 60 of the SMA 2013 allows MCs of mixed strata developments to have different rates of maintenance charges.

MIPFM had previously raised concerns that a uniform rate will be unfair to owners of affordable housing in a development that also has high-end parcels, as some facilities and amenities may only be accessible to residents of the high-end units.

Meanwhile, National House Buyers Association (HBA) Hon Secretary-General Datuk Chang Kim Loong reaffirmed his view that an owner should only pay maintenance fees for the facilities that he is entitled to use.

“Allowing different rates of management fees will provide flexibility. But of course, safeguards must be put in place to ensure that this mechanism is not abused,” he said.

He urged KPKT and the Department of the Director General of Lands and Mines to quickly look into amending the SMA 2013 and the Strata Titles Act to resolve the present dilemma and to offer clarity and certainty.

"The minister may have to pass a new set of Strata Management Regulations to even differentiate between 'residential' and 'commercial' areas," he said.

Chang pointed out that some JMBs in large and diverse mixed developments have passed ‘special resolutions’ under Section 32 of SMA 2013 in conjunction with the statutory by-law 4 of Strata Management Regulations, 2015 (SMR) to grant exclusive use of designated parts of the common property to a particular component.

“Such JMBs, in our humble opinion, should be allowed to continue with their different rates of maintenance charges that have been approved at AGM/EGM as this is the fair and reasonable maintenance charges to the different components based on an approved rational operating budget,” he noted.

"Perhaps, other JMBs of such large and complicated mixed-use strata schemes may want to emulate the above mentioned JMBs in seeking maintenance charges that are rational, fair and reasonable to their diverse components. They may however want to seek legal advice prior to this undertaking," he added.

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