Saturday 20 Jul 2024
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This article first appeared in City & Country, The Edge Malaysia Weekly on July 25, 2022 - July 31, 2022

Additional questions from those who attended The Edge Malaysia RealTalk 2022 were sent via email after the event. Here are the responses from the speakers.

 

Anthony Lee

1. I was recently informed by the joint management office that the unit on the 15th floor has a water leak and it is due to water dripping from the common toilet. May I know who is responsible for repairing this sewerage pipe/water leak?

In strata properties, water leaks or seepages that emanate from a higher floor that affect the floor below may be termed as an inter-floor leakage. The source of water leakage is usually the bathrooms, toilets, sewerage, water pipes or roofing, resulting in water stains, paint damage, mould or bio-hazardous wastewater.

Unfortunately, inter-floor leakage has become a serious and recurring systemic problem in high-rise strata properties in Malaysia. In response, the Ministry of Housing and Local Government (KPKT) introduced regulations under the Strata Management Act 2013 (SMA) to tackle the growing concerns of affected strata owners.

As the source of the reported leak has been established by the building manager, that it is from a common area bathroom above Level 15, the joint management body (JMB) will be responsible for undertaking the repairs at its own cost and expenses, including making any repairs to the associated damage to Level 15.

You may download this link for more information and tips concerning inter-floor leakage and effective methods for long-lasting repairs. Link: https://www.youtube.com/watch?v=BSKRNz7Krf4

2. I was also informed by the joint management office that a window on the external wall of my master bedroom has a crack and water is seeping into the unit below. May I know how this crack can be repaired and who is responsible for the repair?

The external wall located outside your master bedroom window likely belongs to the common area of the property. The maintenance and repairs of common areas are the responsibility of the JMB.

To be effective, leaks emanating from external wall cracks should be repaired from the outside surface. There are many methods available depending on the root cause or severity of the cracks and leaks.

Depending on the age of the property, there may be a valid and enforceable External Wall Painting Warranty available, usually for a minimum of five years or more. Check with your property manager.

You may download this link for more information and tips on external wall repairs and repainting. Link: https://www.youtube.com/watch?v=yixmkPgXi7E&t=2s

3. My condo is still under the developer’s management period and the JMB has yet to be formed. The security guards have not been doing their job and always let outsiders come into my condo to use the facilities. Complaints have been made to the management office and the developer but no action has been taken. What else can the owners do?

You can always refer to the commissioner of buildings to seek an intervention or ask for a direction to expedite the formation of the JMB by calling for the first annual general meeting within a year from the delivery of vacant possession. Having a JMB in place allows effective participation of the unit owners in the management of the common property as well as the services in any strata development.

4. When choosing a management company, what are the main criteria residents should look into?

The “know-how-who-when-where-what” for the management of strata properties (especially mixed strata) requires the experience and professionalism of a reputable and reliable property manager (PM) to be engaged as early as possible. Building owners, property developers (during the developer’s management period), the JMB, management corporation (MC) or real 

estate investment trust (REIT) should not choose the cheapest PM or from a beauty parade. It should be made after careful consideration, based on the following criteria:

1.     Registered with the Board of Valuers, Appraisers, Estate Agents & Property Managers (BOVAEP).

2.     Able to provide skills of both property management (soft people skills) and facilities management (technically competent).

3.     Resourcefulness and preparedness, with the ability to respond quickly and, in some critical issues, immediately and decisively.

4.     Systematic support from headquarters to the site team, especially in the areas of planned preventive maintenance.

5.     High level of professionalism and integrity, especially when it comes to money, compliance and safety.

6.     A transparent systematic audit protocol for finance, expenditure and operation matters.

7.     Sound up-to-date knowledge of strata issues, prevailing laws and regulations under the Strata Management Act and Strata Title Act.

8.     Track record of managing past winners of The Edge Malaysia Best Managed and Sustainable Property Awards 2017 to 2022.

 

A participant asking a question during the Q&A session

Foo Gee Jen

1. Is buying an auction property really that great? If yes, what do I need to look out for before buying?

There are opportunities in every market, be it the secondary market or auction. For auction properties, apart from the usual market research, one must be wary of the following:

•    Physical condition of the building, as no internal inspections are allowed

•    Outstanding service charges and utility bills

•    Occupation status, as vacant possession is not guaranteed

•    Any illegal structure, especially external extensions

•    Whether the CCC (certificate of completion and compliance) has been issued

2. You said interest rates are still low, but Bank Negara Malaysia will raise the overnight policy rate again soon. Is it still a good time to buy property?

We have been in the era of ultra-low interest rates for many years now and any upward revision is likely to be done moderately based on past experience, unless the inflation rate surges drastically. Timing to buy very much depends on your needs and financial capability. Real estate investment must always be seen as a long-term prospect and I strongly believe it is still one of the best investment vehicles to deliver capital gains in the long run.

3. Where along the MRT3 line are property hotspots to look at now?

For investment assets, look at the needs and behaviours of renters. Most of these occupiers are either single or young adults with small families who frequent F&B outlets, need high-speed WiFi, easy connectivity and so on. So, these locations do fit the criteria and will be a good choice — Kota Damansara/Sungai Buloh, Cheras/Bandar Permaisuri, Tasik Ampang, Kerinchi and Setapak.

4. Are there other ways to get financing/loan to buy a house? If yes, what are they?

Rent-to-own could be the best alternative for home ownership, but not all developers are able to provide this type of scheme. Taking examples from other countries, like Housing and Development Board (HDB) housing in Singapore, buyers can fund the purchase of a house with a bank loan, a loan from HDB, with cash or with funds withdrawn from the Central Provident Fund (CPF). HDB was formed to provide affordable and high-quality housing for Singaporeans while CPF is a social security system that enables working citizens and permanent residents to set aside funding for healthcare and housing.

In the UK, there is a shared ownership scheme where you can buy a share of between 10% and 75% of the house’s price and pay rent to the landlord for the remaining percentage. These shared ownership homes are offered by housing associations, local councils and other organisations.

5. Which is better, buying on the secondary or primary market?

Unfortunately, I don’t have a direct answer for this as it very much depends on one’s needs and financial capability. In terms of opportunity for a good buy based on the current market conditions, the secondary market offers more options. However, bargaining hard to acquire completed unsold units on the primary market was unheard of before, but is possible now.

 

Chan Ai Cheng

1. Where do we check to see if an agent has been professionally trained and is a registered real estate negotiator (REN)? How and where do we report a registered agent and negotiator about his/her wrongdoing? What is the procedure?

The link to the website of The Board of Valuers, Appraisers, Estate Agents and Property Managers (BOVAEP)  is http://search.lppeh.gov.my. You can search by firm, real estate agent or real estate negotiator. Meanwhile, you can channel complaints directly to the board — do attach evidence, such as documents and communications — by emailing to [email protected]. The procedure is listed on https://www.miea.com.my/faq/general-public.

2. You shared that one of the ways to reduce multiple listings on the same property is to practise exclusive agent appointments, like practised in Australia. What are the pros and cons of doing so in Malaysia? Will that affect the livelihoods of agents in the industry?

Exclusive agency will certainly improve the practice of estate agency in Malaysia as it resolves many gaps in the practice, including multiple agents fighting for listing, buyers using different agents to make different offers to the detriment of the seller, and issues of underpricing the listing price to get more enquiries.

With exclusive agency, the best agent wins. Owners should do interviews and shortlist the most suitable agent. Then, entrust that agent with marketing the owner’s property and to get the best price possible within the time frame of the exclusivity. There is accountability and responsibility when the sale rests upon the exclusive agent’s performance. Trust works both ways.

It will improve the livelihood of agents as co-agency will then be properly managed and conducted in its best setting. There are really no cons to exclusive listing, perhaps only if the owner appoints the “wrong” exclusive agent, even if it is for only a fixed duration. If the owner is unhappy after the exclusive period, which is usually three to six months, he or she can appoint a new exclusive agent.

3. During an investment in property, is it always a must to buy MRTA (mortgage reducing term assurance)/MLTA (mortgage level term assurance)? Are the bank discounts really lower versus our own personal MLTA cash value in, say, 30 years?

Personally, I would strongly encourage insurance, be it MRTA or MLTA. The difference is the purpose for which the property is purchased. For owner-occupiers, MRTA works, as it is more affordable and it serves its purpose. For investment property that you plan to sell after five or 10 years, you can consider MLTA, as the coverage amount remains the same throughout the duration of the insurance. The only challenge with this is tagging that policy to the property and how much to cover, as the value of the property in the years ahead is still unknown. For actual calculations and comparison, an insurance agent would be the best person to guide you through this.

 

Y Y Lau

Chong Shu Ling

1. Can you please specify the upcoming projects, areas and hotspots in Sydney and Melbourne?

In Melbourne, South Melbourne and Southeast Melbourne suburbs have always been popular hotspots. For a fantastic value opportunity, we are seeing areas like Burwood become more attractive.

In Sydney, Coogee is a gentrified coastal suburb southeast of Sydney CBD, which will see the benefits of infrastructure projects over 2020. The South-East Light Rail project is a A$2.2 billion (RM6.77 billion) project and will see a 12km light rail network connect Circular Quay to Kingsford. Kingsford is a residential suburb southeast of Sydney CBD and situated directly south of the University of New South Wales.

2. What are the pros and cons of the Golden Visa Scheme in Portugal?

Advantages:

•    There is no requirement for immediate relocation, one only needs to stay in Portugal for 14 days every two years to maintain the Golden Visa for five years.

•    It is also part of the EU/Schengen area (26 countries): one can work, study, and live in the EU without restrictions.

•    One is eligible to apply for Portugal residency in the sixth year of the Golden Visa.

•    Medical benefits (free), unemployment and housing benefits are similar to those of citizens.

•    Spouses and children can participate with one investment/application.

•     The ability to obtain citizenship is faster than by naturalisation.

•    The visa allows free travel to more than 130 countries

•    In Portugal, there is no tax on residency: 0% tax on foreign income. Once a resident, one can apply for NHR status: 10% tax on pension income. There is also no inheritance or gift tax and no wealth tax. There is relatively low transfer tax (of up to 8%) and stamp duty (0.8%).

Disadvantages:

•    Parents under 65 and children over 26 cannot be included in the Golden Visa application.

•    Visa to UK is compulsory.

•    One needs to reside in the country for more than 183 days to obtain non-habitual resident (NHR) status.

3. It appears to be an opportune time to invest in Japan. Can you please elaborate on the five-year rental guarantee, and other possible intricacies of investing there?

The five-year guarantee is offered by a top reputable Japanese leasing company to guarantee the rental income for five years for projects sold by JLL in Tokyo and Osaka. The rent guarantee plan takes care of all administrative matters of the property and the owner can have a net and consistent rental income during the five-year period without taking a vacancy risk.

An intricacy there would be language. All documents for signing are in Japanese. However, English translated ones are available upon request. Our JLL staff in Japan who are multilingual can explain the documents in English and Chinese.

Currency risk is another intricacy. Based on the history of the last 10 years, now is probably the best time to invest in Japan because of the depreciated yen.

4. You have highlighted that foreign investors do not need to pay taxes after owning property for 10 years in Germany. What are the other things to look out for?

In general, the other factors to consider are:

•    Reputable letting companies are willing to offer up to five years of rent guarantee for projects sold by JLL in Germany. These services will help to take away the administrative issues for owners to enjoy hassle-free rental returns. There is also steadily growing yield, strong demand due to population growth, low ownership rate of less than 30% in general, and preference to rent rather than buy.

•    Legal ownership process and documentation language is in German, although translation to English is easily available.

•    Financing for foreign buyers is available via mortgage broker services, with up to 70% loan margin depending on credibility.

•    Our centres in Germany provide advisory on current market value and resale services for owners to execute their exit strategy.

5. What is the most preferred property type in Berlin and Frankfurt, Germany? Where are the top areas?

The most preferred location in Berlin is Mitte followed by Wilmersdorf, Charlottenburg, Schöneberg and Kreuzberg. Berlin has 54% single households, so the most preferred units are one-bedroom rather than two-bedroom units.

In Frankfurt, the most preferred districts are Westend, Innenstadt, Bockenheim, and the new hip Europaviertel (or districts close to the central banking district). If you are investing in the city centre, the most preferred units are one-bedroom and two-bedroom units.

 

Amy Wong

1. What are the risk management measures required in property investment?

First, pinpoint the risks. Then, identify the causes behind the risks. For the risks I highlighted during the talk (inflation, rising construction costs, interest rates), those are unfortunately factors that are beyond our control. So, I’d say to focus on the opportunities. Do your research before buying.

2. How seriously should we consider the possibility of a recession when buying a property today?

As a savvy investor, very seriously, I hope. Definitely never invest with money that you need to sustain yourself and the family through bad times — that’s your rainy day fund. In fact, savvy investors save up a “war chest” to be used to acquire good quality properties at low prices during a recession.

3. Why follow the train lines when ridership is considered low in Malaysia and we have poor last-mile connectivity/walkability options from station to destination?

That is why I advocate buying at/close to train stations — precisely because our last-mile connectivity/walkability options are quite dire at the moment. Ridership is low now, because our cars are cheap and petrol is heavily subsidised; our train network is not comprehensive enough yet. Imagine if petrol is priced at three times of what we pay now, Grab rides would become a lot more expensive and you would definitely think twice before you drive. Wouldn’t trains then be the best option? It is a proven formula in other developed cities like Singapore, Hong Kong and even Bangkok.

4. You noted that transaction volume and value of residential properties in the Klang Valley grew year on year in 2021. Are the majority primary or subsale properties, and how is the secondary market performing?

In 2021, primary sales made up about 14.3% of total volume of residential transactions in the Klang Valley (compared with a 14.8% share in 2020). The balance was for subsale properties.

The volume of primary residential transactions increased by 5.9% to 8,590 units in 2021 (2020: 8,109 units). The secondary/subsale market is performing well, with a 10.2% increase in volume of transactions from 46,531 units in 2020 to 51,294 units in 2021.

The information is sourced from the National Property Information Centre’s (Napic) annual property market report, in which only completed residential units sold by developers are included in the numbers for “primary sales”.

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