Building Managers Act? Don't create new board when existing one can be strengthened

In Part 1, “Another property management law? Fix the gaps, don't duplicate the regulator”, the National House Buyers Association (HBA) examined whether the Housing and Local Government Ministry (KPKT)’s recent proposed new legislation for a Building Managers Act would address a genuine regulatory gap or risk duplicating existing frameworks under the Valuers, Appraisers, Estate Agents and Property Managers Act 1981 (Act 242) and the Strata Management Act 2013 (Act 757).  

In Part 2, it looks at possible alternatives to another regulatory regime.

There is a fundamental principle of good governance, which is:

1) Before creating a new agency or duplicating a regulatory function, determine whether an existing agency can perform that function effectively, with appropriate legislative and institutional strengthening where necessary.

In terms of property management, the Board of Valuers, Appraisers, Estate Agents, and Property Managers (BOVAEP) has existed for decades, and it already:

a) has institutional knowledge,
b) has regulatory infrastructure,
c) maintains registers,
d) has disciplinary mechanisms, and
e) regulates property managers.

If the proposed legislation were to establish another statutory authority or parallel regulatory structure, this could involve additional expenditure on personnel, offices, information systems, administration, enforcement and governance.

At a time when the government is emphasising fiscal discipline and better utilisation of public resources, potential duplication deserves particularly careful consideration.

The relevant question is not which ministry should control property management. It is which regulatory structure will produce the clearest accountability, highest professional standards and best protection for property owners without unnecessary administrative cost.

Regulate unlicensed practitioners or create 'back door' registration?

Perhaps the strongest argument for a new law is the minister's concern over unlicensed property-management practice.

If that is the real problem, one of the immediate responses must be effective enforcement of the existing law. Malaysia already has legislation governing the professional practice of property management. Hence:

i)  Where people are carrying out activities that fall within regulated property-management practice without the registration or authority required by law, the relevant authorities should investigate and enforce the applicable law.

ii) If existing penalties are insufficient, increase them.

iii) If enforcement resources are inadequate, allocate more resources.

iv) If there are loopholes, close them.

v)  If legitimate categories of building-management personnel presently fall outside the professional property-management regime, define their functions and create appropriate competency pathways without allowing those pathways to become a substitute route into regulated property-management practice.

There is little point in creating a new register if the government does not adequately enforce the existing framework. Otherwise, we could simply have another register while people operating outside the applicable regulatory requirements continue doing so.

Worse, if substantially the same professional functions could be undertaken under a new regime with materially lower entry requirements, the new regime could risk becoming a "back door" into property-management practice.

Whether that risk arises will ultimately depend on the definitions, entry requirements and allocation of functions under any eventual legislation.

Address the real shortage

If there genuinely are insufficient property managers, KPKT and BOVAEP should work together on a national manpower strategy.

The government could:

1. expand recognised property-management education and training,

2. create structured pathways for graduates to enter the profession,

3. facilitate practical training and apprenticeships,

4. recognise relevant professional qualifications,

5. streamline registration without compromising standards,

6. encourage continuing professional development,

7. improve public awareness of the importance of appointing registered professionals,

8. strengthen enforcement against unlicensed practice, and

9. examine whether the remuneration and career prospects of property managers are sufficiently attractive to retain talent.

The government should also examine whether the reported shortage is uniform across the country and across all categories of properties.

A meaningful manpower study should distinguish between the number of registered individual property managers and registered firms, as well as strata schemes, non-strata properties, geographical distribution, scheme size and complexity, and the supporting professional and technical personnel employed by each firm.

The simple ratio of licensed firms to strata schemes, although useful as an indicator, does not by itself establish how many additional property managers are actually required.

One property-management firm may employ multiple qualified personnel and manage multiple schemes with supporting site teams. Conversely, some large or complex integrated developments may require substantially greater professional resources than numerous small schemes combined.

Such measures would address the causes of the shortage rather than merely creating another administrative structure.

Strengthen cooperation instead of creating competition

There is nothing wrong with KPKT wanting to improve property management. In fact, it should.

But a better approach would be to establish a formal inter-agency mechanism involving KPKT, BOVAEP, Commissioner of Buildings (COB), local authorities and relevant professional bodies. Such a mechanism could identify regulatory gaps, develop common standards and coordinate enforcement.

The objective should be one coherent regulatory framework, not competing jurisdictions.

The government should also undertake a comprehensive audit of existing laws affecting building and property management before introducing another Act.

Such a review should identify:

a) Who regulates whom?

b) What activities are regulated?

c) What qualifications are required?

d) Which authority investigates complaints?

e) Which authority takes disciplinary action?

f) Which authority prosecutes offences?

g) Where do jurisdictions overlap?

h) Where are the genuine gaps?

i) Which functions are already regulated under Act 242?

j) Which functions arise from the statutory duties of developers, joint management bodies, management corporations (MCs) and sub-MCs under Act 757?

k) Which functions are technical or facilities-management activities already subject to other legislation and competent authorities?

l) What specific activity remains unregulated after this mapping exercise?

Only after answering these questions should Parliament be asked to legislate to address any genuine deficiency identified.

Don't mistake institutional expansion for reform

There is an unfortunate tendency in public administration to respond to problems by creating a new unit, department, board or law. But bigger government does not necessarily mean better governance.

Sometimes the better reform is not to create something new, but to make an existing institution work better.

Malaysia already has multiple layers of regulation governing property, strata and building management. Adding another regulatory layer may increase bureaucracy without necessarily improving service quality.

The minister should therefore be asked a simple question:

2) What regulatory gap would a proposed Building Managers Act fill that cannot be addressed by strengthening Act 242, amending Act 757, improving the COB structure and enforcement, or better coordinating the existing regulatory authorities?

If there is a compelling answer, let the government explain it publicly. If there is no compelling answer, the proposal should be reconsidered.

This is not an argument against reform. It is an argument that reform should follow diagnosis. The government should first identify the defect and then prescribe the remedy, rather than create a new regime first and define its necessity afterwards.

The interests of property owners must remain paramount

Ultimately, this debate should not be about which ministry controls a register.

It should be about property owners. Owners want competent managers:

a) They want their maintenance payments properly accounted for.

b) They want lifts, pumps, fire systems and common facilities maintained.

c) They want transparent procurement.

d) They want proper accounts.

e) They want prompt enforcement against defaulters.

f) They want professional property managers to be properly registered and professionally accountable, with adequate insurance protection where required or appropriate.

g) They want someone clearly accountable when things go wrong.

h) They want a clear avenue for complaints and effective enforcement against incompetence, misconduct and unlicensed practice.

i) They want COBs to be properly structured and adequately staffed, with officers who understand the applicable laws and discharge their statutory functions proactively, efficiently, consistently and reliably.

Another regulatory structure will not automatically deliver these outcomes. Effective enforcement, professional competence, transparency and accountability will.

3) The test for any proposed new legislation should therefore be straightforward: Will it materially improve these outcomes for property owners, or will it principally create another overlapping registration and administrative structure?

One profession, one coherent regulatory framework

The government's concern about poor property management is legitimate. Its intention to improve standards should therefore be supported. But good intentions should not lead to regulatory duplication.

4) If BOVAEP already regulates property managers under Act 242, the first responsibility of the government should be to determine whether that system can be made to work better before creating a parallel system under another ministry. There is no need to reinvent the wheel.

i)  If there are shortcomings, amend the law.

ii) If there are shortages, train more professionals.

iii) If there are unlicensed practitioners, enforce the applicable law.

iv) If there are jurisdictional conflicts, resolve them.

v)  If there are weaknesses in Act 757, amend it.

vi) If the COB system lacks sufficient structure, expertise or manpower, strengthen it.

vii) If genuinely distinct building-management functions are presently unregulated, define and regulate those functions without duplicating property-management practice under Act 242.

Do not create another register simply because the existing system has not yet achieved its full potential. Malaysia needs better regulation, not more regulations. It needs clearer accountability, not overlapping accountability.

The government should therefore carefully reconsider the need and scope of any proposed Building Managers Act before proceeding with a parallel regulatory regime.

Let us first fix what already exists.

5) If a genuine gap remains after that exercise, legislate specifically for that gap.

That is the essence of good governance: before asking Parliament for another law, identify what the existing laws cannot do, determine whether they can be amended to do it, and demonstrate why an additional statutory regime is necessary.

For property owners and house buyers, the desired outcome is simple: competent management, transparent administration, proper maintenance and accountability.

They do not care which ministry owns the register. They care that their homes and investments are properly managed.

That should be the starting point — and the finishing point — of any housing reform.

Read also:
Misguided push for Property Management Bill

This article is written by Datuk Chang Kim Loong, honorary secretary-general of the National House Buyers Association (HBA). HBA is a voluntary non-governmental and not-for-profit organisation manned wholly by volunteers.

HBA can be contacted at:
Email:  [email protected]
Website: www.hba.org.my
Tel: +6012 334 5676

The views expressed are the writer’s and do not necessarily reflect EdgeProp’s.

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