How to Avoid Selling your Condo at a Loss Due to Poor Management?

condo-maintenance-fee-in-singapore-propertyguru

Sometimes condo owners in Singapore sell their property at a loss. Common reasons they do so include downbeat market sentiment, a sluggish real estate sector, lackluster global economic conditions, and an emergency requiring a huge amount of cash, such as paying for a family’s medical treatment.

However, there is a less known factor why property owners divest at a huge discount – poor condo management.

In this article, we’ll discuss how condo management affects the selling price of your condo. We’ll also talk about how to identify bad apples from good condo managing bodies, so you won’t be a victim of poor condo management. But for starters, let’s have a concise background on the subject matter.

What is Condo Management?

In Singapore, condos are run by a management corporation or Management Corporation Strata Title (MCST), a juridical entity with perpetual succession that is empowered by the law to administer and oversee the condo’s common property.

If you bought a unit in a condominium, you will automatically become a member of the management corporation. But unit owners don’t typically don’t oversee the condo’s daily operations. It’s either the condo management’s council (the elected officials) or an appointed managing agent.

According to Building and Construction Authority (BCA), a condo management is automatically established when the condo’s developer submits the strata title plan to the Chief Surveyor and a strata title application is lodged with the Singapore Land Authority’s Registrar of Titles. Please note that the condo builder is only permitted to register the strata title plan when the construction progress has reached the roof level, meaning the development is almost completed.

Officially, the condo management will be known as “The Management Corporation — Strata Title Plan No.____” with the BCA issuing a serial number to distinguish it from other managing bodies.

The day the condo management is established until the date of the first Annual General Meeting (AGM) is called the “initial period”, and this must only last for up to 12 months.

Within this time frame, it is the condo developer which exercises the powers and duties of the condo management’s council, but the developer typically appoints a condo management firm.

During the first AGM, the unit owners need to elect their own condo management council, which must comprise not be more than 14 natural persons. Positions to be filled up include a chairperson, one secretary, a treasurer and council members.

After the council is elected, the condo developer is required to transfer its authority over the condo management to the elected body. These include transferring control of MCST’s monies, including the maintenance funds, as well as handing over all keys and other means of access necessary for the performance of the council’s duties and responsibilities.

During the first AGM, the unit owners have the freedom to retain the condo management firm appointed by the developer, choose another managing body, or let the council perform this role. Moreover, the council or the MCST as a whole can determine which duties and responsibilities to delegate to the condo management firm.

One of the main tasks performed by the managing body is to collect monthly condo maintenance fees, which is used for the condominium’s upkeep. This includes paying for cleaning services, security, gardening, repairs of common facilities and others. Please keep in mind, that the condo maintenance fee can only be used for certain expenses as stipulated by the law.

According to property experts and existing managing firms, the condo maintenance fee paid by each property owner depends on the number of units, the condominium’s current status, the present market cost for hiring security and cleaning contractors, as well as the amount needed for the sinking fund, which is used to finance major long-term expenses like repainting the condo’s facade.

Another factor that significantly impacts the condo maintenance fee amount is the project’s facilities and the category of the condominium. To help you, below are rough estimates on the average condo maintenance fees per month.

Average Condo Maintenance Fees

Mass market
Over 200
S$200 to S$300
Mid-tier
Reasonably big area
S$500 to S$700
Luxury
With posh facilities
Aprox. S$1,000 or more

If you want to know more about a condo’s management corporation, please check this guide. If you require more info on condo maintenance fees, we recommend this article.

How managing body affects a condo’s rent and selling price?

What many people in Singapore don’t know is that some condo managing bodies are facing difficulties in running the daily operations of condominiums. This is because a condo is one of the most difficult kinds of strata properties to oversee. It is even more difficult to manage than logistics facilities and shopping centres.

One reason for this is that facilities in a condominium are utilised by hundreds or over one thousand unit owners. The usage also runs day and night as the condo never closes. Patrolling security guards must to be paid. CCTV cameras sometimes need to be replaced. Lifts has to be maintained to keep them in working order. Gardens, trees and landscapes require trimming and weeding. More importantly, swimming pools, Jacuzzis, gyms and spas need frequent cleaning, unless you want a disease outbreak to occur.

If the managing body struggles to maintain a condominium, then the development could end up looking like a slum or an abandoned building after 5 or 10 years. The garden could look like Jumanji’s jungle. The pool could become an infested green lagoon, while the gym could emanate a funky smell and stains could appear on its walls.

If this tragedy happens, even with the help of Singapore’s top property agents, it would be hard to sell or rent out your condo. Ultimately, poor management would deter would-be buyers and tenants, forcing the owner to significantly reduce the asking price or rent just to secure a deal.

Hence, if you are considering to purchase a condo, don’t forget to scrutinise how the condo is being managed and check the track record of the appointed condo management.

How to Check Condo Management for New Launch Condos?

If you are purchasing a newly launched condo, you can’t physically check how the condominium is being maintained as construction is yet to start or is ongoing.

For such condominiums, you can only rely on the condo developer’s track record and reputation. Nevertheless, most condo builders will gladly share with prospective buyers on which condo managing firm they want to appoint and the reason for selecting this company. So make it appoint to quiz the developer’s salespersons about this when visiting a showflat or sales gallery.

Some condo developers even use their stringent selection of a condo management to attract buyers. For instance, Eastern & Oriental (E&O) has earned a reputation for being finicky on condo management.

But as stated previously, the council or the MCST as a whole may decide to appoint another condo managing firm during the Annual General Meeting.

How to Check Condo Management for Resale Condos?

If you are buying a unit in a condominium that has already been completed, it’s not hard to check the how well the condo is being maintained as well as the track record of the condo management firm by doing the following:

  1. Check the condo management firm’s qualifications
  2. Visit the condo and scrutinise the state of the common facilities
  3. Look for facilities and amenities that were added after the condo’s completion
  4. Interview the people directly maintaining the condo
  5. Pay attention to the condo management’s activities
1. Check the condo management firm’s qualification

To do this, the first step is to identify the development’s managing body. Kindly visit this link, if you want to check the MCST and appointed condo management agent (if there is) of a particular development. The website features an interactive map with a development’s location and its management corporation, and you can scan the list of managing bodies and their telephone numbers. Please note that projects comprise strata properties so non-condos are included as well. If you already have a shortlist of specifics condos where you want to buy, that will make your search easier.

Alternatively, you can visit BCA’s MCST Inquiry Site. Just input the management corporation’s plan number, its Unique Entity Number (UEN) or the name of the project. Through this website, you can learn the status of the MCST and its contact number, as well as the name of the condo managing agent and its contact details.

Thereafter, you can check if the appointed condo managing firm is qualified to oversee a condo. Just cross-reference the name of the managing body, with the List of Managing Agents jointly accredited by the Singapore Institute of Surveyors and Valuers (SISV), and the Association of Property and Facility Managers (APFM).

Please note that there are two kinds of accredited managing agents. Those under Category A are considered eligible to run large projects with over 150 units, while those under Category B should only oversee developments with 150 units and below.

2. Visit the condo and scrutinise the state of the common facilities

Go to the condo. Then take down notes or take pictures of the public spaces and facilities there. Be fastidious about the condition and quality of its facilities, as this is important for potential tenants and would-be buyers.

Is the playground safe to use for children? Is the gym squeaky clean? Does the clubhouse appear inviting to use? Are there overfilled trash bins or broken furniture in the hallways? Is the water in the swimming pool crystal clear, and there are no unknown residue at the bottom?

3. Look for facilities and amenities that were added after the condo’s completion

You can check a condo’s original facilities by downloading a development’s fact sheet online, or ask for a brochure from the developer or property agency that marketed it.

If there are facilities and amenities constructed after condo’s completion, this indicates that the condo management is doing an excellent job as it’s not only taking care of basic maintenance, but is also doing asset enhancements.

A condo management struggling to maintain a project will be hard-pressed to add something new to a condominium. These include new fitness areas, open spaces turned into gardens and landscapes, as well as setting up convenience stores and laundrettes. Please note that the latter is not easy, as you need to seek the Urban Redevelopment Authority’s (URA) approval if you want to open retail spaces and laundrettes within land zoned for private residential projects.

Be on the lookout for asset enhancements as such amenities make a condominium more attractive to home hunters. It also helps boost the rental demand for condos.

4. Interview people directly maintaining the condo

Instead of asking the condo management’s council or appointed managing agent, interview the staff directly involved in maintaining the condominium, such as janitors, gardeners and security guards.

As these people are ones really taking care of the condominium, they are privy to the state and condition of its facilities, especially if there are issues like faulty elevators. Also, they usually are the first to hear the common complaints of condo residents, so it pays to listen.

Moreover, be on the lookout if the janitors or security guards appear angry or displeased with the condo management. As the managing body is responsible for paying these staff, any tension or quarrel between them could impact not only the condo residents, but also the maintenance and upkeep of the condominium.

If the condo management switches to a different cleaning or security contractors because of disagreements, there could be serious consequences. For instance, cleaning may temporarily stop, or the existing personnel may do their job sloppily while awaiting their replacement.

5. Pay attention to the condo management’s activities

A condo management that does an excellent job usually holds many activities per year. Aside from Christmas and New Year celebrations with the condo residents, they also commemorate other occasions.  For instance, they may hang ketupat decorations during Hari Raya in June or hand out mooncakes during the Mid-Autumn Festival in September. You don’t need to be a resident to know about this, you can just visit by project’s entrance or lobby to feel the festive vibe.

In addition, you should aspire for a condo management that is active and stands out with a conspicuous presence. You shouldn’t go for mediocre condo management that hardly puts much effort in celebrating the aforementioned occasions. That kind of managing body tend to be the type that slowly acts on complaints. You can ascertain this by checking a condo’s notice board. If you see posted letters detailing what has been done on issues like broken tiles at the pool or a broken gym equipment, that’s a good indication of a proactive condo management.

Finally, check how the condo management treats the residents (including tenants) of a condominium, as well as how the unit owners treat the managing body in return. A managing body with a warm relationship with its stakeholders suggests it has earned the respect of the condo residents, as it’s doing its best to look after the interest of all people it serves instead of its own.

Aside from this article, you may also want to browse our resale HDB flats or private condos for sale or rent. If you want to know about future property hotspots in Singapore that will benefit from ambitious government plans, check our AreaInsider.

If you need someone to assist you for a property deal, kindly engage a licensed property agent or query them instead via AskGuru.

 

To get more guides like this, check out PropertyGuru.

Read Next