Maintenance Fees: A Snowball That Can Trigger An Avalanche
By Abdul Hamid A Rahman
The second part of this series highlights the domino effect of unpaid maintenance fees on property values and living conditions. Through real-world case studies, we explore how financial mismanagement and enforcement gaps contribute to the deterioration of strata properties — and what can be done to pre-empt a crisis.
KUALA LUMPUR, March 12 (Bernama) -- The issue of unpaid maintenance fees is a snowballing crisis, that, if unaddressed, can escalate into a major threat to property value and living conditions.
It often starts with a small group of owners who delay or refuse payment, placing growing financial strain on joint management bodies (JMBs), management corporations (MCs) and property managers. As funds shrink, essential maintenance is neglected, security deteriorates, and common areas fall into disrepair. What begins as a minor issue soon spirals into a widespread problem, eroding the overall living environment.
For responsible owners who pay their dues, frustration builds as they witness their contributions yielding diminishing returns. If maintenance issues persist, they may start questioning the fairness of the system, leading to more defaults and accelerating financial distress.
The damage doesn’t stop there. A poorly maintained strata property not only loses its value but also drags down surrounding developments, impacting entire communities. Would you invest in a beautifully maintained property right next to a decaying, problem-ridden one? The answer is obvious. No.
JMBs or MCs, authorities, and residents must work together to enforce strict payment policies, ensure financial transparency, and instill a culture of collective responsibility — before it’s too late.
A Financial Struggle for JMBs and MCs
For JMBs of Palma Puteri and Palma Perak in Kota Damansara, collecting maintenance fees remains a persistent challenge. According to their chairman, Aulia Fahriza Nusyirwan, only 25 per cent of unit owners consistently pay their dues on time. As of January 2025, arrears totalled RM225,000.
“These arrears are significant for JMBs like ours,” he said.
If owners continue to default on their maintenance fees, essential services may be delayed or stopped temporarily, he warned.
Security services might need to be scaled back, and crucial repairs — especially for lifts — could be postponed. While cleaning and lighting costs remain relatively stable, lift maintenance is one of the biggest financial burdens.
Aulia also pointed out that their fees are among the lowest compared to similar developments, yet collection remains a struggle. Palma Puteri residents pay RM66 monthly, while Palma Perak residents are charged RM104. In contrast, similar apartments charge over RM100, with some high-rise units, especially those with lifts, going up to RM200 or more.
To recover the arrears, the JMB has drastically resorted to issuing letters of demand (LOD) through lawyers. Previous committee members attempted direct engagement by visiting residents, but these efforts had little success. Instead, the JMB now issues notices and reminders, listing outstanding balances by units instead of residents’ names to avoid direct conflict.
“However, I’ve noticed that non-payment is often due to attitudes rather than financial hardship. Some residents withhold payments over minor inconveniences, like faulty gates or uncollected rubbish, even though these issues can be addressed promptly,” Aulia observed.
To tackle persistent arrears, Aulia proposed an alternative approach — allowing residents to pay their utility bills directly to the JMB. This, he believes, would increase enforcement capabilities and improve collection rates.
“If utilities were paid through the JMB, enforcement could be stricter, easing financial strain and improving compliance,” he said. Under such a system, defaulters could face immediate consequences, such as temporary disconnection of services. It is, therefore, a powerful deterrent against non-payment.
“With better enforcement, collection rates could improve over time, ensuring sustainable property upkeep and financial stability for JMBs,” he added.
He said while some high-end condominiums are already using this model, older developments like Palma, which have been around for over 20 years, would require regulatory approval from the Commissioner of Buildings (COB) before implementing it.
“If adopted, this could create a structured framework for more effective enforcement, securing long-term financial stability for JMBs struggling with persistent arrears,” he added.
Impact on Property Value
According to Rahim & Co International Sdn Bhd research director Sulaiman Akhmady Mohd Saheh, maintenance fees are crucial in determining a property’s resale value.
“Properties with well-maintained common areas, sound financial reserves, and proactive management practices tend to command higher market appeal, attracting both buyers and long-term investors who seek stability in their property investments.
“Well-kept landscapes, functional facilities, and responsive management foster a positive living environment, which directly enhances property desirability and value,” he said.
On the other hand, developments plagued with financial deficits, deferred maintenance, and potential “cash calls” often experience a downward trend in value.
“When facilities deteriorate due to a lack of funds, common areas become neglected, security services are compromised, and major structural repairs are delayed. This results in a loss of confidence among owners and deters potential buyers, ultimately reducing its marketability and resale value,” he added.
Sulaiman said rather than merely being fee-conscious, today’s buyers are financially discerning, leveraging digital platforms to assess a property’s financial sustainability.
“Many strata communities that initially engaged lower-cost management services later reinstated established firms after encountering operational inefficiencies.
“This underscores the importance of hiring competent property managers registered with the Board of Valuers, Appraisers, Estate Agents, and Property Managers (BOVAEP) to uphold professional standards and regulatory compliance.
Sulaiman recommended that JMBs, MCs and property owners appoint registered property managers (RPMs) to ensure efficient financial management and avoid mismanagement risks.
“Having a certified property manager ensures financial prudence, regulatory compliance, and proper maintenance,” he said.
A Real Story of Poor Management
Sulaiman cited a real-life example from Kuala Lumpur, where poor financial management had severe consequences. A high-rise residential development, completed in 2008, experienced a sharp decline in property value due to mismanagement by its JMB.
“A small group of committee members misused funds by awarding contracts to associated vendors at inflated costs, depleting the sinking fund.
“Financial reports were delayed or lacked transparency, leading to insufficient funds for critical repairs, including lifts, water pumps, and security infrastructure. When the financial mismanagement was exposed, the committee members resigned en bloc, having already sold their units,” he said.
The development suffered multiple operational setbacks. Lift breakdowns became frequent due to delayed servicing, security services were scaled down as the JMB struggled to pay service providers, and basic maintenance, such as cleaning and landscaping, was neglected.
“This led to a sharp decline in living conditions, prompting many residents to default on their service charges. The situation worsened when banks flagged the development as high-risk, reducing loan approvals for prospective buyers. Consequently, resale values dropped by nearly 30 per cent compared to similar properties in the vicinity,” he said.
In an attempt to salvage the situation, a group of concerned residents pushed for an extraordinary general meeting (EGM) to elect a new committee and appoint a registered property manager, as required under the Valuers, Appraisers, Estate Agents, and Property Managers Act 1981 (Act 242).
“With professional management in place, a financial recovery plan was introduced, service charge collection was improved through better enforcement, and cost-cutting measures were implemented to stabilise the sinking fund.
“The situation gradually improved but the development’s damaged reputation took years to repair,” he said.
This case highlights the importance of professional property management, financial prudence, and regulatory compliance in safeguarding a development’s long-term value. Property buyers should conduct a thorough due diligence exercise by reviewing past annual general meeting (AGM) minutes, financial reports and the property management teams’ track record before purchasing a unit.
“A well-managed development with a transparent governance structure, proper financial controls, and a proactive management team is more likely to maintain its value and attract long-term investment,” added Sulaiman.
Key Considerations for Buyers
Sulaiman recommended prospective buyers considering high-rise properties to look at three critical financial factors.
“The developer’s reputation and construction quality are important. Poor workmanship increases long-term maintenance costs. Buyers should review the developer’s track record and past project performance.
“Service charge framework and financial sustainability have to be scrutinised. Buyers should anticipate potential fee increases after management handovers and review audited financial statements to gauge the JMB’s or MC’s financial health.
“While location and long-term investment potential are important factors, proximity to major infrastructure, commercial hubs, and public transport impact rental demand and capital appreciation,” he said.
Will the snowball grow bigger?
The struggle to collect maintenance fees is not just a financial concern but a fundamental issue affecting sustainability, livability, and long-term investment value.
Poor fee collection affects daily upkeep, leading to deteriorating property conditions, declining resale values, and financial distress for JMBs or MCs
Ensuring competent property management, transparent financial governance, and responsible payment habits is key to sustaining property values and enhancing marketability.
As Aulia emphasised, “We shouldn’t have to beg for payments. If this issue persists, the JMB may eventually be forced to shut down. If that happens, building maintenance will be severely impacted, leading to a decline in living conditions for residents.”
The time to act is before a snowball turns into an avalanche.
-- BERNAMA
This three-part series on the importance of maintenance fees ends tomorrow with Maintenance Fees: The Hard Truth – JMBs, MCs lack Expertise, Residents Neglect Responsibility.