BTQS 3062 Integrated Project

(Property Development)

• Week 14
• Tutor Identified Incident
• Semester 1 : 05/2023

• Sr Ng Chooi Chooi
BTQS 3062 - WEEK 14 1
Tutor Identified Incident

Part I

BTQS 3062 - WEEK 14 2

Tutor Identified Incident PART I
What is a Strata Title ?

❖ The implementation of the Strata Management Act 2013 (SMA 2013) on June 1,
2015, provides a clear and provisions on the management of stratified properties in
Malaysia, including residential, commercial and mixed use developments.

❖ SMA 2013 allows property buyers ownership or co-ownership of a (strata property).

❖ A strata property is defined as a development or scheme where the building or land

is carved out into different lots or parcel.

❖ Residential strata properties include high rises such as flats, apartments,

condominiums, townhouses, as well as landed homes in gated and guarded (G&G)
communities

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Tutor Identified Incident PART I
What is a Strata Title ?

❖ A strata title is the type land titles issued for stratified properties.

❖ The apartment/condominium owners own their own particular unit or parcel.

❖ Also responsible for the shared area known as common areas. These include the
swimming pool, gym, elevators, lounge and any area that does not belong to an
individual strata unit holder.

❖ The strata titles attached with accessory parcel, ie air-conditioning ledges and car
park lots.

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❖ Floor number
What is a Strata Title ? ❖ Building number
❖ Parcel number

❖ Title type
❖ Bandar/Pekan/Mukim

❖ Leasehold or freehold
❖ Here is an example of a
strata title ❖ Land lot number

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Why is a strata title important for homeowners ?

Having the strata title is important because:

❖ It serves as proof of ownership of the apartment/condominium.

❖ It is used as an instrument of charge to banks for loans.

❖ The issuance of the strata title will initiate the formation of the management
corporation (MC) by owners of the apartment/condo.

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Tutor Identified Incident PART I
Why is a strata title important for homeowners ?

Having the strata title is important because:

❖ It serves as proof of the built-up area of your unit and the apportionment of your
share in the total aggregate units. This enables the calculation of the maintenance
fees by the Management Committee.

❖ Having a strata title can prevent complications should the developer come under
liquidation or become insolvent.

❖ According to the master title, the land legally belongs to the developer, the
homeowner only has beneficial ownership of their respective parcels. The homeowner
unable to prove ownership of their parcel without the strata title being registered
under their name.

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Tutor Identified Incident PART I
When should the strata title be issued ?

❖ Issued upon vacant possession (VP) of the property.

❖ The homeowners receive their vacant possession, keys, ownership documents and
strata title together.

❖ The application process starts upon the completion of the superstructure, ie walls and
structure.

❖ The developer must apply for and obtain a Certificate of Proposed Strata Plan (CPSP)
from the Director of Survey.

❖ Thereafter commence the application for strata titles.

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When should the strata

title be issued ?

CoB : Commissioner of Building

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What are the differences between a strata title and individual title ?

❖ Strata titles
❖ Issued for properties in a multi-storey building.
❖ Divided into separate individual titles issued to units of houses, apartments or
offices within a development share common facilities.
❖ Developers to apply for the strata titles.

❖ Individual titles
❖ Issued to landed properties ie semi-D, terrace, bungalows.
❖ To owners of the land.

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What is common property and limited common property ?

❖ Common property :
❖ Any other area in the development which does not belong to an individual strata
unit owner.
❖ Common property is shared between all property owners.
❖ Examples : gymnasium, swimming pool and elevators.

❖ Limited common property:

❖ Specific common areas and facilities which can only be utilised by certain property
owners.
❖ For instance, only penthouse owners of a condominium block have access to a
private rooftop garden.
❖ Useful for mixed development, where the owners of commercial units cannot
utilise certain common properties.
❖ Example: the shop owners cannot use the gymnasium at residential block.
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Tutor Identified Incident PART I
What happens after the strata title is issued ?

❖ Upon issuance of strata titles by the land authority, the developer shall transfer the
titles to the purchasers within 30 days of the date of issuance.

❖ The owners are the legal owners of the parcel.

❖ Without the strata title, the homeowners just beneficial owners. They need to obtain
the consent of the developer if they wish to sell their houses.

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Who manages and maintains the strata property ?

❖ Owners of the parcels to the Management Corporation (MC) to manage the property.

❖ The MC formed and voted by units owners who attended the Annual General Meeting
(AGM). The MC serves to represent all the strata unit owners.

❖ Responsibilities of the MC:

❖ Enforcing rules and regulations;
❖ Managing and maintaining common properties;
❖ Paying quit rent;
❖ Obtaining fire insurance;
❖ Complying with relevant laws and policies.

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What fees I have to pay for my strata unit ?

❖ Service charge / maintenance fees.

❖ Monthly payment for maintaining common facilities and common property such as
swimming pool, elevators and security services.
❖ Used for everyday repairs and upkeep purposes.
❖ Depends on the built-up area of the strata units.

❖ Sinking fund
❖ Covers future capital expenses such as painting of the façade, refurbishment works
or replacement fixture.
❖ Collected in advance.

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Tutor Identified Incident PART II
Discounts, rebates, freebies – do house buyers really gain from them ?

❖ Developers inflate the property prices and offer rebates to buyers.

❖ The rebate help the buyers off-set the 10% down payment.

❖ For example:

❖ A condominium valued at RM450,000.

❖ Offer a 10% rebate of RM50,000.
❖ The inflated selling price = RM450,000 + RM50,000 = RM500,000.
❖ The house buyer get a full loan of RM450,000.

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Tutor Identified Incident PART II
Discounts, rebates, freebies – do house buyers really gain from them ?

Negative consequences are:

❖ Higher costs to house buyers

❖ The stamp duties and loan agreements calculated based the property value.
❖ The higher the property price or loan, the higher the stamp duty is.
❖ The artificial increase RM50,000,
❖ Pay RM1000 more for stamp duties,
❖ Pay RM250 more for loan agreement.

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Tutor Identified Incident PART II
Discounts, rebates, freebies – do house buyers really gain from them ?

Negative consequences are:

❖ Higher interest amount

❖ Higher interest amount to the buyer as taking a higher loan.
❖ For example;

Repayment Repayment
RM450,000 RM405,000
30 year loan 30 year loan
+ RM83,000

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Tutor Identified Incident PART II
Discounts, rebates, freebies – do house buyers really gain from them ?

Negative consequences are:

❖ Pushing up the prices of existing completed properties and future launches.

❖ Primary properties = prices of new launches
❖ Secondary properties = prices of completed properties.
❖ Prices primary properties increase, the owners of secondary properties also
increase the selling prices.
❖ The prices of future launches increase
❖ The properties prices beyond the reach of the average citizen.

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Tutor Identified Incident PART II
Discounts, rebates, freebies – do house buyers really gain from them ?

Negative consequences are:

❖ Encourages speculation
❖ House buyers only need to pay the ancillary costs and service interest during
construction
❖ Upon completion, property flip for a quick gain.
❖ Encourage “flippers” and push up the properties prices.

BTQS 3062 - WEEK 14 19

Tutor Identified Incident PART II
Discounts, rebates, freebies – do house buyers really gain from them ?

Negative consequences are:

❖ Transacted price not the true price

❖ The “prices” declared to Valuation and Property Services Department (JPPH) are
the “transacted prices” stated in the SPA and not the true prices.
❖ Make the true price discovery difficult.
❖ SPA declared the inflated prices.
❖ Property loan not reflective the true values

BTQS 3062 - WEEK 14 20

Tutor Identified Incident PART III
Course Recap
1.
Syllabus Introduction

6. Tutor
2. Site
Identify
Selection
Incident

BTQS3062
Property
Development

5. Feasibility 3. Product
Study Development

4. Market
Study

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Tutor Identified Incident PART III
Course Recap Property Development

• A process that involves changing or intensifying the use of land to produce

buildings for occupation.

• An exciting and occasionally frustrating complex activity.

• High risk activity, involves large sum of money.

• Indivisible and illiquid products.

• Economy influence the process.

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Tutor Identified Incident PART III
Course Recap Property Development

1. Initiation.
2. Evaluation.
3. Acquisition.
4. Design and costing.
5. Permissions.
6. Commitment.
7. Implementation.
8. Let/manage/dispose.

• There are 8 property development process.

• The process are not sequential activity.
• Stages in the process can repeat or overlap.

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Tutor Identified Incident PART III
Course Recap Site Selection

✓ 3 most important factors in determining a good site are :

1) Location
2) Location
3) Location

✓ 2 basic characteristics of land are :

✓ Immobility
✓ Non substitutability.
✓ Each parcel of land is unique and has only 1 location.
✓ Location is very important in determining land value.
(Source : John McMahan (2007, page 172 – 173)

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Tutor Identified Incident PART III
Course Recap Site Selection

❖ Planning guidelines

❖ Land use zoning

❖ Development intensity
❖ Plot Ratio (commercial)
❖ Density control (residential)

❖ Calculation of FAR

❖ Calculation of car parking

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Tutor Identified Incident PART III
Course Recap Proposed
Development

Product Development

Complementary Property
Properties Features

Market
Segmentation

Substitute
Market Area
Properties

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Tutor Identified Incident PART III
Course Recap • Plinth Area of various development :
Product Development

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• Affordable Home:
Course Recap
Product Development
• Bumi Quota :

BTQS 3062 - WEEK 14 28

Tutor Identified Incident PART III
Course Recap Economic
Analysis
4 Types Market Analysis

Feasibility Market
4 Type
Analysis Analysis

Investment
Analysis

BTQS 3062 - WEEK 14 29

Tutor Identified Incident PART III
Site Boards
Course Recap & site
hoarding
Promotion Methods
Show Particulars
Units & and
Brochures
Office

Method

Email Advertisement

Internet

BTQS 3062 - WEEK 14 30

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Course Recap
Feasibility Methods Residual
Valuation

Sensitivity
Analysis Method Cash Flow
Method

Discounted
Cash Flow

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The roots of education are bitter,
but the fruit is sweet.
By Aristotle

Quote of the day

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