PSZ 19:16 (Pind. 1/97)
UNIVERSITI TEKNOLOGI MALAYSIA
BORANG PENGESAHAN STATUS TESISυ
OPPORTUNITIES OF TENANCY MANAGEMENT SERVICES
BY FM ORGANISATION IN JOHOR BAHRU
JUDUL:
SESI PENGAJIAN:
2005/2006
KHAW TAN CHENG
Saya
(HURUF BESAR)
mengaku membenarkan tesis (PSM/Sarjana/Doktor Falsafah)* ini disimpan di Perpustakaan
Universiti Teknologi Malaysia dengan syarat-syarat kegunaan seperti berikut:
1.
2.
3.
4.
Tesis adalah hakmilik Universiti Teknologi Malaysia.
Perpustakaan Universiti Teknologi Malaysia dibenarkan membuat salinan untuk tujuan
pengajian sahaja.
Perpustakaan dibenarkan membuat salinan tesis ini sebagai bahan pertukaran antara
institusi pengajian tinggi
**Sila tandakan (9 )
Mengandungi maklumat yang berdarjah keselamatan ata
kepentingan Malaysia seperti yang termaktub di dalam
AKTA RAHSIA RASMI 1972)
SULIT
TERHAD
9
Mengandungi maklumat TERHAD yang telah ditentuka
leh organisasi/badan di mana penyelidikan dijalankan)
TIDAK TERHAD
Disahkan oleh
(TANDATANGAN PENULIS)
Alamat Tetap:
2 JALAN MUSANG PULUT
CENTURY GARDEN
80250 JOHOR BAHRU
Tarikh:
CATATAN:
22 NOVEMBER 2005
(TANDATANGAN PENYELIA)
PROF. ROSDI AB RAHMAN
Nama Penyelia
Tarikh:
22 NOVEMBER 2005
*
**
Potong yang tidak berkenaan.
Jika tesis ini SULIT atau TERHAD, sila lampirkan surat daripada pihak
berkuasa/organisasi berkenaan dengan menyatakan sekali sebab dan tempoh tesis ini
perlu dikelaskan sebagai SULIT atau TERHAD.
υ
Tesis dimaksudkan sebagai tesis bagi ijazah Doktor Falsafah dan Sarjana secara
penyelidikan atau disertasi bagi pengajian secara kerja kursus dan penyelidikan atau
Laporan Projek Sarjana Muda (PSM)
SUPERVISOR’S DECLARATION
“I hereby declare that I have read this Master Project Report and in my opinion
this Master Project Report is sufficient in terms of scope and quality for the
award of the degree of Master of Science in Facilities Management”
Signature
:
Name of Supervisor
:
PROF. ROSDI AB RAHMAN
Date
:
22 NOVEMBER 2005
OPPORTUNITIES OF TENANCY MANAGEMENT SERVICES BY FM
ORGANISATION IN JOHOR BAHRU
KHAW TAN CHENG
A project report submitted in partial fulfilment of the
requirements for the award of the degree of
Master of Science in Facilities Management
Faculty of Geoinformation Science And Engineering
Universiti Teknologi Malaysia
NOVEMBER 2005
ii
DECLARATION
I declare that this Master Project Report entitled “Opportunities of Tenancy
Management Services by FM Organisation in Johor Bahru” is the result of my own
research except as cited in the references. The report has not been accepted for any
degree and is not concurrently submitted in candidature of any other degree.
Signature
:
Name
:
KHAW TAN CHENG
Date
:
22 NOVEMBER 2005
iii
DEDICATION
To my beloved daughters, Adeline and Alicia,
Who bring incredible joy to my life….
To my beloved husband, Kelvin,
Who has given me his endless financial support….
To my wonderful mother,
Who has given me her endless moral support and assistance….
iv
ACKNOWLEDGEMENT
I would like to take this opportunity to express my sincere gratitude and
appreciation to Professor Rosdi Ab Rahman for his invaluable guidance, advice,
comments and encouragements throughout the whole journey of supervision to
complete this project.
My special gratitude also goes to Dr. Hishamuddin Mohd. Ali as the course
coordinator and all the lecturers who have taught me in this course.
Lastly, I must add that there are many others, who have assisted me in various
ways while in the process of completing this project. To all of them, I am greatly
indebted.
Thank you.
v
ABSTRACT
Property investment has always been one of the best investment vehicles to
build a steady stream of passive rental income that can be extremely rewarding if
managed correctly. When comes to the management of rental property, there is no
doubt that rental is always the main issue. There are of course other issues which
give problems to the landlords for example tenant disappearing act, causing damage
to the property and using the rental property to carry out illegal activities. The same
goes to the tenants whereby they may encounter landlords, who on purpose delay the
refund of security deposits, produce unjustified claims, fail to carry out repair and
maintenance of the rental property and fail to provide quiet possession of the rental
property. These are the common examples of problems faced by the landlords and
tenants when the tenancy is managed without using the tenancy management service
provider. There are two objectives for this study. The first objective of this study is
to identify the reasons why both the landlord and tenant decline to use tenancy
management service providers that are available in the market. The second objective
is to identify the list of problems faced by both landlord and tenant in the residential
sectors, namely the apartment complex. The data for this study are collected from
three different groups concerned, namely the parcel owners of the apartment, tenants
of the apartment and the Apartment Management Team. These data collected were
then analysed using Frequency Distribution and Likert Scaling Analysis method.
The findings of this study suggest that the business of tenancy management services
would be a good business prospect and opportunity in Johor Bahru taking into the
consideration of the availability and market of sideline investors, corporate or foreign
tenants who favour the used of agency services and the nature of tenancy problems
which could not be solved effectively by the landlords and tenants themselves.
Finally, the results of the findings may also become useful information to the FM
organisations who intend to venture into the business of tenancy management
services in Johor Bahru.
vi
ABSTRAK
Pelaburan harta tanah merupakan satu pelaburan yang boleh mendatangkan
pendapatan yang lumayan jika dikendalikan dengan cara yang betul. Isu-isu
mengenai sewa merupakan isu utama yang sering dihadapi oleh tuan rumah. Selain
daripada isu-isu mengenai sewa, terdapat juga isu-isu lain dan ini termasuk isu
penyewa menghilangkan diri, isu tentang penyewa merosakan rumah serta isu
penyewa menjalankan aktiviti haram di dalam rumah. Penyewa rumah pula juga
sering menghadapi masalah dalam proses penyewaan. Masalah-masalah yang
dihadapi adalah seperti tuan rumah sengaja tidak memulangkan wang cengkeram,
mengadu tentang kerosakan rumah yang tidak benar, gagal melaksanakan pembaikan
dan penyenggaraan rumah dan gagal memberi pemilikan tanpa kekacauan kepada
penyewa. Masalah-masalah tersebut merupakan masalah yang biasa dihadapi oleh
kedua-dua pihak tuan rumah dan penyewa rumah dimana prosidur penyewaan
diuruskan tanpa menggunakan agen perkhidmatan. Kajian ini mempunyai dua
objektif. Objektif pertama bagi kajian ini ialah mengenalpasti sebab-sebab mengapa
kedua-dua pihak, tuan rumah dan penyewa rumah tidak menggunakan perkhidmatan
agen untuk mengendalikan perkara tentang penyewaan rumah. Objektif kedua ialah
untuk mengenalpasti masalah-masalah yang dihadapi oleh tuan rumah dan penyewa
rumah di dalam sektor perumahan khasnya pangsapuri. Data-data kajian tersebut
diperolehi dari tiga kumpulan iaitu tuan rumah pangsapuri, penyewa pangsapuri dan
pekerja dari Pejabat Pengurusan Pangsapuri. Data-data yang diperolehi dianalisis
dengan menggunakan kaedah Analisis Frekuensi dan analysis Likert Scaling.
Keputusan kajian tersebut memberi cadangan bahawa perkhidmatan pengurusan
penyewaan merupakan satu peluang bisnes perkhidmatan di Johor Bahru dengan
mengambilkira terdapatnya pelabur harta tanah sampingan, penyewa asing atau
korporat yang menggunakan perkhidmatan agen dan masalah-masalah penyewaan
yang tidak dapat diselesaikan oleh pihak tuan rumah dan penyewa rumah berkenaan.
Akhir sekali, keputusan kajian yang diperolehi akan menjadi satu maklumat yang
berguna kepada organisasi Pengurusan Fasiliti yang ingin menerokai bisnes
perkhidmatan pengurusan penyewaan di Johor Bahru.
vii
TABLE OF CONTENTS
CHAPTER
1
TITLE
PAGE
Title Page
i
Declaration
ii
Dedication
iii
Acknowledgement
iv
Abstract
v
Abstrak
vi
Table of Contents
vii
List of Tables
xii
List of Figures
xiv
List of Abbreviations
xvi
List of Appendices
xvii
INTRODUCTION
1
1.1
Background of the Study
1
1.2
Problem Statement
3
1.3
Objectives of Study
4
1.4
Significance of Study
4
1.5
Scope of Study
6
1.6
Limitations of the Study
7
viii
2
1.7
Methodology of Study
7
1.8
Chapter Outline
11
LITERATURE REVIEW
13
2.1
Introduction
13
2.2
Residential Properties
14
2.2.1 Traditional Housing
14
2.2.2 Condominium
15
2.2.3 Apartment and Condominium
15
2.2.4 Apartment Complex
16
2.2.5 Recent Apartment Trend
16
2.3
Tenancy Management
17
2.4
Tenancy Management Services
17
2.5
The Provision of Tenancy Management Services
18
2.6
Comparison of Tenancy Management Services
and Property Management Services
2.7
20
Tenancy Management Services in the Context of
Facility Management
20
2.7.1 Landlord
22
2.7.2 Tenant
22
2.7.3 Facility Manager
22
2.7.4 Landlord, Tenant and Facility Manager
Relationship
2.7.5 Agent-Principal Relation Issues
2.7.5.1
24
Privity of Contract in Tenancy
Management
2.7.5.2
23
24
Control of Facility Manager’s
Authority
25
ix
2.7.5.3
Supervision of Consultant
2.7.5.4
Protection of Landlord’s Soft
Asset
2.8
2.9
26
26
2.7.6 The Tenancy Trend
27
Legal Aspect of the Tenancy
27
2.8.1 Lease and Tenancy
29
2.8.2 Tenancy Agreement
30
2.8.3 The Creation of Tenancy
32
2.8.4 Landlord and Tenant General Obligation
32
2.8.5 Termination of Tenancy
33
Standard Tenancy Practice Procedures
34
2.9.1 Basic Tenancy Terms and Conditions
37
2.10 Professional Practice in Tenancy Management
39
2.11 Tenancy Management Services in the Context of
Business Opportunity for FM Organisation
40
2.11.1 Change of Employment Trend
44
2.11.2 Tenancy Problems
45
2.12 Conclusion
3
50
CASE STUDY: SERI MUTIARA APARTMENT,
BANDAR BARU SERI ALAM
52
3.1
Introduction
52
3.2
Background and Overview
53
3.3
Apartment Units Available
55
3.4
Apartment Amenities
57
3.5
Facilities
57
3.6
Residents Component
59
3.7
Apartment Management
60
x
3.8
4
Conclusion
61
RESEARCH METHODOLOGY
62
4.1
Introduction
62
4.2
Research Process
63
4.2.1 Stage 1: Identify and Select the Research
Method
4.3
5
64
4.2.2 Stage 2: Creation of Survey Question
66
4.2.3 Stage 3: Identify the Area for Survey
68
4.2.4 Stage 4: Data Collection
68
4.2.5 Stage 5: Data Verification
72
4.2.6 Stage 6: Data Collation
72
Conclusion
72
ANALYSIS AND FINDINGS
74
5.1
Introduction
74
5.2
Study of the Population
75
5.3
Data Analysis Method
77
5.3.1 Frequency Analysis
77
5.3.2 Likert Scaling Analysis
78
Detail Findings and Survey Data Analysis
79
5.4
5.4.1 Reasons for Not Using the Tenancy
Management Service Provider Available in
the Market
80
5.4.1.1
Landlord
80
5.4.1.2
Tenant
83
5.4.2 Problems Faced in Tenancy
86
xi
5.4.2.1
Landlord
86
5.4.2.2
Tenant
94
5.4.2.3
Apartment Management
100
5.4.3 The Ranking of the Tenancy Problems
5.5
6
101
5.4.3.1
Landlord
102
5.4.3.2
Tenant
104
Conclusion
107
CONCLUSION AND RECOMMENDATION
108
6.1
Introduction
108
6.2
Summary of the Findings
109
6.3
The Prospect of Tenancy Management Services
Business for FM Organisation in Johor Bahru
111
6.4
Limitation and Shortcoming of the Research
113
6.5
Recommendation for Future Research
114
6.6
Conclusion
114
REFERENCES
116
Appendices A-E
121
xii
LIST OF TABLES
TABLE NO.
TITLE
PAGE
2.1
Landlord and tenant typical obligation in tenancy
33
3.1
Apartment design statistic
55
5.1
Summary of survey group
80
5.2
Landlords response on rent arrears and bad debt
88
5.3
Landlords response on tenants fail to clear debris
89
5.4
Landlords response on insufficient utilities
deposits
90
Landlords response on tenant non-complying to
tenancy agreement
91
Landlords response on tenant bring a counterclaim
92
5.7
Landlords awareness of legal right
93
5.8
Landlords awareness of the obligation
93
5.9
Landlords effort to read and understand the
tenancy agreement content
94
Tenants response on getting back security
deposits
95
Tenants response on landlord non-complying of
tenancy agreement content
96
5.5
5.6
5.10
5.11
xiii
5.12
Tenants response on false accusation on damages
97
5.13
Tenants response on unreasonable charge for
damages
98
5.14
Tenants awareness in legal rights and obligation
99
5.15
Allocation of score for problems faced by
landlords
102
Scales in index value for problems faced by
landlords
103
5.17
Ranking of tenancy problems faced by landlords
104
5.18
Allocation of score for problems faced by tenants
105
5.19
Scales in index value for problems faced by
tenants
106
Ranking of tenancy problems faced by tenants
106
5.16
5.20
xiv
LIST OF FIGURES
FIGURE NO.
TITLE
PAGE
1.1
Research methodology (Adopted from Lim, 2005)
10
2.1
FM components
21
2.2
Standard tenancy procedure in Malaysia
(Adapted from www.propertylookout.com and
www.propertylink.com)
36
2.3
Stamp duty for tenancy computation
38
2.4
Linking customer’s needs and wants with
company’s goals (Tow, 2004)
41
2.5
Factors influence business organisation
42
3.1
The view of the Seri Mutiara Apartment
53
3.2
Seri Mutiara Apartment location map
54
3.3
Types of three-bedroom design
56
3.4
Overview Seri Mutiara Apartment facilities
58
4.1
Research process model
63
5.1
Eligible population derivation
(Source: Seri Mutiara Management Office)
76
5.2
Landlords’ summary used of agent
81
5.3
Landlords used of agent based on nationality
status
82
xv
5.4
Analysis of landlords’ reasons for not using agent
83
5.5
Tenants’ summary used of agent
84
5.6
Tenants used of agent based on nationality status
85
5.7
Analysis of tenants’ reasons for not using agent
86
xvi
LIST OF ABBREVIATIONS
AGM
-
Annual General Meeting
HR
-
Human Resource
FM
-
Facilities Management
IFMA
-
International Facility Management Association
MNC
-
Multi National Companies
xvii
LIST OF APPENDICES
APPENDIX
TITLE
PAGE
A
Questionnaire for property owner
121
B
Questionnaire for tenant
125
C
Interview questions for Apartment Management
Office
129
D
Tenancy Agreement
131
E
Property Inspection Checklist
144
CHAPTER 1
CHAPTER 1
INTRODUCTION
1.1
Background of the Study
According to Lee (2001), the Malaysian government has put in a large effort
since independence to ensure that Malaysians of all income levels have accessibility
to adequate, affordable and quality houses. The Employees Provident Fund's
withdrawal scheme for housing in which a subscriber is allowed to withdraw up to
30 per cent of his savings to purchase or build a house has also helped promote a
house-owning society.
Marbeck (1994) has identified three main reasons of purchasing a property.
The first reason of purchasing a property is with the intention for the buyer
occupation. The second reason for purchasing a property is for investment purpose.
In this case property is purchased so that it will generate income in the form of rent
which will be regular, and if all goes well it will rise and make up for inflation. The
third reason for purchasing a property is for speculation. Under this third reason, the
2
buyer will expect the property price rise rapidly and gain from the regular
appreciation of the property price.
In the case where property is held for investment purposes, the yield from
rental income varies with the type of property owned. Generally, new units in
apartment and condominiums fetch better yields than landed properties during the
early years of use. The yield diminishes, however, with the age of the property as
tenants prefer to pay top rentals for newer apartment and condominium units (Lee,
2001).
The way a property is let and managed is likely to have a significant impact
on the day to day experience of tenants living in the sector. It would also affect the
tenants on how satisfied they are with their housing and how confident they are that
problems can be efficiently and fairly resolved as and when they arise.
Tenancy problems have always been an issue to the property owners. Most
of the property owners often find having problem in managing their property
invested for rental income. It is accepted that the purpose of a tenancy agreement is
to regulate the tenants’ occupation to the best advantage of the landlord. However,
most landlords fail to carry out the responsibility of selecting the tenant via scrutiny,
imposing, monitoring and implementing the provisions of the tenancy with the
ultimate aim of securing the value of the properties invested.
Most landlords tend to have the opinion that managing the property
themselves usually proves to be the most cost effective way. Often this is not
practical, due to the potential time constraints of taking viewings, checking
references, and collecting rent, especially if the property is located at a distance from
3
the landlord’s own residence. In extreme cases of difficult tenants, there may also be
legal costs involved during any disputes.
Recently, there is a growing awareness of the role of good letting and
management practices in stabilising declining neighbourhoods prone to low demand,
anti-social behaviour and landlords who do not take responsibility for the impact of
their private letting. As a result of that, a good tenancy management is important for
the overall image of the property sector and a good tenancy management practice for
the landlords to minimise the risks involved in letting their properties. Collier (2003)
also mentioned that property should be viewed as a long-term income-generating
asset which should be managed and maintained in an efficient and cost effective
manner to ensure optimum performance and value to the owners
Based on the issues above, two specific problems have been selected for this
study. It is hoped that the results in this study will able to display a clear picture of
how tenancy management services can become a good business opportunity for the
FM organisations in Johor Bahru.
1.2
Problem Statement
1.
The tendency that landlords and tenants do not use tenancy management
services available.
2.
Problems faced when self managed.
4
1.3
Objectives of Study
1)
To identify the reasons why the landlord and tenant decline to use the tenancy
management services available in the market.
2)
To identify the landlord and tenant problems when the landlord solely
manages the property for rent without engaging the tenancy management
service provider.
1.4
Significance of Study
The findings of this study would be useful to the following groups of
individuals:
1) Facility Manager
The findings of this study will be very useful to the Facility Manager who
provides tenancy management services for the clients. The information gathered in
this study will serve as a basis of advice to the clients on tenancy issue.
5
2) Landlord
The findings of this study are very useful to the landlord because it
highlights to the landlord the list of problems they may encounter when managing
the properties for rent on their own.
3) Tenant
This finding is very useful to the tenant because it brings to the attention of
the tenant the list of issue that may happen during the tenancy and termination of
tenancy.
4) Condominium/Apartment Management Team
Condominium/Apartment Management Team would find this study useful
for implementing the management fees collection strategies and tactics to increase
occupancy rate in the apartment blocks.
5) Service Provider Companies
Companies who wish to diversify their business or penetrate into the business
of tenancy management services would find this study useful for implementing a
successful strategic business plan.
6
6) Lawyers, Mediators and Arbitrators
The Lawyers, Mediators and Arbitrators will find these findings informative
because it will serve as a basis of reference and advice to the clients on tenancy
related issue.
7) Members of the Public
The public will find these findings informative because it will enlighten them
on the knowledge pertaining to the tenancy issue such as the legal aspect of tenancy
and the problems faced in tenancy business despite many favourable remarks and
comments on becoming a wealthy landlord.
1.5
Scope of Study
I.
The purpose of this study is to focus on two major areas. The first focus
would be the reasons why both the landlord and tenant decline to use the
tenancy management services which are available in the market who can help
them to solve the tenancy problems. The second focus area would be the
problems faced by both the landlord and tenant when the tenancy of the
premise is solely managed by the landlord himself.
II.
The information of this study would be used by the FM organisation to
identify the viability of the tenancy management services business.
7
III.
This study will be carried out by dividing the targeted persons into three
categories. That is the landlord, tenant and Condo/Apartment Management
Team. Therefore, this study will only reveal the problems they faced in
tenancy matter without the presence of tenancy management service provider.
IV.
This study focuses on the tenancy issue at Seri Mutiara Apartment, Bandar
Baru Seri Alam, one of the apartment complexes that come with
condominium facilities. The feedback and information gathered from the
primary and secondary data in this study would be used to determine the
business prospect of providing tenancy management services by FM
organisations in Johor Bahru.
1.6
Limitations of the Study
As the research is conducted only in one of the apartment complexes in Johor
Bahru, the sample cannot infer the viability of tenancy management business for all
type of residential properties in Johor Bahru. As a result of this, the research can
only infer to the apartment and condominium sectors with similar facilities in Johor
Bahru.
1.7
Methodology of Study
The methodology of this case study will be conducted in five main stages
which are stated as below:-
8
Stage 1
The first stage of the study is to identify the problem statement and objective
of the study.
The idea of the problem statement for this study was derived from the
author’s working experience in relation to property field; and articles, journal and
books pertaining to tenancy. In order to collect more data related to the research
topic, secondary data has been collected through a review of findings by earlier
researchers of the same nature from different media.
The title and objectives of this study are also identified at this stage based on
the problem statement derived earlier. At this stage the significance, scope and
limitation of the study are also being identified accordingly.
Stage 2
The second stage of the study is to conduct a theoretical research pertaining
to the tenancy issues. Articles, books, journal and electronic media such as internet
would be the information and sources used as the mean for data collection. The
information collected at this stage will later serve as the secondary data in Stage 3.
9
Stage 3
The third stage of the study is to conduct a data collection which will be
divided into primary and secondary data as described below:-
I.
Primary Data
The primary data would be gathered from the questionnaires distributed to the
parcel owners of the apartment blocks who have rented out their units for rental
income and tenants who are living in the said apartment blocks. Besides that, the
information gathered from an interview with the Manager of the Apartment
Management will also contribute as part of the primary data of this study.
II
Secondary Data
The secondary data would be gathered from the reference books with relevant
topic pertaining to the tenancy and tenancy management, internet articles on tenancy
law and tenancy management, Malaysia property journal, Malaysia property report
and the apartment monthly in house bulletin.
Stage 4
At this stage, a data analysis will be conducted based on the data that has
been collected at Stage 3. An appropriate statistic analysis method will be adopted in
this data analysis process.
10
Stage 5
This would be the final stage of the study whereby suggestions or
recommendations will be given and a conclusion of the findings will be drawn at this
point. The research methodology is illustrated in Figure 1.1 below:
Stage 1
PROBLEM
STATEMENT
Objective of
the study
Significance of
the study
Scope of the
study
Stage 2
THEORETICAL
RESEARCH
Stage 3
DATA
COLLECTION
Primary Data
Limitation of
the study
Secondary
Data
Data Arrangement
Stage 4
Stage 5
DATA ANALYSIS
SUGGESTION/RECOMMENDATION
AND CONCLUSION
Figure 1.1: Research methodology (Adopted from Lim, 2005)
11
1.8
Chapter Outline
The write-up for the overall study is organised and presented through six
chapters. Brief outline of the contents in each chapter is elaborated as below:-
Chapter 1: Introduction
Chapter 1 will discuss on the effect and important of tenancy management in
the residential sectors. Following of this chapter will comprise of the discussion on
the problem statement, determination of the objectives, significance of study, scope
of study and limitations of this study. The methodology and the chapter outline of
the research are also been briefly stated in this chapter.
Chapter 2: Literature Review
This chapter will discuss on the areas concerned with the key issues of this
study. In this chapter, theories and concepts by different authors and experts in the
related field pertaining to the study are being adopted to this study which will be
explained in depth in this chapter.
Chapter 3: Introduction of the Case Study: Seri Mutiara Apartment
Chapter 3 shall present the background of the case study that is Seri Mutiara
Apartment, located at Bandar Baru Seri Alam. A brief description of the apartment
layout, apartment facilities and the residents’ component shall be put forward in this
chapter.
12
Chapter 4: Research Methodology
Chapter 4 described the research process for this study in detail. This
includes the explanation on the methods used to gather the data and techniques
adopted to produce the information needed to address for this study.
Chapter 5: Analysis and Findings
Chapter 5 presented the findings of this study. Ideas, opinions and comments
from the parties involved in the research will be gathered to achieve the objectives
which addresses to the problem statement identified earlier in Chapter 1. This
chapter will also presents the result collected in quantitative data using the method as
described in Chapter 4.
Chapter 6: Conclusion and Recommendation
This final chapter will summarise the findings of the research analysis in
Chapter 5. Limitations of the research for this study and recommendation for future
studies have been stated in this chapter. Finally, this chapter ends with the
concluding notes on the objectives stated in Chapter 1.
CHAPTER 2
CHAPTER 2
LITERATURE REVIEW
2.1
Introduction
When the property is held for investment purposes, the letting and
management of the tenancy will be the prime concern to the owners or investors.
The changes of trend and preferences of the tenants have encouraged the business
growth in tenancy management services.
This chapter will describe the meaning of type of residential properties
available for rent, tenancy management, tenancy management services in the context
of Facility Management and the legal issues to be considered by the FM organisation
that provides tenancy management services. Besides the above, this chapter also
look into the business opportunity in the context of tenancy management services
which served as guidance to the FM organisation.
14
2.2
Residential Properties
There are various types of residential properties available for rent in
Malaysia. Marbeck (1994) has classified the various types of property into two
main headings that is the traditional housing and condominiums.
2.2.1
Traditional Housing
Traditional housing can be further classified according to price, namely, lowcost and non low-cost houses.
i)
Low-cost houses
Low-cost houses are very simple house which can be flat, single-terraced and
two-storey terraced. All are constructed with cheap materials but are strong enough
to withstand wear and tear for about 10 years. The rooms are kept small and
bathroom is limited. The land area will measure from around 650 to 800 square feet.
The transaction of the low-cost house is governed by the Cawangan Perumahan
ruling.
ii)
Non low-cost houses
Traditional housings which is not categorized under low-cost are single-
storey terraced, two-storey terraced, single-storey semi-detached, two-storey semidetached, single-storey detached to multi-storey detached and with the recent trend
of apartments, town houses, linked and cluster linked houses.
15
2.2.2
Condominium
Condominium living was introduced into Malaysia in the late 1970’s to
overcome the shortage of land.
Condominium, in the physical sense, should be thought of as housing that
provides more units per acre, more liveability in less space and better use of existing
structures. Condominiums can include as few as two and as many as hundreds of
units.
The condominium concept can even be applied to a group of detached single
family houses where owners have undivided interest in the common area which the
structural possibilities are endless.
2.2.3
Apartment and Condominium
Marbeck (1994) has distinguished a condominium block from an apartment
block with the facilities offered by the block.
Apartment is said to be a tall building divided into flats on each floor and
come with no facilities provided for particular purposes.
Whereas condominium on the other hand is a block of flats, each of which is
owned by the person who lives in it and the said block of flats comes with complete
range of facilities that are normally found in the private club such as swimming pool,
barbecue pit, jogging track, putting green, canteen, laundry facilities, gym, tight
16
security and so on. Condominium is therefore said to be the result of a marriage
between and apartment block and a private club.
2.2.4
Apartment Complex
The word “complex” is defined by Oxford Advanced Learner’s Dictionary as
a group of similar buildings or facilities on one site. Therefore, apartment complex
would define as a group of apartment blocks located on one site.
2.2.5
Recent Apartment Trend
As there are strong competitions in the property development market, the
developers tend to come out with all sorts of innovative design for the products. One
of the innovative designs for the high rise residential block would be apartment
comes with condominium facilities. In order to be competitive, the apartment units
will come in various designs to suit the purchasers’ needs and these purchasers will
only need to pay for the apartment price in return for the exclusive design and
comprehensive condominium facilities. One of the apartment complexes that come
with condominium facilities in Johor Bahru would be Seri Mutiara Apartment
located at Bandar Baru Seri Alam.
17
2.3
Tenancy Management
BC Non-Profit Housing Association (2002) has identified Tenancy
Management as the term used in connection with the process of selecting applicants,
leasing vacant units, and ensuring tenants fulfil their lease obligations. It includes
the followings:-
•
Selecting applicants and maintaining waiting lists.
•
Leasing vacant units to new tenants.
•
Ensuring tenants understand their rights and responsibilities.
•
Considering tenant requests for transfer.
•
Preparing move-out units for new tenants.
•
Documenting and collecting charges for damages when tenants move out.
•
Enforcing the lease terms when tenants do not fulfil their obligations.
•
Resolving conflicts with or among tenants.
•
Providing for the special needs of tenants (e. g. disabilities, mental health
issues).
•
2.4
Encouraging a balanced and healthy community.
Tenancy Management Services
Tenancy management services are services provided to work on behalf of the
tenant to ensure correct management of the tenancy. It also covers the aspect of
carry out the task for the clients such as paying the rent and utility accounts, and
acting as a single point of contact for repairs and management for all of the client’s
employees who occupy property rented by the company (The Relocation Bureau,
2005).
18
Primacy Europe (2004) has defined tenancy management services as a
service which is designed and managed to enable clients to offload the significant
administrative burdens of resolving issues associated with their transferees’ tenancies
in the host country, while retaining full financial and operating control.
Property Seen (2005) on the other hand has defined tenancy management
services as a service that designed to provide support to the personnel / HR
departments of corporate clients through outsourcing of the administration of the
client’s residential tenancies.
2.5
The Provision of Tenancy Management Services
Tenancy management services are services designed to provide a comfort
place for the tenant to stay. It also design to assist the landlord to retain full financial
and operating control over the property invested for rental income.
In general, different organisations provide different set of tenancy
management services. Each FM organisation will have their marketing strategies to
market their tenancy management services. According to PRH Property
Management (2003), the provision of tenancy management services shall include the
enforcement of the Housing Ordinance, Tenancy Agreements, and the
implementation of Housing Policies. Examples of different sets of tenancy
management services provisions are:-
19
Property Seen from United Kingdom…
•
Provide an ongoing point of contact for employees regarding issues during
the tenancy.
•
Control monthly rental and bill payments.
•
Control administration on behalf of the client.
•
Liaise with managing agents and landlords regarding repairs, inspections and
legal issues.
•
Co-ordinate mediation, terminations, surrenders and renewal of tenancies.
•
Co-ordinate subsequent negotiations for repairs and deficiencies at the end of
the tenancy.
Savills Property Management from Hong Kong….
•
Review of tenancy documentation.
•
Maintaining landlord and tenant relations.
•
Negotiating tenancy renewals.
•
Preparation of land tribunal applications.
•
Securing and negotiating new letting.
•
Rental and service charge collection.
•
Carrying out handover inspections.
•
Maintaining detailed tenancy records.
Primacy Europe from Europe….
•
Effect prompt resolution of any issues arising during the course of a tenancy.
•
Arrange the best terms for any tenancy extensions.
•
Ensure both the landlord and transferee fulfil their respective obligations.
•
Minimize inconvenience and/or cost to the transferee and client.
20
2.6
Comparison of Tenancy Management Services and Property
Management Services
Knight Frank (2005), a property services company from Malaysia has
distinguished the services provided between property management services and
tenancy management services.
According to Knight Frank (2005), the coverage aspect of property
management services shall include the space management which includes
forecasting and accommodation reviews, building and maintenance management and
energy use, implementing and reviewing safety and security procedures,
management of business support related issues as well as performance, quality and
user satisfaction monitoring.
Whereas tenancy management services shall cover the services such as rental
and management fee collections, lease renewals and negotiations and assist in the
set-up of administrative and financial systems needed for efficient long-term
management, financial and performance reports, budgets, sinking fund provision, and
secretarial services for AGMs and other meetings for management corporations.
2.7
Tenancy Management Services in the Context of Facility Management
Facility Management, commonly abbreviated as FM, is a fairly new business
and management discipline. The common definition of Facility Management is the
practice of coordinating the physical workplace with the people and work of the
organisation; integrates the principles of business administration, architecture and the
behavioural and engineering sciences (Cotts, 1999).
21
The International Facility Management Association (IFMA) has defined
Facility Management as a profession that encompasses multiple disciplines to ensure
functionality of the built environment by integrating people, place, process and
technology (IFMA, 2004).
According to Teicholz (2001), Herman Miller Inc., which established Facility
Management Institute, has developed a FM model that made up of the element of
people, process and place. This model comprised of three-interlocking circles
representing the important facilities roles and facilities management which play in
integrating employees, work processes and work places into a coherent productive
and holistic system.
PEOPLE
FM
PROCESS
PLACE
Figure 2.1: FM components
Tenancy management in facilities is therefore said to arise when a company
decides to become the “Landlord” for the property. As a result of that, someone must
be put in charge to administer the tenancy function in meeting tenant needs and
ensuring the compliance of the terms and conditions laid down in the tenancy
agreement.
22
2.7.1 Landlord
Landlord is defined as one who owns or holds property and leases it to
someone else that is the tenant (www.legal-definitions.com).
2.7.2
Tenant
Tenant is defined as someone who has the right to temporarily possess
another’s property in exchange for rent under a lease or similar arrangement
(www.legal-definitions.com).
2.7.3
Facility Manager
Magee (1988) has identified Facility Manager as a person who may be either
full or part owners of the facility, or may be salaried employees and if the Facility
Manager is not tied to an organisation by ownership, he may be hired from outside
the organisation. In this instance, the FM organisation would be the Facility
Manager engaged to oversee the tenancy management procedures for the property
owners.
23
2.7.4
Landlord, Tenant and Facility Manager Relationship
The relationship between landlord and tenant are created through the use of
tenancy agreement where all responsibilities and rights will be agreed upon and spell
out. Property owners on the other hand can assign the job of running the property to
an agent and the relation to be created will be through the appointment of a Facility
Manager which will be facilitated by a contractual agreement.
The landlord being the assignor, from the legal stand point will be known as
the Principal. Whilst the Facility Manager being the appointee will be called as the
Agent and with proper signing of the appointment and agreement, the principal and
agent relation is created.
Upon the creation of the relation, rights and responsibilities will arise
between the Principal, Agent and the Third Party. In the agent-principal relationship,
the agent will act for and on behalf of the Principal and in most cases the action will
be restricted to that being agreed upon signing.
In the creation of the relation, proper care should be given to safeguard the
landlord. It is important that the landlord have some sort of control so that he or she
will not be subjected to unnecessary risk as a result of an agent’s doing.
24
2.7.5
Agent-Principal Relation Issues
A landlord must be aware of the issues in the creation of agent-principal
relation before engaging a FM organisation to handle his tenancy matters.
Issues to consider in the creation of agent-principal relation are as follows:-
i)
Privity of contract between the landlord and Facility Manager.
ii)
Control the authority of the Facility Manager so that the landlord will not
be responsible for any wrong doings of the Facility Manager and illegal
contract signed.
iii)
Appointment and control of other related professional services such as
lawyers, accountant etc.
iv)
Operational organisation including accounts maintenance, budgeting,
management expenses and etc.
v)
Protecting of landlord’s soft asset.
2.7.5.1 Privity of Contract in Tenancy Management
A contract is a private relationship between the parties who make it, and no
other person can acquire rights or incur liabilities under it (Redmond, 1991). Under
the common law doctrine of privity of contract, no one can sue or be sued on a
contract to which he is not a party (Abbott and Pendlebury, 1996).
In the tenancy management assignment, the Facility Manager can act either
as an agent or a freelance contractor from a FM organisation. If the Facility Manager
25
is appointed as an agent, therefore the landlord will be regarded to be involved
directly in contracts signed between the Facility Manager and any other third party.
Thus, any problems and difficulty arising from the contract will be the responsibility
and liability of the landlord. However, if the Facility Manager is appointed as a
freelance contractor, the landlord will not be responsible or liable to contracts signed
by the Facility Manager and Third Party.
2.7.5.2 Control of Facility Manager’s Authority
In the protection of the landlord’s interest and to control the authority of the
Facility Manager in the tenancy management, especially in the aspects of rent
review, acquisition of facilities, creation of contract and appointment of consultant,
the landlord should incorporate into the agreement some rules and limitation. The
following regulations are samples of what is commonly included in the contract:-
i)
Provision of standards and operating procedure with regard to
involvement of the Facility Manager in documentation of relation
depicting the Landowner.
ii)
Insertion of liquidated damages to be recovered as a result of Facility
Manager’s negligence and mistake.
iii)
Requirement that the Facility Manager prepares and submits reports
pertaining to tenancy or leasing, amendments, expenses, approvals and
etc.
26
2.7.5.3 Supervision of Consultant
In most cases, the landlord will delegate the authority to the Facility Manager
to act with the consultant and also third parties. However, problem might arise if it is
not clear whether consultant is representing the Facility Manager or the landlord. To
alleviate future problems in this respect, a clearly define role must be spelled out in
respect of consultant appointment and supervision. Some sort of assurance that
continuity of service is also required from the consultant especially when the Facility
Manager is terminated.
2.7.5.4 Protection of Landlord’s Soft Asset
In the appointment agreement, it is important that recording and reporting be
done properly and it must also be emphasized that those records and reports are the
property or belong to the landlord. The Facility Manager must also ensure that the
records be accurately updated and be kept safely and confidentially, for example the
tenancy and contractual records, accounting recording and etc.
To ensure a healthy relation between the Facility Manager and the landlord,
every each of the issue and other relevant understanding must be documented, agreed
upon and it should also comprise the followings:-
i)
Property information and description.
ii)
Exact name of both the Facility Manager and the landlord.
iii)
Rate of fee/commission for the services.
iv)
Complete and detail provision with regards to risk.
v)
Period of appointment and provision of terminating the contract.
27
2.7.6 The Tenancy Trend
The changing of the work nature and the real estate market that shifts
constantly would be the issue that a Facility Manager needs to be aware of
developments in tenancy management and anticipate changes. For example, tenants
who are seeking different kinds of buildings. This has produced the following
trends:-
i)
The tenants seek flexible buildings capable of housing research,
laboratories, office space, warehousing and support space-all in an
attractive setting with increased amenities.
ii)
Landlords are shifting as much risk as possible to the tenants.
iii)
Tenants are becoming more sophisticated in stating their requirements and
in selecting buildings to fit their needs.
iv)
More tenants are considering becoming developers and/or owners.
2.8 Legal Aspect of the Tenancy
Malaysia’s landlord and tenant law, in many respects, is still in its infancy.
The law regulating landlords and tenants in Peninsular Malaysia is not too difficult to
learn, or too complicated to comprehend.
The National Land Code 1965, which is the premier legislation on land
matters in Peninsular Malaysia, represents the governing law. However, the Code
only contains a handful of provisions on leases and tenancies.
28
For example, sections 221 to 239 in Part 15 of the Code spells out the powers
of a land owner to grant a lease (which is for a period of more than three years), a
tenancy (not exceeding three years) and to stipulate various covenants, terms and
conditions in the lease or tenancy. The Code also prescribes the circumstances
giving rise to the forfeiture or surrender of a lease.
The Code does not set out a complete set of rules or a code of conduct for the
parties. Therefore, one has to fall back on general contract law, specifically the
Malaysian Contracts Act, for much of the law governing landlords and tenants
(Salleh Buang, 2004).
Some specific issues are spelt out in certain statutes, such as the Specific
Relief Act, while the conveyancing lawyers who draw up these standard documents
usually spell out the rights and obligations of the lessors and lessees (or landlords
and tenants) for their clients.
Salleh Buang (2004) also stress that potential landlords and tenants should
take note that since “freedom of contract” is still the norm when drawing up a lease
or tenancy agreement, they should have their own lawyers to advise them. It is not
advisable to rely on lawyers retained by the other party.
29
2.8.1 Lease and Tenancy
Tan (2003) has differentiated the term “lease” and a “tenancy” as follows:-
•
Lease
The word “lease” conveys the meaning of “to rent” which is to have the
benefits of something in return for payment of a certain sum of money. Traditionally
this relationship existed in the context of land and landed property.
The owner of the property allows another to occupy it and in return the other
person pays money in a lump sum in advance or periodically such as weekly,
monthly, quarterly or yearly. The payment is referred to as rent.
Under the National Land Code all leases with the letting period above three
years have to be registered. The result of the registration is the fact of the letting to
be endorsed on the title deed and therefore in the Register of Titles. A lease that is
not registered is said to be void.
The registration is thus highly beneficial to the lessee because his interest in
the title is effectively made known to third parties. Any person taking a subsequent
charge does so subject to the existing lease.
•
Tenancy
Traditionally, the word “tenancy” has been used for letting for short periods.
When such a letting is for a longer period, it is called a lease. In the context of
30
Malaysia National Land Code which only applies in peninsular Malaysia, a tenancy
is for a period of up to three years. Any longer than that and it becomes a lease.
A tenancy is exempted from registration. Therefore if a third party is buying
the land or creating a charge, such a person may not know about the tenancy which is
not registered.
2.8.2
Tenancy Agreement
The tenancy agreement is a legal contract that outlines the rights and
responsibilities as a tenant and the rights and responsibilities as a landlord. It
includes information on anti-social behaviour, rent, property use, repairs, hygiene,
health and safety, animals, gardens, vehicles and ending of the tenancy (The
Gateshead Housing Company, 2005).
According to Leong (2004), tenancy agreement should incorporate all the
clauses, terms and conditions necessary to protect both the rights of the landlord and
tenant. Leong (2004) also described tenancy agreement as a legal document
providing all the details as follows:•
The tenant’s name or names and identity card numbers (in cases of apartment
and condominiums, all the names and identity of the tenants will have to be
included to facilitate easy reference and to obtain the necessary tenant pass).
•
The company’s registered address and the company registration number, if
the tenancy is signed with private limited company.
31
•
Clarity of the type of expenses and outgoings that are to be paid by the
respective parties which include but not limited to quit rent, assessment,
maintenance (for non-landed properties) etc.
•
The landlord and tenant’s respective responsibilities.
•
The rental due date.
•
The usage of the rental property. This is very important because certain
statutory provision penalize landlords for illegal usage of property, such as
using residential house to run illegal house betting business. The usage of the
rental property stated in the agreement will ensure the tenant’s usage of the
property does not invalidate the insurance policy taken up on the property by
the landlord.
•
The tenancy option period, this will state the length of the option period and
the rental thereafter should there be any.
•
Period of notice to be given in writing either to terminate or renew tenancy
usually three months before the expiry of the current tenancy term.
Both landlord and tenant are to sign the tenancy agreement and in Malaysia,
one would need to be at least 18 years old to be eligible to sign. If the tenants are
students below 18 years old, parent or guardian will be asked to sign the tenancy
agreement.
32
2.8.3
The Creation of Tenancy
According to Male (1984), a tenancy may arise in one of two ways. First it
may be created by an express or implied agreement between two parties. This may
be either the simplest of oral agreements with the most elementary terms, that is
parties, property, rent and period or it may be a formal document running to many
pages and dealing with every possible eventuality from responsibility for cleaning
the windows to liability in the event of destruction by fire or other similar disaster.
Second, it may be created by statute. This is a method of recent origin but which is
now a fundamental and well established part of English law.
2.8.4
Landlord and Tenant General Obligation
Landlord and tenant disputes are a common occurrence in the renting process.
Therefore a Facility Manager should aware of issues on the obligation that need to be
fulfilled by both landlord and tenant in order to provide efficient tenancy
management services. The table below depict the list of typical obligation to be
fulfilled by the landlord and tenant.
33
Table 2.1: Landlord and tenant typical obligation in tenancy
Tenants should:
Landlords should:
Pay rent on time.
Make property habitable before tenants move in.
Use reasonable care and not
Make and pay for repairs due to ordinary wear
damage property.
Properly dispose of garbage.
Refrain from taking on additional
occupants or subleasing without the
landlord's written permission.
and tear.
Refrain from turning off a tenant's water,
electricity or gas.
Provide written notice to tenants when ownership
of the property is transferred to a new landlord.
Not unlawfully discriminate.
2.8.5
Termination of Tenancy
There are various ways of terminating the tenancy. The most common ways
in which a tenancy may be ended as described by Male (1984) are as follows:-
a) Effluxion of time
This only applies to a fixed term tenancy. The tenancy will end on the expiry
of the term and the landlord will entitle to possession of the premise.
b) Under a power
A tenancy can be terminated by having a term in the agreement which
enabling either party to end the tenancy at a particular time or on the happening of a
particular event. This is often called a “break clause” and is normally found in the
34
fix term tenancy. For example either party reserves the right to terminate the tenancy
by giving one month’s written notice of termination.
c) Forfeiture
The tenancy agreement will normally contain a clause which enables the
landlord, in certain specified circumstances, to terminate the tenancy and to re-enter
the demised premises. This is called a forfeiture clause or a proviso for re-entry.
The specified circumstances will normally be where the tenant is in breach of any of
his obligations under the tenancy. Even if there is no express proviso, the landlord
may still be able to re-enter if the tenant is in the breach of a condition of the
tenancy.
d) Frustration
Under the termination of tenancy by frustration, both parties released from
further contractual obligations where the circumstances surrounding the contract are
radically altered by unforeseen events so that the whole basis of the contract changes.
For example the demised premise destroyed by fire.
2.9
Standard Tenancy Practice Procedures
The Facility Manager should be aware and alert on the standard tenancy
practice procedures in the market to avoid any disputes which may arise. The
standard tenancy practice procedure in Malaysia environment is basically divided
into five stages as follows:-
35
i)
Stage 1
Upon confirmation of the property unit, the tenant is required to pay an
earnest deposit of one month’s rental to the landlord. Under the agency law, earnest
deposit will deem to be the consideration paid to secure the desired property unit.
ii)
Stage 2
Both parties, namely the landlord and the tenant will state their required terms
and conditions pertaining to the tenancy clearly and these terms and conditions will
then be spelt clearly on the offer letter to be signed by both parties.
iii)
Stage 3
Tenancy agreement will be prepared at this stage base on the mutual
agreement of the terms and conditions mentioned earlier at Stage 2. If the unit is
partly or fully furnished, an inventory list will be attached to the tenancy agreement.
The said tenancy agreement will be prepared in two sets and will then be signed by
both landlord and tenant. The signatures of both parties have to be witnessed by a
third party in order for the tenancy agreement to be legally binding.
iv)
Stage 4
The tenant will take possession of the premise after signing of the two sets of
tenancy agreement and settle the balance amount owing. The balance amount would
comprise of the security deposit and disbursement fees.
36
iv)
Stage 5
The executed tenancy agreements will be sent for stamping and subsequently
forward the stamped copies to the landlord and tenant for their safekeeping.
UPON CONFIRMATION
STAGE 1
The tenant is required to place one month's rent as earnest deposit with the
landlord.
STAGE 2
All terms and conditions will be put in an offer letter and signed by the
tenant and landlord.
STAGE 3
On mutual agreement on the terms and conditions, tenancy agreement will
be prepared, attached with the Inventory List and signed by the tenant and
landlord.
STAGE 4
Upon signing the tenancy agreement, the balance payment to be paid by
the tenant to the landlord.
STAGE 5
The executed tenancy agreements will be sent for stamping and copies of
the stamped tenancy agreements will be forwarded to both landlord and
tenant for their safe keeping.
Figure 2.2: Standard tenancy procedure in Malaysia
(Adapted from www.propertylookout.com and www.propertylink.com)
37
2.9.1
Basic Tenancy Terms and Conditions
The basic tenancy terms and conditions in Malaysia environment which have
to be drawn to the attention of the FM organisation that provide tenancy management
services would be as follows:-
i)
Earnest Deposit
The tenant shall pay an earnest deposit equivalent to one month's rental to
secure the said property. This sum shall be deemed as the first month's rental in
advance upon the execution of the tenancy agreement and is forfeitable if the tenant
does not execute the said contract in the agreed stipulated time given.
ii)
Security Deposit
After securing the property, the tenant is required to pay a further sum of two
month's rental for security deposit and half month’s rental for utilities deposit to the
landlord on or before the execution of the tenancy agreement. The security deposit
has to be refunded without interest and less any liabilities incurred by the tenant at
the time termination of tenancy.
iii)
Government Stamp Duty / Disbursement / Legal Fees for Tenancy
Agreement
Government stamp duty including disbursements, and legal fees thereof, shall
be borne and paid by the landlord and tenant equally.
38
iv)
Computation of Government Stamp Duty
The government stamp duty computation is based on the monthly rental and
the tenancy period stated in the tenancy agreement. A flat stamp duty rate of RM10
will be imposed for each duplicated set of tenancy agreement.
Therefore if the tenant signed the tenancy for two years the computation
formula for the government stamp duty would be as follows:-
Stamp Duty Computation (for a 2 years tenancy) :
monthly rent x 12 – 2400
------------------------------------------------------- x 2 years
250
Figure 2.3: Stamp duty for tenancy computation
v)
Professional Fees
So far there are no specific guidelines imposed on the professional fees
charged for tenancy management services provided by the organisation. Therefore
the professional fees charged will be based on the discretion of the service provider.
39
2.10
Professional Practice in Tenancy Management
A Facility Manager should at all times provide a cost effective service which
maximises the return of the property owners’ investment. Therefore a Facility
Manager should be a person who is trained and experienced in the legal, practical
and human relations aspects of tenancy and property management. It would also be
the duty of the Facility Manager to carefully select suitable tenants who will meet
their responsibilities as set out in the written tenancy agreement.
The Facility Manager should also recognise that proactive practices to
encourage goodwill and positive relationships with tenants is not only beneficial to
the Facility Manager’s business reputation but greatly enhances the income and cost
effectiveness of the property owners. This attitude together with other policies
designed to minimise vacancies also accounted for and shall become one of the
critical success factor in the industries.
Being a professional Facility Manager in tenancy management, regular
tenancy inspections do not only ensure that tenants are fulfilling their obligations but
to allow the Facility Manager to observe and report to the property owner any repair
or maintenance matter that may require the property owner’s attention. Besides that,
a Facility Manager should also as and when necessary take timely and proper action
which protects the interests of the property owner.
40
The Facility Manager shall provide a fully documented monthly statement of
rent receipts and any authorised expenditure to the property owners. Besides that,
the property owners will also receive a detailed summary of financial transactions
related to the property rented at the end of each tax year.
Finally, with the agreement and authority given, the Facility Manager can
deal with every matter affecting the property including payment of assessment and
quit rent, insurance, building management fees, pest control, repairs, etc. (Adapted
from www.jdco.com)
2.11
Tenancy Management Services in the Context of Business Opportunity
for FM Organisation
The FM organisation must look for new opportunities to meet customers’
needs and wants, and the needs of emerging markets. It is important for the FM
organisation to understand the opportunities available for tenancy management
services in order to embark on a new product development and make it successful.
Figure 2.4 depicts the links between customers and organisations.
41
Customer’s
Objectives
Customer’s
Needs and Wants
Firm’s
Objectives
Product or
Service
Customer’s
Present Position
Firm’s Needs
Firm’s Present
Position
Figure 2.4: Linking customer’s needs and wants with company’s goals (Tow, 2004).
Business opportunities are opportunities in the organisation’s business
environments that represent potential avenues for growth and/or gaining a
sustainable competitive advantage. An organisation’s external situation is defined by
the opportunities and threats that exist in its business environment (Goetsch and
Davis, 1997).
The examples of the external opportunities that the FM organisations
providing tenancy management services may have are as follows:•
Availability of new customers, namely the property owners and corporate
tenants.
•
An expanding market for existing tenancy management services.
•
Ability to diversify into related services.
•
Removal of barriers that inhibit growth.
42
43
•
Failures of competitors.
•
New on-line technologies that enhance the service quality.
Gabriel (1985) has identified four factors that influence a business which is
summarizes in Figure 2.5. These factors will serve as a business opportunity which
can be adopted by FM organisation that provides tenancy management services.
Social Environment
Physical
Environment
Business
Organisation
Economic
Environment
Legal-Political
Environment
Figure 2.5: Factors influence business organisation
I.
Physical Environment
Physical environment refers to the geographical features of the nation as well
as the natural endowments, and how FM organisations operate its tenancy
management services business within these constraints and to use them as
opportunities.
44
II.
Economic Environment
The economic environment shall focus on the economic conditions under
which a business operates. Tow (2004) has mentioned that the state of the country’s
economy, whether it is in boom or recession is an important factor. The level of
inflation and unemployment will also have significant bearings. Relationships
between markets and the various economic indicators are important in planning and
executing tactics and strategies.
III.
Legal-Political Environment
The legal-political environment covers the laws passed to protect the public
and the consumer from unscrupulous business practices.
IV.
Social Environment
The social environment includes intangible assets like skill and training of the
work force, and social cohesion of the community in supporting the productivity
movement. Changing trends in demography and tastes will have serious implications
for the future of the business. By understanding the customers’ behaviour, shifts in
demography and changes in customer profile, the FM organisation will be able to
position to satisfy new generations of users in tenancy management services.
Besides the above four common macro factors as identified by Gabriel
(1985), there are two other factors that result in the increase demand for tenancy
management services. The two factors are the current change of employment trend
45
and the increase problems in tenancy matter.
2.11.1 Change of Employment Trend
According to the Property Seen (2005) the expert Home Search Division of
Countrywide Residential Lettings in United Kingdom, with the increase in
globalisation, the trend for overseas staff assignments has changed and up to 50 per
cent fewer long term postings have been found. Besides that, more businesses are
now in favour on using short term transfers and temporary or 'commuting'
assignments, as well as modern technology, such as video conferencing which cause
lesser disruption to families and reduce overall operational costs.
The changing profile of job assignments may result in more cost and time
efficient. However, it is important to recognise that employees still need to be fully
supported with appropriate travel and accommodation arrangements, cultural
services and lines of communication, including co-ordination and reporting
structures. There are also a whole range of Human Resource issues to be addressed
and agreed. Thus, the changing profiles of assignments have given the FM
organisation a business opportunity in providing competitive package deal in tenancy
management services. The tenancy management services provided will ease the job
of the Human Resource and the implications to be considered will be followed and
arrange neatly by the service provider.
The number of implications to consider as a result of changing profile of
assignments which were summed up by Property Seen (2005) are as follows:-
46
1. The need for meticulous planning, both in the period leading up to an
assignment, and towards its termination.
2. Obtaining the correct visas/work permits.
3. Handling accommodation requirements, taking advantage of opportunities for
short tenancies on rented property, rather than using expensive hotels.
4. Organising motor cars or other transport.
5. Full briefing/debriefing to ensure efficient handover.
6. Clarification of employment status on return to home base.
Therefore, the tenancy management service provider has come into the
picture to release the tedious workload of the HR department.
2.11.2 Tenancy Problems
Problems and disputes between landlord and tenant has become a very
common issue in tenancy. As a result of that the demand for the service to handle
tenancy matter and tenancy disputes has seen to be increasing. This has then become
a business opportunity for the FM organisation to provide the service called the
tenancy management services. Even though there are laws to protect both landlord
and tenant, somehow or rather hiring lawyers on a case-by-case basis may result in
significantly higher legal fees for landlord-tenant issues (Larson, 2004).
According to Bruno Rost of Experian, a recent survey of 200 property agents
in the United Kingdom revealed that more than 65 per cent of all tenants turn out to
be problem cases. While the most common issue is non-payment of rent, there are
also other worrying trends, which include burning or destroying floorboards, doors,
skirting boards, and even torching parts of a property. One even discovered that his
47
departing tenant had ripped out all the carpets in the house and dumped them in the
garden, together with the entire contents of the house. (Source: Property Times, 17
April 2004 issue).
Below are the common tenancy problems that faced by landlords and tenants.
(Extracted and adapted from www.caltenantlaw.com and www.expertlaw.com)
•
Landlords Common Problem
Landlords do not always have good tenants. Very often landlords will meet
tenants with invisible devil horns on their heads. Despite meeting the tenants and
going through the thorough screening, the landlords still end up having problem
tenants occupying their units. The lists of common problems that encounter by the
landlords are:-
1)
Non-payment of rent
Non-payment of rent became a common issue among the landlords. In most
jurisdictions, there is an expedited process for evicting a tenant for non-payment of
rent. However the process can sometimes be frustratingly slow. In Malaysia, the
time takes to get an eviction order through a summary proceeding for non-payment
of rent is usually about three to six months. As a result of that, the landlords have to
endure with the frustration of non-payment of rent until the court issues the eviction
order.
48
2)
Violation of tenancy
Some landlords may get tenants who are not complying with the terms stated
in the tenancy agreement. Under this situation, the landlord will provide a written
warning of the violation, referencing the tenancy agreement provision that the tenant
is violating and specifying a fixed amount of time for the tenant to remedy the
problem and inviting a written response. However, most tenants will claim that they
did not know they were in violation of the agreement, ignore the notice, claim the
notice was not received or even lie convincingly for example, document that a tenant
was warned about owning a dog. The tenant will lie convincingly and claim that
they were just merely “dog-sitting” for a couple of days or that the dog belonged to a
friend who was visiting.
3)
Counter-claims by Tenants
Some tenants will bring a counter-claim against the landlord when threatened
with eviction. For example, claiming tenancy violations or inadequate maintenance
of the property. The tenants may also allege violations of applicable consumer
protection laws including protections against “retaliatory eviction” where the tenant
reported the landlord to a government agency for alleged housing violations.
•
Tenants Common Problem
Tenants do not always meet compromising and negotiable landlords. Tenants
often meet landlords who are calculative, mean and nasty and often intrude into their
private life. Even though the tenants may have a smooth sailing along the tenancy
49
period, but they may encounter problems when handling over the unit at the end of
the tenancy. The lists of common problems that encounter by the tenants are:-
1)
Recovering of security deposit
This has been the most common problems faced by tenants. Usually, the
landlords will get away with it by using all kinds of unscrupulous methods. Below
are some of the common games that landlords play:-
a)
Semantics
The object of this game is for the landlord to keep the tenant’s deposit by
calling it something else. For example the tenancy agreement might call for a
security deposit of one month’s rent, plus a key deposit of RM10, a pet deposit of
RM200 and a non-refundable cleaning fee of RM100. Most landlords use them and
put them into the tenancy agreement so that tenants do not question on this matter,
hence landlord could get away with the refund of security deposit.
b)
Ghost
The object of this game is for the landlord to keep more of the tenant’s
security deposit by claiming that the tenant was still occupying the premise despite
notice of termination has served, so daily rent is to be deducted from the security
deposit. For example the landlord claims that the tenant was still there after the
tenant had moved out, solely because the landlord did not get the premise keys in his
hands. Another situation would be the landlord claims that the tenant is not officially
“out of the possession” until all the tenant’s belongings have been removed even
though the belongings are claimed to be trash by the tenant.
50
c)
Shell Games
In this game, the landlords claim that the security deposit is not in their
hands. They will claim that they were the new landlord and the old landlord did not
hand the security deposit to him.
2)
Landlord false accuse on the damages
Most tenants were being accused by landlords for damages and made liable
for the repairs and replacement. For example a faucet may suffer metal fatigue and
snap off. The landlord will then accuse the tenant for their rough handling and get
away with the repair cost.
3)
Landlord quote unreasonable charges
Tenant may face the landlord charging unreasonably on the damages found
during the exit of the tenant. For example the tenant has ruined a 15 years old carpet
by repairing his motorcycle in the living room. If the carpet had a 15 year life span,
then the landlord cannot charge the tenant for a brand new carpet or probably cannot
charge the tenant at all. However, the landlord still charges the tenant a cost of a
brand new carpet.
51
2.12
Conclusion
In Malaysia, there are different types of residential properties for rent. These
residential properties are ranging from landed to high rise property units. The
property owners could handle the tenancy procedure which covers from the stage of
viewing right up to the tenancy expires on their own or engages a professional agent.
The tenancy management services come in different packages to cater for the
landlord and tenant. Different organisation will have different set of marketing
strategy to gain a market place for tenancy management services.
In Malaysia, so far there is no professional body being form to govern the
conduct of the Facility Manager in performing its duties in tenancy management
services. Therefore, a reasonable duty of care in the context of agency law and
contract law is being adopted in this subject matter.
A Facility Manager must perform its duty professionally at all times. A
professional Facility Manager should also be aware of the tenancy trend in the
market and the local legal aspect of tenancy in order to give his clients effective
advice and utmost services.
There are various sets of factors which encourage the business opportunity
for FM Organisation to provide tenancy management services. The factors range
from micro and macro aspect of the FM Organisation. The tenancy problems are one
of the factors which encourage the emerging business of tenancy management
services. This is because human disputes normally have to be solved through a third
party or mediator. As a result of that, there is a demand for this type of professional.
Thus, the saying goes “when there is demand, there is supply” has proven the fact
52
that professional agents are getting more in favour by the landlords and tenants to
solve their tenancy problems.
CHAPTER 3
CHAPTER 3
CASE STUDY: SERI MUTIARA APARTMENT, BANDAR BARU SERI
ALAM
3.1
Introduction
One of the traditional housing as identified by Marbeck (1994) is apartment.
In Malaysia, apartments are now more in favour as an alternative form of housing for
the youngster in urban areas. They seem to be the latest trend of the housing market.
Apartment occupiers are normally small households who prefer the high rise living
with 24-hours security and the availability of the apartment facilities. Easy access to
the occupiers’ work places is also one of the contributing factors for the demand of
apartment.
It should be made clear that not all apartments come complete with apartment
facilities and recreation. The apartment facilities shall vary from one apartment
complex to the other pending on the developer and their marketing strategies.
Besides that, the present scarcity of traditional domestic servants and gardeners too
53
has contributed to the change in life style which make apartment staying a favourable
choice.
Seri Mutiara Apartment is one of the apartment complexes in Johor Bahru
that have been selected to conduct the survey for this study. This chapter will
describe the background and overview of the apartment which includes a brief
description of the apartment layout, apartment facilities and the residents’
component.
3.2
Background and Overview
Figure 3.1: The view of the Seri Mutiara Apartment
54
Seri Mutiara Apartment was developed by Mewah Rembang Sdn Bhd, a
wholly owned subsidiary of MBF Berhad. The land tenure of the apartment complex
is freehold. The whole project was completed with Certificate of Fitness for
Occupancy (CFO) in the year 2000.
Seri Mutiara Apartment is a series of well planned apartment that provide the
best comfort for human pleasure. Each unit is designed to optimise on the
enchanting view that is the lush green of Octville golf course and the majestic
structures of Singapore.
The apartments are strategically located that is 12 kilometres from Johor
Bahru city and five minutes walk to the lush green of Octville Golf and Country
Club. The apartments are encompassed by new infrastructures such as Pasir Gudang
Highway and the proposed Southern-Link.
Figure 3.2: Seri Mutiara Apartment location map
55
3.3
Apartment Units Available
Seri Mutiara Apartment is an apartment complex which consists of two
blocks of twenty two-storey apartment namely Block A and Block D; two blocks of
twenty five-storey apartment namely Block B and Block C; and four blocks of fourstorey walk-up apartment namely Block E, Block F, Block G and Block H. All in
there are 700 units in the apartment complex.
Table 3.1: Apartment design statistic
DESIGN
Four-Bedroom
(unit)
Three-Bedroom
(unit)
One-Bedroom
(unit)
Total
(unit)
A
36
114
-
150
B
-
147
21
168
C
-
147
21
168
D
36
114
-
150
E
-
16
-
16
F
-
16
-
16
G
-
16
-
16
H
-
16
-
16
Total (unit)
72
586
42
700
BLOCK
Seri Mutiara Apartment comes in three different designs. That is onebedroom unit design, three-bedroom unit design and four-bedroom unit design. All
these designs come with different layout to suit the taste and preference of the
buyers. Example of the different layout for the three-bedroom unit designs are
shown as below:-
56
Figure 3.3: Types of three-bedroom design
57
3.4
Apartment Amenities
The amenities in the vicinity of Seri Mutiara Apartment are as follows:a)
Hypermarkets, major commercial and industrial centre within the vicinity
namely Giant Hypermarket, Carrefour Hypermarket, Macro Hypermarket,
Today Market, Pasir Gudang Commercial Centre and Plentong, Pasir Gudang
and Seri Alam Industrial Area.
b)
Seri Mutiara is situated next to the Octville Golf & Country Club, offering
residents golfing pleasure at the doorsteps.
c)
Formal Japanese school, primary and secondary school are made available at
Bandar Baru Seri Alam
d)
Easy accessibility with a well integrated network of highways, Johor Bahru
city centre and the causeway to Singapore are only 20 minutes drive away via
Permas Bridge.
3.5
Facilities
One of the unique features of Seri Mutiara Apartment is the concept of
apartment blocks that blend with the condominium facilities. Condominium
facilities are the facilities which can be found in private club and make available in
the condominium blocks.
58
Below are the facilities available in Seri Mutiara Apartment in order to
provide exclusive and comfort lifestyle to apartment occupants.
•
Nursery
•
BBQ pit
•
Gymnasium
•
Tennis court
•
Launderette
•
Landscape garden
•
24-hour security
•
Children playground
•
Putting green
•
Swimming pool
•
Club house
•
Sauna
Figure 3.4: Overview Seri Mutiara Apartment facilities
59
3.6
Residents Component
Seri Mutiara Apartment is located at Bandar Baru Seri Alam which is
approximately 10 minutes drive to the industrial area and shipyard. As a result of
that, most of the residents who reside at Seri Mutiara Apartment are the people who
are working in the industrial area and shipyard.
The components of the residents who are residing at Seri Mutiara Apartment are:i)
Family
ii)
Individual
iii)
Groups
I.
Family
Family is a group consisting of one or two parents and their children residing
at Seri Mutiara Apartment. The head of the family could be the parcel owner of the
apartment or a mere tenant who is renting a unit from the parcel owner.
II.
Individual
Individual here means the single person. Single person could be anybody.
He or she could be the owner of the parcel unit or a tenant, staying in the apartment
alone.
60
III.
Groups
Groups here refer to two or more people whose relationships are friends,
colleague or relatives come together and live in the apartment. These groups of
people are usually the tenant of the parcel unit.
3.7
Apartment Management
Azmi & Co Building Services Sdn Bhd has been appointed by the Seri
Mutiara Apartment Developer, Mewah Rembang Sdn Bhd to handle all events
pertaining to the apartment blocks. These include maintenance of the apartment
blocks, handle residents’ complaints and to oversee the operation of the apartment
blocks so as to ensure that the daily operations of the buildings are carried out
smoothly, effectively and efficiently.
To ensure all residents living in serene and conducive environment, the
Apartment Management has produced an Apartment House Rules to be observed
strictly by each and every resident. The Apartment House Rules cover the following
areas:i)
General House rules governing the use of the individual apartment unit
such as:•
renovation of the individual unit such as installation of grille,
alteration of electrical wiring;
•
installation of electrical appliances such as air-conditioner, television
antenna;
•
prohibition events such as keeping pets in the apartment, storing
61
combustible substance; and
•
ii)
common area cleanliness and hygiene factors.
Recreation facilities rules governing the use of recreational facilities in
the apartment complex such as:-
3.8
•
Guidelines governing for the use of swimming pools.
•
Guidelines governing for the use of the poolside barbecue pit.
•
Guidelines governing for the use of the tennis court.
•
Guidelines governing for the use of the gymnasium.
•
Guidelines governing for the use of the multi-purpose room.
•
Guidelines governing for the use of the jogging track.
•
Guidelines governing for the use of sauna.
•
Guidelines governing for the use of children’s playground.
Conclusion
Seri Mutiara Apartment is an apartment complex comes complete with
condominium facilities and exclusive apartment design to suit the owners and tenants
taste and living style. The exclusive apartment design and location which encompass
the range of amenities have attracted most of the local and expatriate who are
working in Pasir Gudang Industrial Area and shipyard to opt for Seri Mutiara
Apartment as their preference place for accommodation. Therefore the demand for
apartments at Seri Mutiara Apartment will indirectly encourage the business of
tenancy management services which will relief the landlords and tenants from the
hassle and problems in tenancy related matter.
CHAPTER 4
CHAPTER 4
RESEARCH METHODOLOGY
4.1
Introduction
The research methodology adopted must be capable of collecting the kind of
data that are needed to answer the research questions. It must also be capable of
recording the primary data in an appropriate form for analysis and interpretation.
Therefore this chapter shall explicate the research process of Stage 3 of the
methodology of study mentioned earlier in Chapter 1 paragraph 1.7. This research
process will explain in depth on the stages carried out in order to obtain the required
data for this study. This chapter also described the format of the survey questions
and the steps on how the survey being conducted for each of the targeted groups.
Lastly, the criterions required for data collection process are also discussed in depth
accordingly in this chapter.
63
4.2
Research Process
This research is concerned with the reasons why the landlord and tenant
decline to use the tenancy management services available in the market and the
problems faced by the landlord and tenant when the tenancy is managed without the
presence of the service provider. Therefore, for the purpose of this study, the author
has created a research process model to explicate the third stage of the methodology
of study: Data Collection. This research process model consists of six-stages
approach depicted as follows:-
STAGE 1
STAGE 2
STAGE 3
STAGE 4
STAGE 5
STAGE 6
Identify and select the research method
Creation of survey questions
Identify the area for survey
Data collection
Data verification
Data collation
Figure 4.1: Research process model
64
4.2.1
Stage 1: Identify and Select the Research Method
There are many research methods available for the researchers to adopt.
Examples of research methods commonly in used by the researchers are:-
•
Literature review method;
•
Survey method;
•
Site Observation method;
•
Experimental research method;
•
Historical research method; and
•
Operational research method.
After identifying the type of research method available for the study, the next
step is to select the appropriate research methods to be used for this study. Selecting
the type of research method is one of the most critical decisions in many social
research contexts. Thus, a careful selection of research method is required to ensure
the efficiency of the data collection process in the later stage. For example site
observation method, not all site are accessible for observation especially places with
tight security like the airport control tower and computer department of a company
where confidential electronic files are kept.
For the purpose of this study, literature review and survey have been selected
and adopted after taking into consideration of the constraints in time, cost and
availability of the resources.
65
I.
Literature Review
The literature review for this study will focus on the aspect of tenancy issues
namely the reason why both landlord and tenant declined the agent services that
available in the market; and the tenancy problem faced by both landlord and tenant
when agent services are not in used. The sources for this literature review are
basically from the books, articles published on the web and case study conducted by
the overseas researchers based on the environment of the researchers’ origin.
The information gathered from this literature review will serve as the
secondary data for research finding and analysis in the next chapter.
II.
Survey
Survey would be the method used to collect the primary data for this study.
The surveys for this study are divided into two broad categories: the questionnaire
and the interview.
Three different groups of people have been selected for the survey and the
three targeted groups are the landlord, tenant and Apartment Management Team.
The survey medium used for this study would be electronic mail, post, fax, telephone
and face to face interview.
66
4.2.2
Stage 2: Creation of Survey Question
The language used for the survey questions is English. The survey questions
are kept as simple as possible to avoid the respondents’ confusion and ambiguity.
Three sets of questions are created for three different target groups, namely landlord,
tenant and Apartment Management Team. The questionnaires survey will target for
both the landlord and tenant and the interview survey will only target for the
Apartment Management Team.
I.
Questionnaires Design
The format of the questionnaires is divided into two sections: Section A and
Section B.
Section A will comprise of questions that will identify the background of the
respondents and the normal practice of the respondents in execution of the tenancy.
A combination question format of yes or no choice, multiple choice and
open-ended structural question are used in this section. The yes or no choice
questions in this section will force the respondents to choose one particular answer.
The particular answer which was chosen will be further enhanced by a subsequent
open-ended structural question. The examples of question format for this section are
as follows:-
67
Do you use agent to handle your tenancy matter?
Yes
No
If your answer is “No”, please state why?
Are you aware of the legal rights of a landlord in Malaysia?
i)
Fully aware
ii) More or less aware
iii) Not aware
Whereas Section B will comprise of a pure multiple choice question for the
respondents to identify the ranking of the problems faced during the tenancy. The
multiple choice questions format will force the respondents to choose a particular
answer and enabling ranking analysis to be carried out easily. For example:How would you rank the following problem:1) Tenant fails to pay rental on time. 1 – Extreme serious problem
2 – Serious Problem
3 – Moderate Problem
4 – Slight problem
5 – No problem
68
II.
Interview Design
The question created for interviews are semi-structure whereby a free-flowing
discussion around the subject and personal opinions are being expressed. For
example:Does the management office face problems with the tenants that source by the
owners themselves? 1 Yes
2 No
If the answer is YES, then what are the problems the management office faced?
4.2.3
Stage 3: Identify the Area for Survey
The survey area for this study shall confine to only one apartment complex in
Johor Bahru that is Seri Mutiara Apartment located at Bandar Baru Seri Alam.
4.2.4
Stage 4: Data Collection
Data collection is simply how information is gathered. There are various
methods of data collection such as personal interviewing, telephone, mail and
internet. Depending on the survey design, these methods can be used separately or
combined.
69
For the purpose of this study, the following criterion for data collection has
been carefully considered to ensure efficiency in data collection process.
I.
•
The eligible population
•
The sampling method
•
The data collection method
The Eligible Population
The eligible population for this study would cover the following groups.
i)
The landlord would be the parcel owners of Seri Mutiara Apartment
available for letting. Those parcel owners staying in the apartment unit
are excluded.
ii)
The tenants are confined to residents of Seri Mutiara Apartment who have
rented the apartment unit from the parcel owners.
iii)
Developer units excluded. Developer units mean those unsold apartment
units at Seri Mutiara Apartment.
iv)
The staff of the Seri Mutiara Apartment Management Office would
confine to the person in charge of management fee collection and person
in charge to handle residents’ complaints. Other staff of the management
office shall be excluded.
70
II.
The Sampling Method
Sampling is the process of examining a representative number of items
(people or things) out of the whole population or universe (Lucey, 1992). For the
purpose of this study, pure random sampling method has been adopted.
Pure random sampling in this study would be every owners of the apartment
and the tenants residing in the apartment has an equal chance of being chosen. Pure
random sampling requires a sampling frame. The sampling frame here means the list
of every item or member of the population. Therefore, in order to conduct the pure
random sampling for this study, the list of the owners and residents are obtained from
the management office.
III.
The Data Collection Method
There are numerous data collection methods available for adoption in the
research study. For the purpose of this study, the data collection method would be
electronic mail or e-mail, post, fax, mail-drop, telephone interview and face to face
interview. These methods have been adopted because it is cheap and easy available.
The parcel owners’ contacts such as name, address, telephone number can be
easily obtained with the help of the management office of Seri Mutiara Apartment.
The steps to proceed with the data collection from the parcel owners would be as
follows:-
71
Step 1-Send out the questionnaires to selected apartment owners via post.
Step 2-Wait for the response for two weeks. For those owners who have not
response to the questionnaires, a courtesy phone call will be made.
Step 3-Request for e-mail address and fax number to enable the questionnaires to
reach the owners for the second time.
Step 4-Wait for the response for one week.
Step 5-Eliminate all the non-co-operative owners from the list of survey.
Step 6-Compile all the data received.
It would be very much easier to collect data from the tenants compare to the
owners. This is because the questionnaires can be handed over to the tenants
personally and the answers to the questionnaires are obtained on the spots. For those
tenants who could not be reached, the mail drop method is used. Lastly compile all
the data obtain from tenants.
As for the data to be obtained from the staff of Apartment Management
Office, a face to face interview will be carried out. For those staff who are absent at
the time when interview is conducted, a telephone interview will be carried out at a
later date.
72
4.2.5
Stage 5: Data Verification
The data collected will be verified accordingly to ensure the data collected
are relevant to the study especially the answers to the semi-structural questions.
4.2.6
Stage 6: Data Collation
The primary data gathered in Stage 4 will be arranged accordingly in
accordance to the landlord, tenant and Apartment Management Team. These data
arrangement process is important because it will ease the process of research findings
and analysis in the next chapter.
4.3
Conclusion
This chapter outlined the research process which explicates the third stage of
the methodology of study identified earlier in Chapter 1 into six-stage process. That
is:•
Stage 1: Identify and select the research methods
•
Stage 2: Creation of survey question
•
Stage 3: Identify the survey area
•
Stage 4: Data collection
•
Stage 5: Data verification
•
Stage 6: Data collation
73
Every stage of this research process must fall back to the problem statement
and objective mentioned in the earlier chapter. Besides that, reasonable steps must
be taken to ensure the samples of the populations are accessible, enumerated and
literate. This is because the condition of the samples will affect the data collection
method that to be adopted. Using the wrong method for the sample data collection
will distort the research result and thus affect the findings and analysis in the
following chapter.
Lastly, the data obtained must be arranged into appropriate format which will
serve as the basis for the findings and analysis in the following chapter.
CHAPTER 5
CHAPTER 5
ANALYSIS AND FINDINGS
5.1
Introduction
This chapter shall begin with the discussion on the population study for data
collection in detail and the data analysis methods that to be adopted for this study. It
proceeded with the survey analysis to analyse the response from the landlords and
tenants from Seri Mutiara Apartment in relation to the issues as follows:-
•
The reasons why landlords and tenants decline to use the tenancy
management services available in the market;
•
The tenancy problems that faced by landlords and tenants when the
tenancy is managed without the presence of the service providers; and
•
The ranking of the tenancy problems that faced by both landlords and
tenants.
75
5.2
Study of the Population
There are 700 units in Seri Mutiara Apartment. Out of 700 units, 570 units
(81.4%) were sold and 130 units (18.6%) were unsold.
The sold units were further divided into occupied and not occupied
categories. Out of 570 sold units, 200 units (35%) were occupied and 370 units
(65%) were not occupied.
Out of the 200 occupied units, 10 units (5%) were occupied by owners and
the balance of 190 units were units currently occupied by tenants.
Therefore, based on the analysis obtained, only 190 units which is equivalent
to 27% of the total apartment units at Seri Mutiara Apartment were the population
eligible for sampling. The figure below depicts the derivation of the population
eligible for sampling.
76
TOTAL
700 UNITS
Sold
570 units
(81. 4%)
Not Occupied
370 units
(65%)
Unsold
130 units
(18. 6%)
Occupied
200 units
(35%)
Occupied by
owners
10 units
(5%)
Occupied by
tenants
190 units
(95%)
ELIGIBLE
POPULATION
Figure 5.1: Eligible population derivation
(Source: Seri Mutiara Apartment Management Office)
77
5.3
Data Analysis Method
The primary data collected from questionnaires and interviews were analysed
accordingly using the appropriate statistical methods that available. The computer
package has been used to speed up the analysis process for this study. For the
purpose of this study, the statistic methods used are Frequency Analysis and Likert
Scaling Analysis.
5.3.1
Frequency Analysis
Frequency Analysis is the method used in this study to analyse the discrete
data derived from multiple choices and yes-no response formats. This selected
statistical method requires a construction of a frequency distribution. The frequency
distribution is a technique that used to record the number of scores that fall within
each response category. There are two elements to be considered for constructing a
frequency distribution. That is:(1) The categories of response; and
(2) The frequency with which respondents are identified with each category.
The technical requirement of using the Frequency Analysis is that the
categories of response must be mutually exclusive and exhaustive. This means that
the same observation cannot be counted as belonging to more than one response
category. Therefore in this Frequency Analysis method the result obtained from the
questionnaires must be exhaustive in the sense that all respondents must fit into a
category.
78
5.3.2
Likert Scaling Analysis
There are many statistical methods available to measure attitudes. Likert
Scaling Analysis is the statistical method chosen for this study to analyse the ranking
of the problems faced by both landlord and tenant.
Likert Scaling Analysis is the method that requires the respondents to rate
their level of satisfaction or dissatisfaction with various services or degrees of
agreeing or disagreeing with various declarative statements. Therefore, for the
purpose of this study, the respondents will ask to choose from five response
alternatives which indicated in the questionnaires. That is “Extreme Serious
Problem,” “Serious Problem,” “Moderate Problem,” “Slight Problem” and “No
Problem”
To measure the attitude, the scores or weights will be assigned to the
response alternatives, which are not printed on the questionnaires. In this instance
would be:-
Response Alternatives
Score
Extreme serious problems
5
Serious problems
4
Moderate problems
3
Slight problems
2
No problems
1
The total score would be the summation of the weights assigned to an
individual total response. The total score obtained would then be divided with the
total number of respondents to derive the mean value of the score.
79
The mean value of the score obtained from the analysis will later become
the basis to determine the index value. The index value derived will then become the
determinant of the index class range of each response alternatives which will become
the tool to rank the tenancy problems faced by both landlords and tenants. The index
value can be derived by using the formula as below:-
Index value =
Highest mean score value-Lowest mean score value
Total number of point scale
5.4
Detail Findings and Survey Data Analysis
The findings and survey data analysis for this study are structured around the
following themes:•
Reasons for not using the tenancy management services available in the
market.
•
The problems faced in tenancy.
•
The ranking of the tenancy problems.
For each of these themes, a number of sub-themes have been identified.
Relevant findings from the different survey groups that took part in the research are
set out under each sub-theme. The survey groups are shown in the Table 5.1 below
with number of individuals who involved in the survey.
80
Table 5.1: Summary of survey group
Survey Group
Landlord
Number and type of individual
50 owners from Seri Mutiara Apartment who have rented out
their apartment units.
Tenant
50 residents from Seri Mutiara Apartment who have rented the
apartment unit.
Apartment
The Manager of Apartment Management and 2 site staffs who
Management
handle residents’ complaints and management fees collection.
5.4.1
Reasons for Not Using the Tenancy Management Service Provider
Available in the Market.
There are tenancy management service providers or agents available and are
easily accessible by the users in Johor Bahru region. However, most of the property
owners and tenants still prefer not to use agent services that are available in the
market. Below are the findings and survey data analysis on the reasons why
landlords and tenants decline to use the tenancy management services available in
the market.
5.4.1.1 Landlord
The findings have revealed that the landlords at Seri Mutiara Apartment used
agents for the following services.
•
Sourcing for tenants only (32%)
•
Full range of tenancy management services (24%)
81
Based on the findings, only about a quarter (24%) of the landlords used agent
for full range of tenancy management services such as sourcing for tenants; rental
collection; repair and maintenance; handling tenancy disputes and so on. This
analysis also revealed that 32% of the landlords used agent to source for tenant only.
Therefore, for the purpose of this study, the landlords who used agent to source for
tenant only, will be classified under the category of landlords who do not use agent
services for tenancy management. This is because the landlords who use agent
services to source for tenant only are using other agent services such as real estate
agents who do not oversee the complete management of the tenancy related matter.
Thus, 76% of the landlords who do not use agent services are made up of 32% who
use agent to source for tenant only and 44% who do not use agent services for any
tenancy related matter.
Use agent for tenancy
management
24%
44%
Do not use agent for
tenancy management
32%
Do not use agent for any
tenancy related matter
76%
Use agent to source for
tenant only
Figure 5.2: Landlords’ summary used of agent
The survey also shown that use of agents is highest amongst dwelling
belonging to foreign landlords (66.7%) and only a minority (10.5%) amongst
dwelling belonging to the local landlords. A further survey for this study has been
conducted based on the nationality of the foreign landlords. The survey has revealed
82
that 100% of the foreign landlords are Singaporeans. These Singaporean Landlords
are also known as sideline investors who have invested more than two properties in
Malaysia. This survey also revealed that out of that 24% of the landlords who used
agent services, 66.7% are Singaporean; 25% are Malaysian with Singapore
Permanent Resident status and currently residing in Singapore and balance 8.3% are
Percentage
local and currently residing in Johor Bahru
100
90
80
70
60
50
40
30
20
10
0
89.5%
66.7%
33.3%
10.5%
Local
Foreigner
Status
Agent Used
Agent Not Used
Figure 5.3: Landlords used of agent based on nationality status
The landlords (76%) who do not use agent services for tenancy management
were further extended with a question why they do not use agent to handle their
tenancy related matters. Those landlords who do not use agent have responded the
following reasons:1) 50% of the landlords who did not use agent’s services replied that they could
manage the property themselves.
83
2) 26.3% of the landlords who did not use agent’s services explained their
reasons for not using an agent in terms of reluctance to pay for the services
rendered.
3) 18.4% of the landlords who did not use agent’s services explained that
difficult to find a competent agent.
4) The balance 5.3% of the landlords who did not use agent’s services expressed
that they have bad previous experiences with dishonest agent.
18.4%
Landlord managed
property
5.3%
Reluctant to pay service
charge
50%
26.3%
Difficult to get
competent agent
Bad experience with
dishonest agent
Figure 5.4: Analysis of landlords’ reasons for not using agent
5.4.1.2 Tenant
This finding revealed that, the tenants at Seri Mutiara Apartment used agents
for the following services.
•
Source for accommodation only (12%)
•
Full range of tenancy management services (52%)
84
Based on the findings that have been carried out, more than half (52%) of the
tenants used agent for full range of tenancy management services such as rental
payment, handling tenancy disputes, cleaning and housekeeping and so on. This
analysis also revealed that 12% of the tenants used agent to source for
accommodation only. Thus, for the purpose of this study, the tenants who used agent
to source for accommodation only, will be classified under the category of tenants
who do not use agent services for tenancy management. This is because the tenants
who use agent services to source for accommodation only are using other agent
services such as real estate agents who do not oversee the complete management of
the tenancy related matter. Thus, 48% of the tenants who do not use agent services
are made up of 12% who use agent to source for accommodation only and 36% who
do not use agent services for any tenancy related matter.
Use agent for
tenancy management
36%
52%
48%
12%
Do not use agent for
tenancy management
Do not use agent for
any tenancy related
matter
Use agent to source
for accommodation
only
Figure 5.5: Tenants’ summary used of agent
Use of agent base on nationality analysis has shown that 100% of the foreign
tenants use agent to handle their tenancy matters and only 14.3% amongst local
tenants opt for agents’ services.
85
120
100.0%
Percentage
100
85.7%
80
60
40
20
14.3%
0.0%
0
Local
Foreigner
Status
Agent Used
Agent Not Used
Figure 5.6: Tenants used of agent based on nationality status
The tenants who decline to use agent’s services were extended with the
findings on the reasons why they decline to use agent’s services to oversee their
tenancy related matters. The tenants who do not use agent services for tenancy
management have responded the following reasons:1) 83.3% of the tenants who did not use agent’s services explained their reasons
for not using an agent in terms of reluctance to pay for the services rendered.
2) The balance 16.7% of the tenants who did not use agent’s services expressed
that they have bad previous experiences with dishonest agent.
86
16.7%
Reluctant to pay
service charge
Bad experience with
dishonest agent
83.3%
Figure 5.7: Analysis of tenants’ reasons for not using agent
5.4.2
Problems Faced In Tenancy
This section shall identify the most common tenancy problems faced by both
landlords and tenants when the tenancy is managed without the presence of tenancy
management service providers. Analysis on how respondents view the said tenancy
problems is also conducted in this section.
5.4.2.1
Landlord
Basically, this finding has identified five common tenancy problems faced by
the landlords. The five common tenancy problems identified are as follows:1) Rent arrears and bad debts. (76% of the landlords)
2) Tenants fail to clear the debris on expiry or termination. (58% of the
landlords)
87
3) Utilities deposits insufficient to cover the outstanding amount due. (76% of
the landlords)
4) Tenants fail to comply the terms stated in the tenancy agreement. (60% of the
landlords)
5) Tenants bring a counter claim when threatened with eviction. (76% of the
landlords)
I.
Rent Arrears and Bad Debts
Rent arrears or bad debts is one of the common problems faced by the
landlords. According to the findings, 38 out of 50 landlords which is equivalent to
76% of the landlords have responded that they have rental collection problem. These
38 landlords were found to be from the group who does not use agent services for
tenancy management.
Respondents were divided about how they viewed problems with rent arrears.
38% of the landlords thought rent arrears were extreme serious problem but 24% felt
it to be not at all and these were the group of people who use the agency services for
tenancy management. 8% of the landlords gave tenants some leeway when rent was
late and these landlords felt that rent arrears are just a slight problem in tenancy.
Whereas 20% of the landlords have expressed that non-payment of rent in time is a
serious problem and 10% of the landlords however considered that any delay in
payment was a moderate problem.
88
Table 5.2: Landlords response on rent arrears and bad debt
Scales
No. of respondents
Percentage
(%)
II.
Extreme Serious Problem
19
38.0
Serious Problem
10
20.0
Moderate Problem
5
10.0
Slight Problem
4
8.0
No Problem
12
24.0
Total
50
100.0
Tenants Fail To Clear the Debris on Expiry or Termination
Most of the landlords experience having tenants who leave tonnes of rubbish
and debris when surrendering back the dwelling. The findings have shown that 29
out of 50 (58%) landlords were facing problem with tenants leaving behind rubbish
and debris upon handling over the dwelling. The findings also revealed that these 29
landlords were found to be from the group who does not use agent service for
tenancy management.
Respondents were further asked to viewed problems pertaining to the tenants
leaving behind the rubbish and debris to be cleared. According to the survey, a
minority (2%) of the landlords felt that a tenant leaving rubbish and debris behind is
an extreme serious problem. 6% of the landlords felt it is a serious problem, 24%
express that it is a moderate problems and 26% felt that it is a slight problem.
Balance 42% of the landlords felt that leaving behind rubbish and debris is not a
problem at all.
89
Table 5.3: Landlords response on tenants fail to clear debris
Scales
No. of respondents
Percentage
(%)
III.
Extreme Serious Problem
1
2.0
Serious Problem
3
6.0
Moderate Problem
12
24.0
Slight Problem
13
26.0
No Problem
21
42.0
Total
50
100.0
Utilities Deposits Insufficient To Cover the Outstanding Amount Due
Another common problem faced by the landlords is the utilities outstanding
left behind by the tenants. Despite the landlords retain the utilities deposits, the
utilities in arrears are too large to be offset against the deposits.
Base on the survey, 38 out of 50 landlords which is equivalent to 76% of the
landlords having problems with tenants vacate the dwelling without paying the
utilities bills. These 38 landlords were amongst the landlords who managed the
tenancy on their own.
Respondents were further analysed on how they viewed problems about
unpaid utilities bills. About a quarter (26%) of the landlords thought utilities arrears
were extreme serious problem but 24% felt it to be not at all. 10% of the landlords
express that arrear utilities which the tenant left behind are a slight problem in
tenancy. Whereas 26% of the landlords have expressed that non-payment of utilities
90
bills were serious problem and 14% of the landlords however considered that any
non-payment of utilities bills were a moderate problem.
Table 5.4: Landlords response on insufficient utilities deposits
Scales
No. of respondents
Percentage
(%)
IV.
Extreme Serious Problem
13
26.0
Serious Problem
13
26.0
Moderate Problem
7
14.0
Slight Problem
5
10.0
No Problem
12
24.0
Total
50
100.0
Tenants Fail to Comply the Terms Stated in the Tenancy Agreement
Tenants were often found to carry out some activities which are prohibited by
law or go against the terms and condition stated in the tenancy agreement. For
example tenant keeps dogs in the premise, tenant carry out some horse betting
activities in the dwelling and so on. According to the survey, 30 out of 50 (60%)
landlords were having problem with tenants not complying with the terms and
conditions stated in the tenancy agreement. This survey also revealed that these 30
landlords were found to be the group who managed the tenancy on their own.
This study is carried out to reveal how the landlord viewed problems about
tenant on non-compliance of the terms stated in the tenancy agreement. 20% of the
landlords thought non-compliance to tenancy agreement was extreme serious
problem but 40% felt it to be not at all. 12% of the landlords express that it is just a
91
slight problem which will not bring harm to the tenancy. Whereas 16% of the
landlords have expressed that it is a serious problem and 12% of the landlords
however considered that non-compliance of the clause stated in the tenancy
agreement were just a moderate problem.
Table 5.5: Landlords response on tenant non-complying to tenancy agreement
Scales
No. of respondents
Percentage
(%)
V.
Extreme Serious Problem
10
20.0
Serious Problem
8
16.0
Moderate Problem
6
12.0
Slight Problem
6
12.0
No Problem
20
40.0
Total
50
100.0
Tenants Bring a Counter-Claim When Threatened with Eviction
In tenancy, landlords may face problem such as tenants bringing a counterclaim when threatened with eviction. 38 out of 50 landlords (76%) have expressed
that they have problems with tenants bringing a counter-claim when threatened with
eviction.
This study is carried out to reveal how the landlords viewed problems about
tenants bringing a counter-claim against them. About a quarter (24%) of the
landlords felt that tenants bring a counter-claim against them were an extreme serious
problem but 24% felt it to be not at all. 12% of the landlords express that it is just a
slight problem. Whereas 24% of the landlords have expressed that it is a serious
92
problem and 16% of the landlords however considered that tenants bring a counterclaim when threatened with eviction were just a moderate problem.
Table 5.6: Landlords response on tenant bring a counter-claim
Scales
No. of respondents
Percentage
(%)
Extreme Serious Problem
12
24.0
Serious Problem
12
24.0
Moderate Problem
8
16.0
Slight Problem
6
12.0
No Problem
12
24.0
Total
50
100.0
There are laws that exist to help landlord prevent unnecessary counter-claim.
However, most of the time, landlord’s ignorant and carelessness have created an
opportunity for the tenant to bring a counter-claim successfully.
A further study on this finding has been carried out based on the following
issues:•
The awareness of the landlords’ legal right.
•
Landlords’ obligation.
•
Landlords’ effort to read and understand the tenancy agreement prior
to execution.
i)
Awareness of Landlords’ Legal Right
This study has shown that 56% of the landlords are fully aware of their legal
rights, 30% more or less aware and a minority of 14% are not aware of their legal
93
right as a landlord. This analysis also shows that, the nationality of the 7 landlords
who are not aware of their legal rights are Malaysian.
Table 5.7: Landlords awareness of legal right
Fully aware
Status
More or less
Not aware
No. of
Percentage
No. of
Percentage
No. of
Percentage
respondents
(%)
respondents
(%)
respondents
(%)
Malaysian
20
40.0
11
22.0
7
14.0
Foreigner
8
16.0
4
8.0
0
0
Total
28
56.0
15
30.0
7
14.0
ii)
Awareness of Landlord’s Obligation
The result shows that 56% of the landlords are fully aware of their legal
rights, 30% more or less aware and a minority of 14% are not aware of their legal
right as a landlord.
Based on the analysis above, it shows that the landlords who are aware of
their legal rights are also aware of their obligation.
Table 5.8: Landlords awareness of the obligation
Fully aware
Status
More or less
Not aware
No. of
Percentage
No. of
Percentage
No. of
Percentage
respondents
(%)
respondents
(%)
respondents
(%)
Malaysian
20
40.0
11
22.0
7
14.0
Foreigner
8
16.0
4
8.0
0
0
Total
28
56.0
15
30.0
7
14.0
94
iii)
Read and Understand the Content in Tenancy Agreement
The analysis has shown that 50% of the landlords made an effort to read
through and understand the content in the tenancy agreement before execution.
Whilst the remaining 50%, felt that the tenancy agreement is just a mere standard
document and need not make a fuss over the said documents.
Table 5.9: Landlords effort to read and understand the tenancy agreement content
Yes
Status
No
No. of
Percentage
No. of
Percentage
respondents
(%)
respondents
(%)
Malaysian
13
26.0
21
42.0
Foreigner
12
24.6
4
8.0
Total
25
50.0
25
50.0
5.4.2.2 Tenant
This study will identify the tenancy problems that faced by the tenants. Four
tenancy problems identified are:1) Difficulty in getting back security deposit. (56% of the tenants)
2) Landlords fail to comply the terms stated in tenancy agreement. (96% of the
tenants)
3) False accusation on the damages. (56% of the tenants)
4) Unreasonable charges on the damages. (88% of the tenants)
95
I.
Difficulty in Getting Back Security Deposits
Difficulty in getting back the security deposits when tenancy expires is one of
the common problems faced by the tenants. 28 out of 50 tenants, which is equivalent
to 56% encounter problem in getting back the security deposit.
Respondents were asked on how they viewed problems with getting back
security deposits on expiry of tenancy period. 44% of the tenants view this matter as
extreme serious problem but 44% felt it to be not at all and these were the foreign
tenants who use the agency services throughout the tenancy period. 8% of the
tenants express that not getting back the security deposits upon expiry of tenancy is a
serious problems; 2% of the tenants considered it as moderate problem and 2% of the
tenants felt it is just a slight problem and not much of a big deal.
Table 5.10: Tenants response on getting back security deposits
Scales
No. of respondents
Percentage
(%)
Extreme Serious Problem
22
44.0
Serious Problem
4
8.0
Moderate Problem
1
2.0
Slight Problem
1
2.0
No Problem
22
44.0
Total
50
100.0
96
II.
Landlords Fail To Comply the Terms Stated In Tenancy Agreement
This study is carried out to show how the tenant viewed problems about
landlord on non-compliance of the terms stated in the tenancy agreement. For
example, landlord fails to provide quiet possession of the premise; landlord fails to
repair the defect of the premise and landlord fails to pay apartment maintenance fees
as stated in the tenancy agreement. A majority (96%) of the tenants have expressed
that they have problems with landlords who do not comply with the terms and
condition stated in the tenancy agreement.
The respondents were further asked to view the above said problem. 60% of
the tenants thought non-compliance to tenancy agreement by the landlords was
extreme serious problem but 4% felt it to be not at all. 4% of the tenants expressed
that it is just a slight problem which will not bring harm to the tenancy. Whereas
20% of the tenants have expressed that it is a serious problem and 12% of the tenants
however considered that non-compliance to the clause stated in the tenancy
agreement by landlords were just a moderate problem.
Table 5.11: Tenants response on landlord non-complying of tenancy agreement
content
Scales
No. of respondents
Percentage
(%)
Extreme Serious Problem
30
60.0
Serious Problem
10
20.0
Moderate Problem
6
12.0
Slight Problem
2
4.0
No Problem
2
4.0
Total
50
100.0
97
III.
False Accusation on the Damages
This study is carried out to show how the tenant viewed problems about
landlord’s false accusation on the damages found in the dwelling. 56% of the tenants
have expressed that they have problems with false accusation on the damages which
lodged by the landlord.
About a quarter (26%) of the tenants felt false accusation on the damages was
extreme serious problem but 44% felt it to be not at all. 8% of the tenants expressed
that it is just a slight problem. Whereas 12% of the tenants have expressed that it is a
serious problem and 10% of the tenants have considered false accusation on damages
by the landlord is just a moderate problem.
Table 5.12: Tenants response on false accusation on damages
Scales
No. of respondents
Percentage
(%)
Extreme Serious Problem
13
26.0
Serious Problem
6
12.0
Moderate Problem
5
10.0
Slight Problem
4
8.0
No Problem
22
44.0
Total
50
100. 0
98
IV.
Unreasonable Charges on Damages
In tenancy, tenant may come across landlord who quoted unreasonable
charges on the damages found during the joint inspection of handling over of
premise. This study is carried out to show how the tenants response on this matter.
88% of the tenants have responded that they have problems with landlords quoting
unreasonable charges on the damages found in the dwelling.
According to the survey, 38% of the tenants felt that unreasonable charges on
damages was extreme serious problem, 20% of the tenants have expressed that it is a
serious problem, 18% of the tenants considered as a moderate problem and 12% of
the tenants expressed it as slight problem. Balance of 12% felt that an unreasonable
charge on damages is not a problem to them.
Table 5.13: Tenants response on unreasonable charge for damages
Scales
No. of respondents
Percentage
(%)
Extreme Serious Problem
19
38.0
Serious Problem
10
20.0
Moderate Problem
9
18.0
Slight Problem
6
12.0
No Problem
6
12.0
Total
50
100.0
99
V.
Tenants’ Awareness in Legal Rights and Obligation
There are laws to protect tenants in tenancy related matters. However, most
of the time, tenants tend to be ignorant on their legal rights. Thus, this have given
the opportunity to the landlords not to comply with the agreement terms and carried
out unlawful deduction of security deposits.
This study is further carried out to reveal the awareness of the tenants’ legal
right and obligation and the tenants’ understanding of the clauses stated in the
tenancy agreement prior to execution of tenancy agreement.
Table 5.14: Tenants awareness in legal rights and obligation
Fully aware
Status
More or less
Not aware
No. of
Percentage
No. of
Percentage
No. of
Percentage
respondents
(%)
respondents
(%)
respondent
(%)
s
Malaysian
10
20.0
10
20.0
8
16.0
Foreigner
12
24.0
10
20.0
0
0
Total
22
44.0
20
40.0
8
16.0
The study has shown that 44% of the tenants fully aware of the legal rights
and obligation, 40% more or less aware and a minority of 16% are not aware of their
legal right and obligation as a tenant.
The analysis also shown that, 8 tenants who are not aware of their legal rights
and obligation are all Malaysian.
100
This study also reveal that 44% of the tenants’ make an effort to go through
the tenancy agreement and understand each and every clause stated and the balance
of 56% thought the tenancy agreement is just a formality to obtain a rented premise.
Therefore, these tenants will just sign the tenancy agreement blindly without further
question on clauses which may be unfavourable to them.
5.4.2.3 Apartment Management
The survey of this study was also extended to the Apartment Management.
The survey will reveal problems as to what extent the problems faced by Apartment
Management when the owners of the apartment managed the tenancy themselves.
The information is gathered through interview with the Manager of
Apartment Management and two site staff who handle management fees collection
and apartment residents’ complaints.
Three major problems have been identified by the Manager of the Apartment
Management and the site staff listed as below:1) Problems in controlling the type of tenants to be brought into the apartment
complex by the individual owner.
This problem happened when some of the owners rent their units on their
own to anybody who is willing to pay for the high rental. As a result of that
people such as illegal bookies, prostitutes, drug smugglers and so on, who can
afford and willing to pay for the high rental, will come into the apartment
complex and tarnish the reputation of the apartment complex.
101
2) Management fees collection problem.
Most owners fail to pay management fees by giving the reasons the apartment
units were not occupied. Even if the apartment units were rented out, the
owners will tend to give all sorts of excuses to avoid paying the maintenance
fees due. However things would be different if the tenancy is managed by an
agent. The agent will collect the rental due from tenant during the validity of
the tenancy period and deduct the management fee upfront prior to handling
over to the respective owners.
3) Problems in contacting the owners.
The Apartment Manager also revealed that most of the time, the management
office will be having problems in contacting the owners who handle the
tenancy matter on their own. This is because the management office could
not fall back to the agent to contact the owner or to get hold of the owners’
latest contact. When disputes arise between the tenant and the management
office for example violation of apartment house rules and when cases
whereby the police raided the apartment unit, the owner could not be
contacted as a result of obsolete contact particulars held by the management
office.
5.4.3
The Ranking of the Tenancy Problems
This section will discuss on the ranking of the tenancy problems obtained
from the findings. The ranking of the tenancy problems will base on two perspective
groups of people: the landlord and the tenant.
102
5.4.3.1 Landlord
The data obtained from the survey pertaining to the tenancy problems faced
by landlords is tabulated according to scores as shown in Table 5.15.
Table 5.15: Allocation of score for problems faced by landlords
Tenancy
Score
Score
Score
Score
Score
Total
Mean of
Problems
1
2
3
4
5
Score
score
Rent arrears and bad
12
4
5
10
19
170
3. 40
21
13
12
3
1
100
2. 00
12
5
7
13
13
160
3. 20
20
6
6
8
10
132
2. 64
12
6
8
12
12
156
3. 12
debt
Tenants fail to clear
the debris on expiry or
termination
Utilities deposits
insufficient to cover
the outstanding
amount due
Tenants fail to comply
the terms stated in the
tenancy agreement
Tenants bring a
counter-claim when
threatened with
eviction
103
There are five scales altogether, namely extreme serious problem, serious
problem, moderate problem, slight problem and no problem. Each of these scales
will be allocated with one score and every scale will carry a different weighting of
score. In this instance, extreme serious problem will be allocated with score 5;
serious problem allocated with score 4; moderate problem allocated with score 3;
slight problem allocated with score 2 and finally no problem allocated with score 1.
The mean score for tenancy problems obtained from the analysis ranges from
the lowest mean score of 2.00 (tenants fail to clear the debris on expiry or
termination) to the highest mean score of 3.40 (rent arrears and bad debt). Therefore,
the index value base on the mean value derived would be 0.28 and this would be the
class interval used for each index value for the scales of each tenancy problems.
Thus, Table 5.16 below shows the scales in index value for problems faced by the
landlords.
Table 5.16: Scales in index value for problems faced by landlords
Index value
Scales
2.00-2.28
No Problem
2.29-2.57
Slight Problem
2.58-2.86
Moderate Problem
2.87-3.15
Serious Problem
3.16-3.44
Extreme Serious Problem
The ranking of the tenancy problems faced by the landlord based on the index
value computed would be as follows:-
104
Table 5.17: Ranking of tenancy problems faced by landlords
Scales
No Problem
Tenancy Problems
•
Tenants fail to clear the debris on expiry or
termination.
Slight Problem
Moderate Problem
•
Tenants fail to comply the terms stated in the
tenancy agreement.
Serious Problem
•
Tenants bring a counter-claim when threatened
with eviction.
Extreme Serious Problem
•
Rent arrears and bad debt.
•
Utilities
deposits
insufficient
to
cover
outstanding amount due.
This analysis has shown that the extreme serious problem faced by landlords
in tenancy would be rent arrears and bad debt and huge amount of unpaid utilities
outstanding incurred by the tenants. The tenancy problems that ranked as serious
problems would be tenants bring a counter-claim when threatened with eviction and
moderate problems would be tenants fail to comply the terms stated in tenancy
agreement. Tenants fail to clear the debris and rubbish upon handling over of
dwelling viewed by landlords as not a problem.
5.4.3.2 Tenant
The data obtained from the survey pertaining to the tenancy problems faced
by tenants is tabulated according to scores as shown in Table 5.18.
105
Table 5.18: Allocation of score for problems faced by tenants
Tenancy
Score
Score
Score
Score
Score
Total
Mean
Problems
1
2
3
4
5
Score
of score
Difficult in getting
22
1
1
4
22
153
3.06
2
2
6
10
30
214
4.28
22
4
5
6
13
134
2.68
6
6
9
10
19
180
3.60
back security deposit.
Landlords fail to
comply the terms
stated in tenancy
agreement.
False accusation on
the damages
Unreasonable charges
on damages
There are five scales altogether, namely extreme serious problem, serious
problem, moderate problem, slight problem and no problem. Each of these scales
will be allocated with one score and every scale will carry a different weighting of
score. In this instance, extreme serious problem will be allocated with score 5;
serious problem allocated with score 4; moderate problem allocated with score 3;
slight problem allocated with score 2 and finally no problem allocated with score 1.
The mean score for tenancy problems obtained from the analysis ranges from
the lowest mean score of 2.68 (false accusation on the damages) to the highest mean
score of 4.28 (landlords fail to comply the terms stated in the tenancy agreement).
Therefore, the index value base on the mean value derived would be 0.32 and this
would be the class interval used for each index value for the scales of each tenancy
problems. Thus, Table 5.19 below shows the scales in index value for problems
faced by the tenants.
106
Table 5.19: Scales in index value for problems faced by tenants
Index value
Scales
2.65-2.97
No Problem
2.98-3.30
Slight Problem
3.31-3.63
Moderate Problem
3.64-3.96
Serious Problem
3.97-4.29
Extreme Serious Problem
The ranking of the tenancy problems faced by the tenant based on the index
value computed would be as follows:-
Table 5.20: Ranking of tenancy problems faced by tenants
Scales
Tenancy Problems
No Problem
•
False accusation on the damages.
Slight Problem
•
Difficulty in getting back security deposit.
Moderate Problem
•
Unreasonable charges on damages.
Serious Problem
Extreme Serious Problem
•
Landlords fail to comply the terms stated in
tenancy agreement
The analysis has shown that the extreme serious problem faced by tenants in
tenancy would be landlords fail to comply the terms stated in tenancy agreement.
The tenants classified problems faced as moderate problems would be unreasonable
charges on damages found followed by difficulty in getting back security deposit
which classified under slight problem. Finally, false accusation on damages is not a
problem to the tenants and therefore ranked last in the tenancy problems faced by
tenants.
107
5.5
Conclusion
The findings revealed that landlords have lesser problems when the tenancy is
managed by an agent. The survey also revealed that foreign landlords prefer to use
agent services compare to local landlords. Most landlords declined the use of agent
services because they feel that tenancy is a simple task that can be handled
personally and is not worth to engage an agent to handle such as simple task.
Moreover some landlords even feel that properties managed by agents tend to be not
just of a better physical standard than those managed by the landlord themselves.
The findings also reveal that tenants who use the agent services tend to have
lesser tenancy problems. The survey has revealed that foreign tenants are more in
favour of using agent in tenancy management compare to local tenants. The survey
also revealed that most of the local tenants are not willing to spend on agency
services compare to the foreign tenants who are more willing to spend on agency
services. Past experience with the agents’ services is also one of the reasons that the
tenants refuse to use the agent services.
Besides that, this finding also reveals that most local landlords and tenants do
not have the habit to read and understand the clauses stated in the tenancy agreement.
As a result of that it has become the root for disputes between the landlord and
tenant. This finding also shows that foreign landlords and foreign tenants are more
careful with events that concerns with Malaysian law.
Finally, this survey suggest that the use of agents services in tenancy would
assist the Apartment Management Office to control the type of tenants residing in the
apartment blocks and ease the management fees collection process.
CHAPTER 6
CHAPTER 6
CONCLUSION AND RECOMMENDATION
6.1
Introduction
This would be the final chapter for this study. The focus of this chapter is to
discuss and interpret the findings of the data analysed in Chapter 5. The data
collected would interpret in accordance to the business prospect of the FM
organisations in providing the tenancy management services in Johor Bahru.
This chapter proceeds with the summary of findings which derived from the
survey undertaken in Chapter 5. The summary of findings will depict how the
objectives of this study are achieved. The limitation and shortcoming of the research
for this study and suggestion for future research are also discussed accordingly in
this chapter.
109
6.2
Summary of the Findings
The summary of the findings is derived from the analysis of the survey
undertaken which includes interview and questionnaires. The result obtained from
the analysis has helped the author to achieve the objectives which addresses to the
problem statement set up earlier in Chapter 1. The objectives of this study are as
follows:-
i)
To identify the reasons why the landlord and tenant decline to use the
tenancy management services available in the market.
ii)
To identify the landlord and tenant problems when the landlord solely
manages the property for rent without engaging the tenancy management
service provider.
The summary of the result obtained from the findings for the reasons why
landlords and tenants decline to use agents to manage the tenancy matters are as
below:-
•
Landlord
i)
Landlords express they could manage the property themselves.
ii)
Landlords’ reluctance to pay for the services rendered.
iii)
Landlords express that difficult to find a competent agent.
iv)
Landlords revealed that having bad previous experiences with dishonest
agent.
110
•
Tenant
i)
Tenants’ reluctance to pay for the services rendered.
ii)
Tenants revealed that they have bad previous experiences with dishonest
agent.
The summary of the result obtained from the findings on the problems faced
by the landlords and tenants are as below:-
•
Landlord
i)
Rent arrears and bad debts.
ii)
Tenants fail to clear the debris on expiry or termination.
iii) Utilities deposits insufficient to cover the outstanding amount due.
iv) Tenants fail to comply the terms stated in the tenancy agreement.
v)
Tenants bring a counter-claim when threatened with eviction.
•
Tenant
i)
Difficulty in getting back security deposit.
ii)
Landlords fail to comply the terms stated in the tenancy agreement.
iii) False accusation on the damages.
iv) Unreasonable charges on the damages.
The ranking of the problems faced by landlords and tenants have revealed
that the most severe problems when the tenancy is managed solely by the landlord
are summarised as below:-
111
•
Landlord
i)
Rent arrears and bad debt.
ii)
Insufficient utilities deposits collected.
•
i)
Tenant
Encounter with landlords who do not comply with the terms and
conditions stated in the tenancy agreement.
Finally, this study also revealed that more than half of the landlords and
tenants do not make the effort to read and understand the contents stated in the
tenancy agreement. Thus this has become one of the roots for the occurrences of
disputes between landlords and tenants.
6.3
The Prospect of Tenancy Management Services Business for FM
Organisation in Johor Bahru
Tenancy management services is quite a new business in Johor Bahru.
Unlike United States and European countries, use of tenancy management services to
let and manage the properties is rather common amongst the property owners and
tenants. There are three reasons why tenancy management services are a good
business prospect for FM organisations in Johor Bahru. The three reasons are:-
112
•
Sideline investors
Base on the findings which carried out, most of the owners who invest in high
rise buildings are Singaporean and Malaysian with Singapore Permanent Residents
status. They bought the properties in Malaysia for investment purposes. These
owners reside in Singapore and do not have the time to take care of their tenancy
matters. Therefore these were the owners who will engage agents to handle the
tenancy of the properties invested. The survey analysis in Chapter 5 has revealed
that, out of that 24% of the landlords who used agent services, 66.7% are
Singaporean; 25% are Malaysian with Singapore Permanent Resident statues and
currently residing in Singapore and balance 8.3% are local and currently residing in
Johor Bahru.
•
Corporate or Foreign Tenants
The findings also revealed that 100% of the corporate or foreign tenants used
agent’s service to handle their tenancy matter. Besides that, based on the observation
and working experience of the author in property sector, agent’s services has always
been a preference amongst the corporate or foreign tenants, who will release them
from the tenancy hassle and problems in dealing with individual owner.
•
The Nature Of Tenancy Problems
Tenancy problems are common issues amongst landlord and tenant. Based
on the findings in Chapter 5, the extreme serious tenancy problems faced by
landlords are rent arrears and insufficient utilities deposits to cover the outstanding
amount incurred by tenant. Whereas the extreme serious tenancy problems faced by
tenants are landlords fail to comply with the terms stated in tenancy agreement. The
survey also revealed that for those landlords and tenants who do not have problems
in tenancy are the one who use agency services to handle their tenancy matters.
113
6.4
Limitation and Shortcoming of the Research
In this study, the survey could not be extended to FM organisations which
provide tenancy management services in Johor Bahru. This is because in Johor
Bahru, there are no FM organisations that provide tenancy management services.
There are other service organisations that provide tenancy management services.
However these organisations are providing the services based on their own definition
and provision of tenancy management. For example, a developer will form a
subsidiary company for the purpose to handle tenancy management of their unsold
property units.
Besides that, real estate agents and negotiators who are available to provide
tenancy management services would deem to be their personal sideline business.
These real estate agents and negotiators do no have the full understanding of tenancy
management services. Thus, the services that provided to their clients are limited to
rental collections and sourcing for tenants only.
As a result of that, opinions and views pertaining to the reasons why landlord
and tenant declined the use of agent’s services in tenancy management and the
common problems faced by landlord and tenant in tenancy could not be determined
effectively from these service providers. This is because bias views and opinions
will be expressed accordingly by the different group of service providers as a result
of the different nature of provision and definition of tenancy management services.
114
6.5
Recommendation for Future Research
There are a few issues which could be further research as a follow up to this
study. The issue which could be explored are:-
I. The reasons why the tenants purposely delay the rental payment.
II. The effectiveness of the tenancy management services provided by agents in
meeting the needs of the landlords and tenants.
III. The type of quality tenancy management services provided by agents in
private rental sectors taking into the consideration of upper, middle and lower
ends of the market.
6.6
Conclusion
As a conclusion, the aims of this study is to identify the reasons why the
landlords and tenants decline to use tenancy management services that available in
the market and the problems faced by both landlord and tenant when the tenancy is
managed solely by the landlord himself. The findings showed that this study has
achieved the objectives of this study. The findings also revealed that landlords and
tenants who use agents’ services could well manage their tenancy and have lesser
tenancy problems. Besides that, the findings also revealed that foreign owners and
tenants are in favour of using agent’s services compared to local owners and tenants.
115
The results obtained from the findings have become useful information to the
FM organisation who intends to venture into the business of tenancy management
services in Johor Bahru. The business of tenancy management service is a good
business prospect and opportunity in Johor Bahru taking into the consideration of the
availability and the market of sideline investors, corporate or foreign tenants who
favour the used of agency services and the nature of tenancy problems which could
not be solved effectively by the landlords and tenants themselves.
Besides the above mentioned factors, a good business strategy is also an
important means for the success of FM organisations that provide tenancy
management services.
REFERENCES
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on 15 March 2005
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2005
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APPENDIX A
121
UNIVERSITI TEKNOLOGI MALAYSIA
QUESTIONNAIRE FOR PROPERTY OWNER
This questionnaire is to research on the following issue:1.
The tendency that landlords and tenants do not use tenancy
management services available.
2.
Problems faced when self managed.
This questionnaire consists of two sections: Section A and Section B.
Please answer carefully, as results from this questionnaire contributes to the
success of this survey.
By: KHAW TAN CHENG
Facilities Management
Universiti Teknologi Malaysia
Thank you for your cooperation.
122
Block unit:_________________________________
SECTION A:
1.
Are you a Malaysian?
If ‘No’, then what is your Nationality?
Yes
No
2.
Do you reside in Johor Bahru?
Yes
If ‘No’, please state the place that you are currently
residing?_____________________
No
3.
Do you own property or properties (i.e. residential lot and/or
commercial lot) in Malaysia for rent?
Yes
4.
How many properties (Residential/Commercial lot) do you
own for rental purpose?
5.
Do you use agent to handle your tenancy matter?
5.1
If your answer is “No”, please state why?
5.2
If your answer is “Yes”, do you use agent services for full
tenancy management or just partial of the service provided?
i)
Full
ii)
Partial
5.2.1 If your answer is “Partial”, what are the list of services?
5.2.2 Which agency do you engage?
Yes
No
No
123
6
Are you aware of the legal rights of a landlord in Malaysia?
i) Fully aware
ii) More or less aware
iii) Not aware
7.
Do you know the lists of obligation a landlord needs to fulfil?
i) Fully aware
ii) More or less aware
iii) Not aware
8.
In the event the tenancy agreement is prepared by your
lawyer or agent, do you make an effort to read and
understand the contents?
Yes
No
124
SECTION B:
How would you rank the following tenancy problem?
***** -Rank no. 1 problem
****
-Rank no. 2 problem
***
-Rank no. 3 problem
**
-Rank no. 4 problem
*
-Rank no. 5 problem
i) Tenant did not pay rental on time
ii) On tenancy expiry or termination of tenancy, the tenants
leave behind tonnes of rubbish and debris for you to clear.
iii) Tenant leaves the premise without paying the utilities bills
and the deposits withhold insufficient to cover the
outstanding amount.
iv) Tenant not complying with the terms stated in the tenancy
agreement. Such as:• Tenant carried out illegal activities in your premise.
• Tenant deliberates damage your furniture & fittings
and your premise.
v) Tenant brings a counter-claim against you when
threatened with eviction.
vi) Other tenancy problems which are not listed above:
__________________________________________________
********Thank you very much!********
125
APPENDIX B
125
UNIVERSITI TEKNOLOGI MALAYSIA
QUESTIONNAIRE FOR TENANT
This questionnaire is to research on the following issues:2.
The tendency that landlords and tenants do not use tenancy
management services available.
2.
Problems faced when self managed.
This questionnaire consists of two sections: Section A and Section B.
Please answer carefully, as results from this questionnaire contributes to the
success of this survey.
By: KHAW TAN CHENG
Facilities Management
Universiti Teknologi Malaysia
Thank you for your cooperation.
126
Block unit:____________________________
SECTION A:
1.
Are you a Malaysian?
If ‘No’, then what is your Nationality?
Yes
No
2.
Do you use agent to handle your tenancy matter?
Yes
No
2.1
If your answer is “No”, please state why?
2.2
If your answer is “Yes”, do you use agent services for full
tenancy management or just partial of the service provided?
i)
Full
ii)
Partial
2.2.1
If your answer is “Partial”, what are the lists of services?
2.2.2
Which agency do you engage?
127
3.
4.
Are you aware of the legal rights of a tenant in Malaysia?
i) Fully aware
ii) More or less aware
iii) Not aware
Do you make an effort to read the tenancy agreement before
signing?
Yes
No
If the answer is ‘Yes’, do you understand all the clauses stated
in the tenancy agreement?
i)
Fully understand
ii)
Not really understand
iii)
Don’t understand at all
If your answer is not- 4(i) (Fully understand), do you get help
from a third party for explanation of the clauses listed in the
tenancy agreement?
Yes
5.
Do you know the lists of obligation a tenant needs to fulfil?
i) Fully aware
ii) More or less aware
iii) Not aware
No
128
SECTION B:
How would you rank the following tenancy problem?
***** -Rank no. 1 problem
****
-Rank no. 2 problem
***
-Rank no. 3 problem
**
-Rank no. 4 problem
*
-Rank no. 5 problem
i)
Difficulty in getting back the security deposit when tenancy
expires.
ii) Landlord does not comply the terms stated in the tenancy
agreement. Such as:• Landlord fails to provide quiet possession of the
premise.
• Landlord fails to repair the defect or faults found in the
premise e.g. roof leakage, plumbing etc
• Landlord fails to pay maintenance fees, quit rent,
assessment etc.
iii) Landlord false accuse on the damages found in the premise.
iv) Landlord quoted unreasonable charges on the damages
found in the premise during termination of tenancy.
v) Other tenancy problems which are not listed above:
__________________________________________________
********Thank you very much!********
APPENDIX C
129
UNIVERSITI TEKNOLOGI MALAYSIA
INTERVIEW QUESTIONS FOR APARTMENT MANAGEMENT OFFICE
This questionnaire is to research on the following issues:3.
The tendency that landlords and tenants do not use tenancy
management services available.
2.
Problems faced when self managed.
Please answer carefully, as results from this questionnaire contributes to the
success of this survey.
By: KHAW TAN CHENG
Facilities Management
Universiti Teknologi Malaysia
Thank you for your cooperation.
130
Date:
Name:
Position:
No.
1.
Questions
Answer
Does the management office face
problems with the tenants that
source by the owners themselves?
If the answer is YES, then what are
the problems the management office
faced?
2.
Do you face management fees
collection problems?
3.
What are the excuses that parcel
owners give for not paying
management fees?
4.
Do you face problems in contacting
the owners?
If the answer is YES, why is it so?
5.
Do you see any differences from the
tenancy managed by the owners
themselves and the tenancy
managed by the agents and what are
the differences do you see?
APPENDIX D
131
TENANCY AGREEMENT
AN AGREEMENT made the day and year stated in Item 1 of the Schedule.
Between
The party named in Item 2 of the Schedule (“the Landlord”);
And
The party named in Item 3 of the Schedule (“the Tenant”).
RECITALS A.
The Landlord is the registered/beneficial proprietor of the whole of
property more particularly referred to and described in Item 4 of the
Schedule (“the said Demised Premises”);
B.
The Landlord desires to let and the Tenant desires to rent the Demised
Premises upon the terms and subject to the conditions contained herein.
C.
The Tenant has inspected and is satisfied with the condition of the
Demised Premises and shall take vacant possession of the Demised
Premises from the date agreed herein.
132
IT IS HEREBY AGREETH BETWEEN THE PARTIES as follows:
1.
AGREEMENT TO LET
The Landlord agrees to let and the Tenant agrees to take a tenancy of the
Demised Premises for the period stated in Item 5 of the Schedule
commencing from the date stated in Item 6(a) and expiring on the date
stated in Item 6(b) of the Schedule respectively at the monthly rental in
the sum stated in Item 7 of the Schedule (“the Rent”) payable in advance
by the seventh (7) day of each and every calendar month, the first of such
payments to be made on the date stated in Item 8 of the Schedule (the
“Date of First Payment Of Rent”) upon the terms and subject to the
conditions contained in this Agreement.
2.
TENANT’S COVENANTS
The Tenant covenants with the Landlord as follows:
2.1
To pay the Landlord on or before the execution of this Agreement a sum
stated in Item 9(a) of the Schedule as security deposit (“the Security
Deposit”) and a sum stated in Item 9(b) as the utility deposit (the” Utility
Deposit”) (the receipt of which the Landlord expressly acknowledges) as
deposit to secure the due observance of the terms and conditions of this
Agreement, which sum shall not be deemed to be treated as payment of
the Rent and the same shall be refunded to the Tenant on the
determination or lawful termination of this Agreement free of interest but
, less such sum or sums as may then be due to the Landlord in respect of
any breach by the Tenant in the due observance of the terms and
conditions of this Agreement.
2.2
To pay the Rent to the Landlord at the times and in the manner stated
above without any deductions whatsoever.
2.3
To pay all existing current and future utilities including but not limited to
water electricity and telephone bills incurred and/or will be incurring by
the Tenant during the Term of the Tenancy and to submit photocopies of
receipts of the said bills to the Landlord on quarterly basis or upon the
request of the Landlord.
2.4
To insure all the goods, articles, belongings, efforts, fixtures and fittings
installed and/or brought to the Demised Premises by the Tenant thereto
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with the policy or policies of insurance against damages by fire, water,
lighting and tempest.
2.5
At all times during the Term to keep the Demised Premises and its
interior including all doors windows glass locks and fastenings and all
additions to and appurtenances of the Demised Premises in good and
substantial repair (fair wear and tear excepted) and condition and to yield
up the Demised Premises restored to its original state and condition in
good and substantial repair to the Landlord at the expiration or sooner
determination of the Term.
2.6
To permit the Landlord and/or its servants or agents with or without
workmen at all reasonable time with prior reasonable notice in writing to
enter upon and examine the condition and state of repair of the Demised
Premises.
2.7
Not to make or permit or suffer to be made any alterations in or additions
to the Demised Premises whether structurally or physically without the
previous written consent of the Landlord first had and the Tenant shall at
its own costs and expense restore the Demised Premises to its original
state and condition (fair wear and tear excepted) on determination of the
Term, if so required by the Landlord.
2.8
To use the Demised Premises for the purpose stated in Item 10 of the
Schedule and for this purpose, the Tenant shall not at any time bring
and/or allowed occupation of the Demised Premise by any workers and/or
foreigner without legal working permit and/or license to stay in Malaysia
and shall keep the Landlord indemnified for any damages or losses
incurred as a result thereof.
2.9
Not to transfer, assign, sublet or part with the actual or legal possession of
the Demised Premises or any part thereof without the previous written
consent by the Landlord.
2.10
Not to do or suffer to be done anything which will cause the policy or
policies of insurance in respect of the Demised Premises or on the
furniture, fixtures and fittings or on the building in which the Demised
Premises is situated to become void or voidable.
2.11
Not to do or permit or suffer to be done upon the Demised Premises
anything which in the reasonable opinion of the Landlord may be a
nuisance or annoyance to the owners or occupiers of the adjoining or
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adjacent premises or properties of which the Landlord may find
objectionable.
2.12
Not to hold or permit or suffer to be held any sale by auction upon all or
any part of the Demised Premises.
2.13
Not to bring or store or permit or suffer to be brought or stored on all or
any part of the Demised Premises any goods/articles which in the
reasonable opinion of the Landlord is unlawful and of a dangerous or
hazardous nature.
2.14
Not to do or permit or suffer to be done any act matter or thing in or on or
respecting the Demised Premises which shall contravene the provisions of
any, law, by-laws, nature, orders, rules or regulations now or any
competent authority affecting the same.
2.15
To permit the intended tenants and others with written authority from the
Landlord or its agents or servants at all reasonable times of the day with
prior reasonable notice to enter and view the Demised Premises within
three (3) months prior to the termination of this Agreement PROVIDED
that the Landlord shall ensure that minimum inconvenience is caused to
the Tenant during such visits.
2.16
To keep the furniture, fixtures and fittings including but not limited to the
inventories in the Inventory List in good and substantial repair, fair wear
and tear excepted. The Tenant shall at his sole cost be responsible for all
minor maintenance and repair works up to Ringgit Malaysia One
Hundred (RM 100.00) only.
2.17
Not to use the Demised Premises for any illegal or immoral purposes or
any other purpose which the Landlord shall find objectionable.
2.18
To reimburse indemnify and keep indemnified the Landlord against any
summons actions proceedings claims and demands costs damages and
expenses which may be levied brought or made against the Landlord or
which the Landlord may sustain or incur by reason of any act or omission
or use of the Demised Premises by the Tenant, its servants, agents,
licensees or invitees whether caused directly or indirectly and
notwithstanding such claims are based on negligence or not.
2.19
Upon the receipt of any notice order direction or other thing from the
authority affecting or likely to affect the Demised Property whether the
same shall be served directly on the Tenant, the Tenant shall so far as
such notice, order direction or other thing or the ordinance, regulations or
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other instrument under and by virtue of which it is issued or the
provisions hereof require of the Tenant to do and by virtue it is issued or
the provisions hereof require the Tenant to do so comply therewith at its
own expense and shall forthwith deliver to the Landlord a copy of such
notice order or other thing.
2.20
Upon the expiration or soonest termination of this Tenancy:i)
to remove all fixtures and fittings belonging to the Tenant and to
restore the Demised Premises to its original state and condition
as at the date of this Tenancy within seven (7) days from the
date of the termination of this Tenancy; failing, which the
Landlord may remove such fixtures and efforts and restore the
Demised Premises as aforesaid. The costs such removal and
restoration shall be a debt clue from the Tenant to the Landlord
and the Tenant shall be deemed to be continued in occupation of
the Demised Premises until the completion of such removal and
restoration and shall be liable to pay the rental for such period.
ii)
3.
to forthwith yield up the Demised Premises with the Landlord’s
fixtures and fittings and additions thereto in good and substantial
repair and condition in accordance with the several covenants
hereinbefore contained.
LANDLORD’S COVENANT
The Landlord covenants with the Tenant as follows:3.1
To pay all quit rent, rates, taxes, assessment, service charges and other
outgoings which are or may hereafter be charged or imposed upon the
Demised Premises.
3.2
Upon the Tenant punctually paying the reserved Rent and observing the
terms and conditions contained in this Agreement, to permit the Tenant
and the Tenant’s servants, agents and visitors to enjoy the Demised
Premises without any disturbance by the Landlord or those lawfully
claiming title under the Landlord.
3.3
To refund the deposits paid under clause 2.1 immediately upon lawful
termination of this Agreement less any sum or sums due and owing by the
tenant arising out of his obligation contained in this Agreement.
3.4
To maintain and keep the main structure walls floor roofs plumbing
system and drains of the Demised Premises in good and tenantable repair
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and condition through the Term PROVIDED that where repairs under this
covenant shall become necessary by reason of the negligence or wilful
default of the Tenant or the Tenants servants then the Tenant shall carry
out such repairs at his own costs and expense.
3.5
In the event that the Landlord shall be desirous of selling the said
Demised Premises prior to the expiration of the Term, the Landlord
hereby covenants, undertakes and agrees that such sale maybe subjected
to this Tenancy and may procure any intended Purchaser to continue with
the Tenancy with the terms and conditions of this Agreement in lieu of
the Landlord.
4
MUTUAL COVENANTS
4.1
If the Rent or part thereof shall at any time be unpaid seven (7) days after
becoming payable (whether formally demanded or not) or if any covenant
on the part of the Tenant contained shall not be performed or observed or
if the Tenant or other person or persons in whom for the time being the
term hereby created shall be vested shall become bankrupt or make an
assignment for the benefit of his creditors or their creditors or enter into
an arrangement or make any arrangement with his creditors by
composition or otherwise to suffer any distress or process of execution to
be levied upon his or their goods or being a limited company shall enter
into liquidation whether voluntary or compulsory (save and except for the
purposes of amalgamation or reconstruction), then and in every such case
it shall be lawful for the Landlord to terminate this Agreement
immediately and thereupon this Agreement shall be determine but without
prejudice to the right of action of the Landlord in respect of any
antecedent breach of any covenant on the part of the Tenant contained in
this Agreement.
4.2
It is agreed and confirmed that nothing contained in this Agreement shall
give either party the right of determining this Agreement before the
expiry of the Term save and except as otherwise provided in Clause 4.1 or
elsewhere in this Agreement. Subject to the terms and conditions herein,
in the event of such early termination for any reason by the Tenant, the
Landlord shall be entitled absolutely to forfeit the Security Deposit and
Utility Deposit paid herein. [and to claim for payment for liquidated
damages being the total rental payable for the remaining term by the
Tenant. (optional)]
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5.0
OPTION TO RENEW
5.1
In the event that the Tenant shall be desirous of renewing the Tenancy
Agreement for a further period as stated in Item 4(b) in the Schedule after
the expiration of the Tenancy herbey created, then the Tenant shall give
notice in writing to the Landlord of such desire at least three (3) months
before the expiry of the Tenancy hereby created and provided that the
Tenant shall have regularly paid the Rent hereby reserved and performed
and observed the several terms and conditions herein on his part
contained the Landlord may let the Demised Premises to the Tenant for a
further period mentioned above commencing from the date a day after the
date stated in Item 5(b) in the schedule at the rental to be agreed upon and
subject to the terms and conditions as shall be mutually agreed by the
parties hereto at the time of renewal.
6.
DAMAGE TO DEMISED PREMISES
If the Demised Premises or any part thereof shall be substantially
destroyed or damaged by fire (except where such fire has been caused by
the default or negligence of the Tenant) or in any way rendered unfit for
use or occupation so as to be unfit for a period greater than thirty (30)
days from the occurrence of destruction or damage, the Landlord shall
then not be bound or compelled to rebuild or reinstate the same. In the
event that the Landlord decides to rebuild or reinstate the Demised
Premises then provided the money payable under any policy of insurance
effected by the Landlord shall not have become irrevocable through any
act or default of the Tenant, the Rent hereby covenanted to be paid or a
fair proportion thereof according to the nature and extent of the damage
sustained shall be suspended until the Demised Premises shall again be
rendered fit for use. The Landlord or the Tenant (except where such
damage has been caused by the fault or negligence of the Tenant) may
however in the event the Demised Premises is substantially damaged or
destroyed determine the Tenancy by giving one (1) month’s notice in
writing and thereupon the same and the covenants herein shall cease as
from the date of occurrence of such destruction or damage but without
prejudice to the rights and remedies of either party against the other in
respect of any antecedent claim or breach of covenant.
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7.
ABANDONED ARTICLES
Unless or otherwise expressly provided in this Agreement, it is agreed by
the Parties that if the Tenancy is terminated or determined or expired and
articles of any kind or nature (collectively referred to as “the Articles”)
are left or abandoned in the Demised Premises, the Landlord may after
the expiration of seven (7) days form the termination or determination or
expiration of the tenancy, remove dispose or destroy the Articles from the
Demised Premises without reference to the Tenant and shall not be liable
for any loss, damages, lost, proceeds or profit arising thereof. Any costs
arising from the disposal of the Articles by the Landlord shall be
reimbursed by the Tenant or to be deducted from the Security Deposit in
accordance to the terms and conditions provided herein.
8.
TIME OF THE ESSENCE
Time wherever mentioned shall be deemed to be and treated as of the
essence of this Agreement.
9.
KNOWLEDGE OR ACQUIESCENCE
Knowledge of or acquiescence by either Party of any breach of any of the
terms, conditions or covenants herein this Agreement contained shall not
operate as or be deemed to be a waiver of such term, condition or
covenant and notwithstanding such knowledge or acquiescence, each
Party shall be entitled to exercise its respective rights under this
Agreement and to require strict performance by the other of the terms,
conditions and covenants herein. No single or partial exercise of any right
power or privilege by any Party shall preclude any other or further
exercise thereof or the exercise of any other right power or privilege.
10.
NOTICES
Any notice, request or demand required to be served by either Party to the
other under the provisions of this Agreement shall be in writing and shall
be deemed to be sufficiently served:-
(a)
if it is given by that Party or that Party’s solicitors by post in a registered
letter with postage prepaid addressed to the other Party or the other
Party’s solicitors at that other Party’s or that other Party’s solicitors’
address herein mentioned or at that other Party’s or that other Party’s
139
solicitors’ last known address and it shall be deemed to have been
received at the time when such registered letter would in the ordinary
course of post be delivered notwithstanding that such letter should be
returned undelivered; or
(b)
if it is given by that Party or that Party’s solicitors and dispatched by hand
or by courier to the other Party or the other Party’s solicitors and it shall
be deemed to have been received at the time of delivery.
11.
ENTIRE AGREEMENT
This Agreement constitutes the sole and entire agreement between the
Parties in relation to its subject matter and supersedes all prior agreements
and understandings, whether oral or written, with respect to such subject
matter and it is hereby expressly declared that no variations shall be
effective unless made by the Parties in writing.
12.
NON-ASSIGNABILITY
Neither Party may assign its respective rights or obligations under this
Agreement without the prior consent in writing of the other Party.
13.
SEVERABILITY
Any terms, conditions, stipulations, provision, covenants or undertakings
in this Agreement which is illegal void prohibited or unenforceable shall
be ineffective to the extent of such illegality voidness prohibition or
unenforceability without invalidating the remaining provisions hereof and
any such illegality voidness prohibition or unenforceability shall not
invalidate or render illegal void unenforceable any other terms conditions
stipulations provisions covenants or undertakings herein contained.
14.
BINDING EFFECT
This Agreement shall be binding upon the respective permitted assigns,
personal representatives, beneficiaries and successors in title of the
Parties.
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15.
COSTS AND EXPENSES
Legal fees, costs and expenses arising from this Agreement and the stamp
duty of this Agreement shall be borne and paid by the Tenant.
16.
JURISDICTION
This Agreement shall be governed by the laws of Malaysia and the parties
submit to the jurisdiction of the courts of Malaysia in all matters arising
from or incidental to this Agreement.
17.
INTERPRETATION
In this Agreement unless there is something in the subject or context
inconsistent with such construction or unless it is otherwise expressly
provided:
(a)
the expressions “the Landlord” and “the Tenant” shall include their
respective successors in title and where two or more persons are included
in any of the aforesaid expressions this Agreement binds such persons
jointly and severally;
(b)
words importing the singular number shall be deemed to include the
plural and vice versa;
(c)
words applicable to human beings include any body of persons corporate
or unincorporated; and
(d)
any recital, schedule, list, annexure or description of the Parties shall form
part of this Agreement.
* * * ** * * * * * * * * * * ** * *** *
141
IN WITNESS WHEREOF the parties hereto have hereto set their hands the day
and year first above written.
SIGNED by the Landlord
in the presence of:-
SIGNED by the Tenant
is affixed hereto in the presence of:-
)
)
)
)
)
)
……………………….…………
Name:
NRIC:
………………………………….
Name:
NRIC:
142
SCHEDULE
(To be taken read and construed as an essential part of this agreement)
1.
Date of this Agreement
2.
Name and Address of the Landlord
3.
Name and Address of the Tenant
4.
Demised Premise
5.
Term
Commencement Date
6.
Expiry Date
7.
Rent
8.
Date of first payment
9(a)
(b)
10.
Security Deposit
Utility Deposit
Purpose
143
SCHEDULE
(To be taken read and construed as an essential part of this Agreement)
No.
Description of items
Number of units
APPENDIX E
144
PROPERTY INSPECTION CHECKLIST
Property
:
Landlord
:
Tenant
:
Move-in Date
:
Move-out Date
:
MASTER BEDROOM
ITEM
Floor
Walls and Ceiling
Windows
Curtains and tracks
Wardrobe, doors & tracks
Doors
Air-conditioner
Dressing table and chair
Beds
Ceiling Light
Move-In
Condition
Move-Out
Condition
Estimated Cost of
Repair/Replacement
145
MASTER BATHROOM
Move-In
Condition
ITEM
MoveEstimated Cost of
Out
Repair/Replacement
Condition
Floor
Walls and Ceiling
Windows
Bathtub, doors & tracks
Doors
Toilet
Plumbing fixtures Sink and
counter
Water heater
1. The sample above is for the master bedroom and master bathroom.
2. List down each of the item found in the specific area under item column.
3. Prepare a similar list for each of the different areas in your rental property,
example:
Master Bedroom
Master Bathroom
Bedroom 1
Bedroom 2
Bedroom 3
Living Room
Dining Room
Kitchen
Balcony
Wash Area
Store
4. Attach the original property inspection checklist to your tenancy agreement
and make a copy for your tenant’s record.
146
OTHERS
ITEM
Move-In
Condition
MoveEstimated Cost of
Out
Repair/Replacement
Condition
Air-conditioners
Remote: Air-con
Remote: TV, VCD
Manual: TV,VCD
KEYS
TYPES OF KEYS
Main Entrance
Back Entrance
Master Bedroom
1st Bedroom
2nd Bedroom
Kitchen Door
Letter Box
Total
Quantity
Move-In
Quantity
Move-Out
Estimated Cost of
Repair/Replacement
147
UTILITIES
UTILITIES
Move-In
Date
Move-Out
Date
Move-In
Date
Move-Out
Date
Electricity meter reading
Water meter reading
Gas reading
Date
Signed by the Tenant
Signed by the Landlord