BUILDING MAINTENANCE AND STRATA MANAGEMENT BILL (As reported from Select Committee)

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BUILDING MAINTENANCE AND STRATA MANAGEMENT BILL:

(As reported from Select Committee): Order for Third Reading read.

The Minister for National Development (Mr Mah Bow Tan): Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Third time."

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Select Committee: _

Sir, at its Second Reading in April this year, the House committed the Building Maintenance and Management Bill to a Select Committee. This was because it was likely to have impact on a broad cross-section of the population.

The Select Committee has received 61 written representations on the Bill from various stakeholders, including management corporations (MCs), subsidiary proprietors (SPs), managing agents (MAs), developers and lawyers.

The Committee has heard oral evidence from 15 individuals or groups, whose views are representative of the stakeholders. It has taken into account these representations as well as Members' views expressed during the Second Reading. The full details are in the Report of the Select Committee,

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which has been presented to Parliament on 7th October 2004 and available to the public since 8th October 2004.

Sir, the Committee has been guided by some key considerations.

First, recognising the different interests of stakeholders, the Committee has sought to strike a balance between the interests of majority and minority SPs, and owner developers and SPs.

Second, the Committee has been conscious that SPs need to take greater ownership in managing their developments, in line with the intent to promote self-regulation.

Finally, the Committee has sought to strengthen the Bill to inculcate a maintenance culture and to facilitate the staging of large development projects.

Let me now elaborate on the key recommendations.

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New short title of Bill: _

The Committee has agreed to change the Bill's short title to "Building Maintenance and Strata Management" to reflect its substantial content on strata developments.

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Balancing the different interests of user groups - in mixed-use strata developments: _

The original Bill proposed a two-tier MC system for mixed-use developments, with a main MC and a second tier of subsidiary MCs (sub-MCs) to represent different users, eg, residential and commercial. The main MC manages the property which is common for general use of all SPs. The sub-MCs manage the common property used exclusively by their respective user groups, ie, "limited common property", and they can levy contributions from them for maintenance or improvement.

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Sir, the two-tier MC system has been tried and tested in other countries, such as Canada and Australia, specifically in the states of New South Wales and Victoria. User groups have flexibility to make their own decisions without being frustrated by other groups who may not share their interest. For example, high-rise residential unit owners can now upgrade their lifts without being hampered by objections from owners of low-rise units without lifts. Likewise, retail shop owners in a mixed development can plan to upgrade the concourse of a shopping area without having to face resistance from residential unit owners.

The representations to the Committee generally supported the two-tier MC system. In fact, several representors have asked that the three categories of developments that are allowed to form sub-MCs, namely:

(a) residential and non-residential lots, eg, residential apartments and retail shops;

(b) non-residential lots used for different purposes, eg, hotels, offices and retail shops; and

(c) different types of residential lots, eg, high-rise apartments and low-rise town houses

be expanded to include one more category, ie, non-residential lots in distinct office blocks. The Committee has agreed to this. To ensure that the addition of the fourth category will not result in the proliferation of sub-MCs, qualifying criteria will be prescribed by regulations. Such criteria can include the minimum size or gross floor area of eligible developments.

To facilitate dispute resolution under the two-tier MC system, the Strata Titles Board (STB) will be allowed to adjudicate boundary disputes on limited common property between MC and sub-MC, or even among sub-MCs. This would be

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more efficient and less costly than going to the courts.

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Balancing the interests of majority and minority SPs - representation in the council: _

In the original Bill, each SP can only have one seat in the council, even if he owns more than one lot. Some representors consider this to be unfair to those SPs with substantial interests in a development. This is because the minority SPs can then dictate the overall management of the development.

Sir, it is reasonable to expect majority SPs to want to have a greater say in the management of their assets. Hence, the Committee has agreed to allow owners of multiple lots to have proportional representation in the council according to share value. This is subject to a cap of 49% of the council seats for any one SP. For example, a SP can have up to six seats in a 14-member council, or one seat short of half of the total seats. This is to prevent absolute control by any SP in the council and provide some safeguard to the minority SPs.

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Balancing the interests of owner developers and SPs - contributions to maintenance fund: _

Sir, the current industry practice is that the developer sets up a maintenance fund for a development after the issue of its Temporary Occupation Permit (TOP). As soon as the developer starts collecting maintenance contributions, the developer must also contribute to the fund, for the unsold units as well as for the sold units that have not yet been handed over to the purchasers.

It is fair that the developer, who has not handed over the units to the purchasers, should contribute to the maintenance fund. However, in several representors' view, requiring developers to contribute to the fund for sold units not

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yet handed over could pressure them to rush through the handing over and compromise quality and customer service. The feedback is that developers usually need up to three months after TOP to hand over the sold units in large developments. Hence, the Committee has agreed to allow developers a grace period of three months from TOP before starting contributions for unsold units and sold units not handed over.

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Establishing a maintenance culture: _

Sir, Members have expressed concern over the weak building maintenance culture in Singapore. I share their concern.

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External windows: _

I have emphasised many times in Parliament this year the danger posed by, for example, falling windows. The Building Control Act has been amended to provide for the Minister to prescribe minimum standards for the design and installation of windows. Existing casement windows in residential buildings are required to be retrofitted with stainless steel rivets. This addresses the upstream safety aspects of design and installation.

Sir, we also need to address the downstream aspects of maintenance to be fully effective in addressing the problem. External windows have been defined as common property in strata developments. This is so that the MCs can have control over window designs, in order to preserve the uniform appearance of building façades for aesthetic reasons. However, with the high incidence of falling windows in the last four years, which again I have highlighted in this House, for example, there were 19 cases in 2000 and, last year, in 2003, there were 106 cases, the rationale for defining all external windows

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as common property and the onus on MCs to maintain them are no longer relevant. A re-definition is needed, so that the most appropriate party is made responsible for window maintenance.

External windows can be classified into two distinct groups:

(a) Those that can be opened, eg, casement, sliding and top-hung windows, and louvres; and

(b) Those that are fixed, eg, curtain walls or fixed glass panels.

The Committee recommends that windows that are openable be excluded from the definition of common property. As the SPs are the ones who have access and control over such windows, they will be made responsible for their maintenance. However, fixed windows remain as common property and, as such, MCs will continue to maintain them. In addition, the MCs will still retain the ability to regulate window designs for uniformity of the building façade.

For consistency, a consequential amendment will also be made to the Town Councils Act to exclude openable windows from common property. These windows will come under the flat owners' maintenance.

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Maintaining exterior features: _

To inculcate a strong maintenance culture, we need continuing public education. We also need to strengthen our legislation. The Committee has agreed to empower the Commissioner of Buildings to prosecute the "person responsible" for failure to maintain the exterior features of their buildings, and thus endangering the lives or properties of others. These exterior features include windows, airconditioning units, wall tiles and any other elements permanently fixed to the external façade of buildings. The

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penalty is a maximum fine of $10,000 or 12 months' imprisonment or both.

The "person responsible" is defined as the person or entity who has charge of the maintenance or daily control of the external features. This means:

(a) Town Councils, for common property in HDB flats;

(b) MCs, for common property in strata developments; and

(c) Owners, for common property of any other buildings or premises.

For openable windows, which are no longer common property, the SPs in strata developments and the flat owners of HDB flats will be deemed as the "person responsible".

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Encouraging greater ownership amongst SPs: _

Resignation of office bearers

Under an existing provision, office bearers in the council (ie, the chairman, secretary and treasurer) are not permitted to resign unless replacements are found. Several representors feel that this is unfair to volunteers, who have to continue in office for many years due to general apathy of fellow SPs. As a result, many are discouraged from coming forward to hold office.

The Committee considers this to be a valid point and recommends that office bearers be allowed to resign, regardless of whether replacements are found. However, the office bearer must first notify the MC of his intention to resign and must convene a general meeting to try to find a replacement. Without replacements, the whole council may be vacated. If this happens, the entire body of SPs will then have to bear responsibility for the management of the

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strata development. Individual SPs will be made jointly and severally liable for the payment of all the MC's debts. If the SPs do not maintain their estate properly, the Commissioner of Buildings will issue a notice to compel them to take corrective actions. A new provision also allows any SP to apply to the STB to compel an election and the appointment of new office bearers.

Sir, this is a reasonable approach as SPs must take ownership of how they want their estate to be managed, including stepping forward to hold office in the council.

Removal of council member on being appointed managing agent (MA)

Many representors are concerned over the discretionary power of the management council to remove a council member, if he is also appointed as an MA.

Sir, the MA's appointment is an important decision that has an impact on all SPs. The Committee has therefore agreed that the termination and re-appointment of MAs be done at a general meeting so that every SP will be aware of the decision. At the meeting, the council member who wishes to be appointed MA will have to declare any conflict of interest.

** Facilitating staged developments - variable initial share values **

The Committee has considered a proposal for developers to be given the flexibility to vary the share value allotted to units in phased or staged developments. Share values allotted in the first stage of such developments usually need adjustments due to changes in the following stages. At present, developers have to get the consent of all purchasers or SPs in order to change the share value. In practice, this is very difficult to achieve.

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This restrictive condition may stifle opportunities for creative developments on White Sites and the upcoming Business and Financial Centre (BFC) at the New Downtown in Marina South. Hence, the Committee has agreed to the proposal to enable developers to better plan and implement mega developments to meet our future demands.

A new provision will allow share value for a unit to be stated within a range of values, to be adjusted according to changes in the later stages of development. Developers are required to let would-be purchasers know these conditions upfront so that they can make an informed decision.

** Other recommendations **

Provision that made failure to pay contributions an offence

Such a provision, making failure to pay maintenance contributions a criminal offence, was removed in the original Bill. This provision is now reinstated following a representation that the threat of criminal sanction is an effective deterrent against SPs defaulting in contributions. MCs are also relying on it to recover outstanding debts owed by SPs.

Statutory presumption of liability for inter-floor leakages

The Committee has heard that in disputes over inter-floor leakages, the fault is usually with the upper floor unit. This is so in the majority of such disputes heard by the STB. Despite this, the upper floor unit owners tend to be uncooperative, and drag on the dispute resolution process unnecessarily. Therefore, the Committee is agreeable to the proposal that the Bill attributes a rebuttable presumption of liability to the

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upper floor unit owner for such cases that are handled by the STB.

Sir, this presumption of liability will make upper floor unit owners more responsive to lower unit owners who have to bear with the inconvenience and distress as long as the leakages remain unresolved. This will facilitate and expedite the resolution of such disputes.

** Lay-person's guide **

Sir, this Bill is highly technical in nature and I am concerned that the lay-person will find it difficult to fully understand its content and implications. Therefore, I have asked BCA to publish a lay-person's guide to highlight the changes in the new legislation and the implications to various stakeholders. The guide will provide interpretation of the various aspects of the new Act, as applied to situations commonly encountered by stakeholders.

** Conclusion **

In conclusion, Sir, this Bill is the result of very extensive consultations with the public at large and with various industry stakeholders for about 1 1/2 years. It addresses the corporate governance of the MCs, as well as the problems arising from differences among the various user groups and stakeholders. The Select Committee is recommending amendments to the Bill, which will no doubt further improve the framework for strata management and maintenance in Singapore.

However, I wish to stress that this will not solve all the problems facing strata developments today. Strata developments are founded on the concept of community living. Individuals own their strata units but share the ownership of common property. Community living requires a certain degree of give-and-take from each resident. He must be aware of his

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responsibilities and liabilities. Ultimately, the SPs and other stakeholders will have to take on greater ownership of their estates and work together to resolve issues for the common good of the community.

Sir, I beg to move.

Question proposed.

Dr Teo Ho Pin (Holland-Bukit Panjang): Mr Deputy Speaker, Sir, I rise in support of the amended Bill.

I wish to thank Minister Mah for agreeing to commit this Bill to a Select Committee. The response from the public is indeed very encouraging and constructive. Sixty-one written representations, coming from various stakeholders, such as developers, managing agents, lawyers, management councils, professional bodies, trade associations, researchers and subsidiary proprietors were received.

Sir, I am pleased to note that the consultative approach adopted by the Select Committee has led to the acceptance of many suggestions as put forward by the representors.

Sir, the amendments can be grouped into three key areas of improvements to the Bill.

(1) Facilitating self-management

Sir, I support the amendment to have better accountability of persons responsible for the maintenance of exterior features, such as external windows. Subsidiary proprietors, who are in control of their external windows, such as those that are openable or with openings, should be held responsible for the proper maintenance of these external windows while fixed external windows, such as claddings, should come under the responsibility of the management

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corporation. In this way, there will be more self-responsibility to ensure that incidents of windows falling from heights will be reduced. This will further enhance safety in our high-rise living environment.

Sir, the appointment of managing agent is a collective decision by all subsidiary proprietors. Therefore, it is important that all subsidiary proprietors must take interest and bear the consequences of their decisions in appointing their managing agents. This is particularly important as managing agents are not regulated in Singapore. As stated in an article titled "Watch who you hire to run your condo" by Ms Tan Hui Yee of the Straits Times on 17th October 2004, management corporations must exercise due diligence when selecting managing agents.

Appropriate tender selection criteria, such as professionalism, quality and track record, should be taken into consideration when awarding managing agent contracts. I would urge subsidiary proprietors to adopt a longer term view, and appoint professional managing agents to enhance the value of their property, instead of always going for the lowest tenderers. The proposed amendment to allow MC to appoint MA for a longer period of up to three years will provide more opportunities for MC and MA to work out plans to better manage their strata developments.

Although some concerns were raised on the two-tier MC system, it will, nevertheless, provide more options and flexibility for subsidiary proprietors to adopt different approaches in managing their strata development, so as to better fulfil the needs of different groups of subsidiary proprietors. However, I would like to urge the Ministry to monitor closely the implementation of the two-tier MC system and evaluate its impact on the standards of maintenance and communal living.

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(2) Balancing the interests of various stakeholders

Sir, to ensure proper management of strata development, it is crucial that developers, managing agents and subsidiary proprietors exercise their duties and obligations diligently and in compliance with the Act. At the start, developers must ensure that proper documents are handed over to the MC so that the MC can manage the strata development properly. I support the amendment that the Minister shall specify the documents that are essential for the proper upkeep of the strata development and shall modify the list from time to time to reflect changes in strata development.

To balance the rights of majority and minority SPs, I support the provision of proportional representation according to share value, subject to a cap of 49% of the council seats. This provides a good check and balance mechanism to prevent undue domination of a single majority SP.

(3) Improving operational efficiency

Various new measures were introduced to further improve the operational efficiency in managing strata management. For example, the removal of the requirement to have 100 SPs to form a quorum for AGM and EOGM will facilitate the conduct of general meetings. Other measures, such as allowing council members to vote in writing and to resign as office bearers, will encourage more SPs to come forward to serve MC and expedite decision-making of the MC.

Sir, a new provision was made to include a statutory presumption of liability to be attributed to the upper floor units in cases of inter-floor leakages. This provision is necessary as inter-floor leakage is common and often results in a stalemate situation when SPs of upper

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floor units refuse to cooperate in repairing the leakage. While the liability is assumed, the cost of repair for inter-floor leakages should be shared equally between the upper and lower floor units in normal wear and tear circumstances. But if the inter-floor leakages could be directly attributed to the actions, such as renovation works of the upper floor units, the upper floor units may have to bear the cost of repairs instead. If there is a dispute between the SPs regarding the apportionment of repair cost, it can be referred to the Strata Titles Board for adjudication.

Sir, I support the amended Bill.

Dr Amy Khor Lean Suan: Mr Deputy Speaker, Sir, in my previous incarnation, I was a real estate practitioner. Although my present work as a mayor cannot be more different, I have not lost my zest and interest in real estate matters. Speaking as such, I am pleased to note that the Select Committee has been receptive to the representations made and have incorporated many of the suggestions into the amended Bill.

The readiness of the Select Committee to refine and, in some cases, even reverse proposed changes to the Bill is very commendable and certainly further evidence of the more consultative approach to policy making this Government now espouses with great vigour.

Of the 27 major suggestions highlighted by the Select Committee in its Report, only seven were rejected outright, whilst the remaining 20 were either wholly or partially accepted, representing a score of 7.4 out of 10,

even better than Mr Inderjit Singh's assessment of the Competition Bill. Indeed, this most recent consultative exercise and the subsequent amendments made, illustrate the importance and value of having thorough consultations on proposed changes to

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legislation or the introduction of new legislation, especially for something that has so wide-ranging impact on our living and working environment. This will help to ensure its effectiveness and efficacy as well as practicality in implementation.

However, the extensive consultations with key stakeholders prior to the drafting of the Bill did not exhaust the flow of comments and ideas during the Select Committee stage. This is not surprising as the legislation is highly technical and complex and impinges on many stakeholders with divergent interests, as alluded to by the Minister. Moreover, the drafters of the Bill may lack the practical experience in the industry to fully comprehend the crux of the issues and problems in the maintenance and management of properties.

Indeed, it would not be an exaggeration to say that many legislation are often highly technical and complex and could have unintended consequences, if not properly drafted or well thought out. I would, therefore, like to urge not only the Ministry of National Development but also other Ministries to actively engage stakeholders and solicit their feedback on proposed Bills, as long as they are not market sensitive, and allow thorough debates on the Bills before they are passed into law to improve their relevance and efficacy.

There are several key issues and concerns that have arisen as a result of some of the proposed amendments which the Select Committee has adopted. I would like to comment briefly on six of these.

First, changes to share value in phased developments. To allow for flexibility that would facilitate phased developments on white sites, such as the upcoming Business and Financial Centre in Marina South, the Select Committee agreed to

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allow share values allotted to units in a phased development to be stated with a range of variation.

Allowing share value in phased developments to be changed within certain prescribed limits and declared upfront by the developer would help to enhance the viability of such large-scale and highly risky phased developments in the face of rapidly changing economic conditions. However, the range of share values should preferably be kept small, otherwise it would be unfair to the first stage owners as there are implications on the early owner's share in the common property, the amount of contributions he has to pay, as well as his voting rights.

The Act does not spell out any guidelines as to how share values are to be given in a range or, when fixed, how is it to be changed subsequently. I propose that the BCA work with key stakeholders to issue some guidelines as to how share values ought to be given in a range, how they are to be adjusted - say, based on a formula - arising from changes in the subsequent phases of the development, and the information that must be clearly spelt out and given to purchasers so that they are fully aware of the implications of possible future changes to the share value of their units. As the chairperson of the Singapore Institute of Surveyors and Valuers, let me state that the Institute would be more than delighted to contribute in this respect.

Second, permitted alterations to common property during initial period. The Bill originally allowed subsidiary proprietors to carry out alterations during the initial period, if they pass a "special" resolution where the votes are based on at least three-quarters of the aggregate share values of the lots cast at the meeting. However, the lots owned by the developers are to be excluded from the voting.

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Written submissions to the Select Committee had highlighted that, if not many units were sold by the developers during the initial period, this could effectively mean that a small number of owners could pass a special resolution that might affect the entire development. For instance, in a 100-unit development where only four units had been sold, a special resolution could be passed by three out of the four owners to make changes to the common property which might not be beneficial to the subsequent owners.

The Select Committee has taken this into consideration and now allows developer votes to be included. However, this change, which is provided now in clause 50, would swing the scenario the other way. If developers hold at least 75% of the votes, they could presumably make alterations to the detriment of the 25% or less of the owners. Alternatively, in a more realistic scenario, they might not make any alterations to the common property which might be beneficial to the owners as a whole so as not to incur additional sums of money or deplete the management fund. Either way, the situation is unsatisfactory.

The purpose of the existing Act in restricting the power of the MC, including making alterations to development during the initial period, is, in fact, to prevent a developer, who may be the majority owner during the initial period, from making decisions which could be prejudicial to the owners or potential owners of the development before the first annual general meeting. Hence, including the lots owned by the developers in the computation of the votes for making alterations to the development during the initial period would defeat the very purpose for which the existing Act, and now clause 49 of the amended Bill, sets out to prevent.

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Therefore, to prevent both scenarios from arising, I propose that we should keep the status quo , ie, the original or existing position before the Bill, where the approval of the Commissioner of Building has to be obtained if the MC decides to carry out any alterations. The COB would then decide on the application of the MC for alterations, after taking into account the owners' and developers' views and interests. This should not be too onerous to the COB in any case, since it is envisaged that such situations would be rare.

The justifications for reverting to the original position would be similar to the basis on which the Select Committee has now agreed to reinstating the offence provision based on feedback that it is an effective deterrent to compel SPs to pay their contributions even though the intention of the removal was to decriminalise minor offences.

Third, resignation of office bearers (Chairman, Secretary and Treasurer). Clause 55 provides that, "Notwithstanding anything in this Act, a person appointed to the office of chairperson, secretary or treasurer of the council of a management corporation shall not resign his office until (a) a meeting of the council is first convened for the purpose of appointing another person to fill his vacancy; and (b) a general meeting is first convened for the purpose of electing another person to fill his vacancy, and any purported resignation or vacation of office in breach of this subsection shall be deemed to be invalid."

This is in response to feedback that the existing provision which does not allow an office bearer to resign, unless a replacement is found, is onerous and unfair. As most people living in multi-unit strata title developments can attest, it is not easy to find well-meaning, responsible men and women with integrity, willing to serve. We should not make it any harder.

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However, the new requirement that a general meeting would have to be convened to elect another person to fill the vacancy would, in practice, make the resignation of any one of the three key office bearers no less difficult and costly. It would be more practical if the Act provides that a general meeting need only be convened if the office bearer or the remaining Council members are unable to find a replacement for the post, say, within a month, after a Council meeting is convened for the purpose of appointing another person to fill his vacancy.

Fourth, period of appointment of the managing agent (MA). Paragraph 57 of the Select Committee's report notes that the appointment of the MA is another important decision that would affect all SPs. Therefore, the Committee agrees that the termination and re-appointment of MAs should be done via a general meeting so that every SP would be aware of the decision. The original Bill had allowed for the MA to be appointed by the council without a general meeting.

Although the Select Committee now agrees that the MA should be appointed at a general meeting, clause 66(1)(b) of the amended Bill still provides that a managing agent may be appointed by the council without a general meeting if duly authorised to do so by the subsidiary proprietors at the last preceding general meeting. This is similar to clause 65(1)(b) of the original Bill and would appear to be contradictory to the current intention for the MA to be appointed at the general meeting to ensure that every SP is aware of the decision.

Additionally, there is an error in clause 66(3)(b) which provides "where the managing agent is appointed under subsection (1)(b) or (c) - by the council of the management corporation without a general meeting". There is no clause 66(1)(c) now as it has been deleted from the Bill.

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Further, the Select Committee agrees in paragraph 71 of its report that MCs could be permitted to appoint the MA for a term of up to three years, which would be comparable to the MAs for Town Councils. Accordingly, clause 66(2)(a) has been amended to state that the MA appointed shall hold office until the conclusion of the "third" annual general meeting instead of until the conclusion of the "next" annual general meeting.

However, the Select Committee also notes that it is important that the MA's performance be reviewed annually and, hence, states that the MA's appointment should be an item on the AGM agenda to be reviewed annually. This requirement seems superfluous since, if the MC wishes to terminate the MA in accordance with the terms of appointment, say, due to poor performance, they could do so at the general meeting. There is no need to mandate that the MA's appointment should be an item for review at every AGM.

Fifth, quorum for general meeting. In the original Bill, the quorum requirement for AGM and EOGM is either 100 SPs or SPs who collectively own 30% of the total share value, whichever is lower. The Select Committee now removes the 100 SPs requirement as a representor had argued that the requirement of 100 SPs at an EGM is arbitrary.

Without this 100 SPs option, for large condominiums with, say 1,000 owners, the quorum required is 300. In practice, this number is not normally achieved. To make this section realistic and practicable, the quorum requirement should not make it so difficult to start a meeting.

The decision making, on the other hand, could be stringent, depending on the seriousness of the subject matters

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discussed (based on the resolutions required). A common attendance at MC meeting is about 50-80; therefore, 100 SPs is a good reference point. Based on the proposed quorum requirement of 30% share value, most large condominiums would be unlikely to start their meetings. They would have to wait for half an hour to start the general meeting. Hence, the section in the original Bill with the 100 SPs or 30% of total share values should be retained.

Finally, accreditation of MAs. Paragraph 69 of the Select Committee report states that the Committee disagreed with the proposal for mandatory accreditation of MAs as this would be inconsistent with the move towards less Government regulation of the industry as a whole. The Committee felt that this should be self-regulated by the professionals themselves. In fact, this is precisely why the SISV-APFM accreditation was established, ie, to provide for self-regulation.

However, it must be acknowledged that standards of practice in the industry are highly disparate precisely because managing agents have never been regulated in any way before. Incidentally, the wide gulf in standards of management agents was also a point highlighted in the Sunday Times article dated 17th October 2004 with the headline "Watch who you hire to run your condo", where the case of a security guard who attempted to secure an appointment as a managing agent was quoted. In contrast, other professions, including insurance agents, are subject to legislation. Indeed, by a strange twist of events, even maid agencies are required to be accredited. But MAs, whose role and function can determine the environment most Singaporeans live in, are not.

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In the recent amendment to the Land Surveyors Act, not only are surveyors required by the Act to be registered, but they now also need to fulfil certain minimum CPD requirements before they can renew their practising certificates. One would presume that this was not seen as being inconsistent with the Government's move towards less regulation of the industry.

With the development of increasingly large-scale and complex developments, the proliferation of more private residential strata developments and the introduction of two-tier MCs, there is a need to maintain some minimum standards of practice among MAs to protect the interests of SPs and ensure the smooth functioning and operation of the Act. Ignorance or lack of knowledge and understanding of property maintenance and management may lead to costly oversight, pose hazards to occupiers and affect the reputation and value of the property.

Whilst the Government appears adverse to legislation for MAs, I hope that it could at least give support for the accreditation scheme by, say, issuing guidelines to MCSTs, that, where possible, accredited MAs should be engaged to manage the development. The Minister would know that even non-statutory guidelines of a purely administrative nature have great persuasive authority. The professional bodies would then exercise control on their members.

As Members of this House would realise, the Select Committee's report is a truly formidable document in weight and technicality of its content, and I suppose that my comments, due to time constraints, are by no means exhaustive. So, I would, in closing, urge the Ministry and BCA to keep the channels of communication open for more feedback to the implementation of this Act.

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With these comments, Sir, I support the Bill.

Mr Mah Bow Tan: Mr Deputy Speaker, Sir, first of all, I would like to thank both Members for their support of the Bill and also for their many useful comments. Let me try to address the questions that have been posed by the Members but not in the order of how they were posed. Let me try and take what I think are the more important and fundamental ones first, and it is the point which has been made by both Dr Amy Khor as well as Dr Teo Ho Pin - the consultation that we have adopted to try and arrive at this point.

Basically, this is a Bill that has got far-reaching implications for many strata title holders in Singapore, as they do have problems with their managing agents. Many people do not come forward to serve for various reasons. And when they do come forward to serve, they do encounter certain problems. So there is a general lack of empathy. And this is the reason why, in the crafting of this Bill, we sought not only to try and address some of the problems of balance of interest between the various stakeholders but also to try and encourage more self-regulation and more involvement of subsidiary proprietors and stakeholders in the management of their estates. That is the reason why we decided to go for this very long consultation process; first of all, an exhaustive process talking to the various stakeholders and then subsequently when we came to Parliament, I accepted the point that was made by Members to commit this Bill to a Select Committee. And then in the Select Committee itself, we again canvassed for a wide range of views and we received a lot of views. More than 60 representations were made and very good representations, I must say.

We then went through the process of hearing the representors. And at the end of the day, many of their suggestions

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were accepted and incorporated as amendments to this Bill. As Dr Khor pointed out, about three quarters of the representations were accepted either wholly or in part. This is a process which the Government has practised in various forms, particularly in Bills which are of a very highly technical nature and also Bills which affect a lot of people. My Ministry will continue to do this for Bills of this nature and I hope to seek the support of Members. In so doing, we will need to spend time sitting through and interviewing the representors and coming to conclusions. But I think it is time that is well worth spending, as Members will agree.

The second important point I would like to address is the issue of accreditation of managing agents. The point has been highlighted, particularly by Dr Amy Khor, on the need for managing agents to be professional. Dr Teo Ho Pin also made the same point. SPs should choose their MAs carefully because MAs are not regulated. Both of these Members understand the current situation. There is a wide range of standards in the industry. There is a wide gulf in the standards between one MA and another. So the question is: who should be doing something about this? My view is that we should continue to encourage the industry to self-regulate. Why? Because I think, first of all, they are the more effective regulators; secondly, they understand the industry better.

There is, in fact, already such a self-regulation system in place. The SISV and APFM both operate a self-regulation system. They have an accreditation system. In addition to that, they have also worked with Government agencies, such as SPRING and BCA, to come up with certain standards for the industry to follow. These standards have been drawn up in the year 2001, the technical reference on performance of managing agents or TR3. Basically, this sets out

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basic requirements for MAs to follow. It serves as a reference for MCs to assess whether their estates are properly maintained. What we can do, of course, is to go to the next step and that is to upgrade this TR3 into a Singapore standard where the industry can then use this as a basis to accredit MAs in Singapore. So this has already been done. The industry has launched a system in December 2003 to raise the standard of professionalism in the industry. I support this move, and I hope that we would be able to do more. But whether the Government should mandate that all MAs must be accredited and to write this into the Bill, I do not think it is necessary for us to do so. I think it is an overkill and I have faith that the industry will be able to self-regulate and there are reputable players in the market who should be able to do this. Again, I come back to my point that subsidiary proprietors and MCs must be able to arrive at informed decisions such that their condominiums and properties are well managed. And if they make the wrong decisions, they will suffer the consequences.

I hope Members will continue to support this approach, work with the Government and continue to promote this self-regulation process and the authorities, BCA and SPRING, will help them in this process.

Dr Teo made several comments concerning two-tier MCs. He basically supported the two-tier MCs but he did also ask that we continue to monitor this process. As I indicated in my Second Reading speech, this is a very new process and this is the reason why we are going to take it in a careful and cautious way. We are not going to back date this to existing developments. We are going to apply this only to new developments. And as we do so, we will also monitor the

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developments closely, as he suggested, and, if necessary, we will make changes as we go along.

On the issue of inter-floor leakages, yes, the reason why we accepted this particular suggestion was a realisation that to be fair, since most of the cases are actually due to the upper floor unit, we should place a rebuttable presumption on them. In other words, it is their responsibility to prove that they are not at fault. That is merely to facilitate the process. The current experience has been that since the upper floor unit is not the one who is suffering the consequences of the leak, there is really no urgency on his part to do anything. So he is the one who would be dragging his feet. He is the one who would not be answering phone calls or answering requests from the MC or the subsidiary proprietor of the lower floor to do something about it. So with this new clause in the Bill, the rebuttable presumption would be on the upper floor unit. The onus is on the upper floor unit to rebut this presumption and prove that the leak is not due to a defect in his unit. Of course, that does not automatically imply that the upper floor unit will have to pay the full cost. It really depends on what each individual case is, and this is where the Strata Titles Board comes into the picture. It is up to the Strata Titles Board to then determine the apportionment of cost depending on the specifics of each case.

Let me hasten to add also that this provision only applies to strata developments, because it relates to disputes heard by the Strata Titles Board. For HDB flats, which are not under the STB, the current arrangement will still apply. In other words, the owners of the upper and lower floor flats would share responsibility in maintaining this party structure. HDB will try and adjudicate and try and resolve the problem to the satisfaction of both parties. Currently,

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there is no plan to change this arrangement.

Dr Amy Khor also made several other points concerning some other aspects of the change. She talked about changes in the share values in the phased developments - whether the range of the share values can be kept small in order to make sure that existing subsidiary proprietors are not disadvantaged later on. I agree with her that we should have some guidelines, and BCA will work with the industry to prepare some guidelines to make sure that there is equity both for the existing as well as for future subsidiary proprietors.

As regards permitting of alterations to common property, this is a question of where we place that balance - how we balance the interest of the owner/developer and the subsidiary proprietors. We feel that with the special resolution, there are sufficient safeguards. We do not wish, if we can help it, to refer everything to the Commissioner of Buildings for such changes to take place. I believe that this is an arrangement which will find its own balance after a while. If there is blatant abuse of the system, then I would certainly expect the Commissioner of Buildings to get into the act.

There were several other points made about resignation of office bearers. Why convene a general meeting to find a replacement? Basically, we want the office bearer who wishes to resign to make the effort to announce to the general body to give notice that he is going to resign, and also to have them put on notice that nobody is stepping forward. They are now able to resign, and the consequence of this is that the individual subsidiary proprietors will have to bear a liability, both jointly and severally. And this liability is something that has to be made known to them, and this is the reason why we require them to convene a general meeting.

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On the issue of quorum, why is the 30% removed? I believe the 30% was removed because there was a representation made that the number of 100 SPs is an arbitrary number. The 30% figure is deemed to be fair. Why do you need 100 SPs? The Committee felt that this was a reasonable point, and this is the reason why we felt that we would remove this.

The last point that Dr Amy Khor made is probably a good point for me to conclude, and that is to agree with her. Yes, it is important that we keep the channels open. I do not believe that this is the last time that we are going to amend the LTSA, although I hope that we do not have to do it too often because this is a very major exercise. The last time we did it, I think, was more than 10 years ago. At that time too, we went through a very major exercise. But the way we have crafted the Bill allows us the flexibility to make regulations that will allow us to continue to keep or preserve the intent of this Bill. And I hope that many of the feedback that we got will allow us to improve the system or process by

changing the regulations.

With that, Sir, I thank Members once again for their very useful and very detailed comments.

Question put, and agreed to.

Bill accordingly read a Third time and passed.