Pros and Cons of Strata Landed Properties

Vigneswar Rajasurian of 'PropertyAdvisor.my' gives an insight into the benefits and disadvantages of Strata Landed Properties

Strata schemes are buildings or land that are divided into parcels or boxes and placed under a management system. High-rises such as flats, apartments and condominiums are typical examples of non-landed strata developments. Landed properties, on the other hand, typically fall under individual titles, with the exception of townhouses, which are strata properties as multiple owners share a building.

That said, strata landed developments are increasingly becoming the norm. These days, terrace, semi-detached and detached houses can be found under gated-and-guarded schemes, which target the mid- to upper-income segment.

Strata landed living has its appeals. For instance, Desa Park City in Kepong, Selangor has enjoyed a long-standing reputation as one of the most successful landed strata developments in the country since it was established in 2000.

The benefits of buying landed strata properties include:

1. Statutory protection

Land parcels with strata titles are regulated by the Strata Management Act (SMA) 2013 and Strata Titles Act 1985. Under the SMA 2013, contribution to maintenance fees and sinking funds by all parcel owners in a strata scheme is mandatory.

The act further provides an avenue for parcel owners to resolve their disputes through the Commissioner of Buildings and the Strata Management Tribunal. The latter is a faster, more affordable and practical way of resolving disputes without legal representation, allowing parcel owners the opportunity for quick redress.

It is the better option compared to going to court, where legal fees and processes can be expensive and time-consuming.

2. Greater aesthetics and security

Strata landed properties are generally uniform, which makes neighbourhoods visually appealing. With restrictions on renovations to facades, homeowners can expect their views to remain unblocked and neighbouring properties unchanged through the years.

Since upkeep will be taken care of by a private management body, developers are also able to provide better landscaping and condo-style facilities such as gymnasiums and swimming pools.

Another benefit is peace of mind, thanks to security features such as guards and CCTV cameras located around the perimeter of the development. You can also get extra protection if you opt for a gated community.

Older individual-title developments face hurdles in getting consensus to transition into a gated-and-guarded community, or suffer from freeloaders who don’t contribute to security fees. Strata landed properties avoid these issues from the outset.

Townhouses are considered strata properties as multiple owners share a building.

3. Better management

Strata management bodies are empowered by statute to enact bylaws or pursue payment defaulters.

Under a private management body, neighbourhood streets and parks also tend to be better managed as opposed to relying on the local council.

During the annual general meeting, homeowners can vote on members of the management committee, which can then appoint or replace property management companies or service providers who have not been up to task in the upkeep of the community.

The disadvantages of strata landed living are:

1. Potentially high maintenance fees

As required by the SMA 2013, owners are expected to pay maintenance fees and sinking funds. The more facility-rich and luxurious the neighbourhood, the more they can expect to pay in service charges.

An individual-title homeowner will only be required to pay the mortgage during its tenure, and may someday pass the landed property to their next of kin debt-free.

In contrast, owners of strata landed properties will have to pay maintenance fees as long as the property is in their ownership. Future generations who inherit the home will inherit these monthly payments as well.

Furthermore, maintenance fees will rise over time as the cost of upkeep increases amidst inflation and the facilities or common areas age.

Even more frustratingly, some owners pay maintenance fees but find their neighbourhood has deteriorated owing to mismanagement or poor collection rates.

2. Fees based on land parcel size

Payment of service charges such as maintenance fees is calculated based on land parcel size. Consequently, end- and corner-lot owners pay more due to bigger land size compared with intermediate homeowners.

This applies even if the built-up area of the end or corner lot is the same as the intermediate units.

3. Owners responsible for unit repairs

Owners of strata land parcels expect the managing body to maintain their homes. Unfortunately, they have no right to demand this under the SMA, unlike non-landed residences, where these issues are attended to by the building management.

Hence, strata landed owners pay maintenance fees while being responsible for the upkeep and repair of their own property.

Under a strata title, owners cannot change the facade of the building or extend premises without prior approval from the management committee. (Envato Elements pic)

4. Restrictions on renovation works

Under a strata title, homebuyers are legally considered to have purchased a land parcel and not a landed property. Land parcels are regulated under the SMA, which has strict and comprehensive restrictions on renovation works.

This means an owner cannot change the facade of the building or extend the premises without prior approval from the strata management committee. The facade includes external windows, balconies, terraces, and other visible parts of the building.

Even if you wanted to change the main gate of your unit, you would need to get permission and adhere to management bylaws.

Corner units also come with huge plots of land that can’t be extended upon without the consensus of fellow owners. Since most parcel owners in a strata neighbourhood are for intermediate lots, the owners of corner or end units will often find their efforts in vain.

In contrast, owners of traditional individual-title homes are free to renovate and extend their residences to meet the needs of a growing family, subject only to permits by the local authorities.

5. Fire insurance coverage

In a non-landed strata development, the onus of getting fire-insurance coverage for the entire subdivided building, including individual building parcels, is on the management body.

But for landed strata schemes, such coverage must be obtained by parcel owners.

Despite these limitations, strata landed living is becoming increasingly popular, so much so that it begs the question if individual-title homes will be a thing of the past.

This article was written by Vigneswar Rajasurian of PropertyAdvisor.my, Malaysia’s most comprehensive source of property data, property analytics and insights.