Building Maintenance and Strata Management (Amendment) Bill

Order for Second Reading read.

The Second Minister for National Development (Mr Desmond Lee): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Building Maintenance and Strata Management Act (BMSMA), applies to all strata-titled developments in Singapore. When the Act was introduced in 2005, there were just 170,000 strata units. Today, the number has doubled to 340,000. The number of management corporation strata titles (MCSTs) has also increased from 2,700 in 2005 to 3,400 today.

Strata developments are premised on a unique concept of community-based property ownership. Subsidiary proprietors (SPs) individually own their lots, but everything outside of those lots is shared. This entails collective ownership of common property and joint responsibility for the upkeep of shared areas. In short, SPs need to cooperate and collaborate as they self-govern and maintain their own estates. BMSMA provides the legal framework for them to do so.

From time to time, there have been calls to introduce more prescriptive legislation, particularly to resolve disputes between SPs, to spell everything out in crystal clear detail, with no room for discretion. But this is probably not the best way to proceed, as each development has unique characteristics, including demographic of SPs, size, age, interests and location. It also has its own set of circumstances and concerns. It will be very difficult to have one-size-fits-all legislation that can satisfy all stakeholders in all developments.

So, the Act has been designed to empower MCSTs to manage their own affairs and make decisions relevant to their needs. Ultimately, it is about striking a balance between maintaining the flexibility that underpins self-governance, while having sufficient oversight and structure to prevent abuse of the system. And this is the thinking that underpins our proposed amendments to the Act.

We started a comprehensive review of BMSMA in 2012. The Building and Construction Authority (BCA) held three rounds of public consultations, two focus group discussions and a town hall dialogue, where we received feedback from 1,700 respondents. We also took into account views given through forum letters, emails and other channels. We have considered them and incorporated many into the amendments that are before this House today. For example, one amendment will now require SPs to give explicit consent before they can be nominated and elected into an MCST council. While this may seem so obvious as to not necessitate express legislation, we had received feedback that some SPs had been elected into office without their knowledge. So, the feedback that we received was very useful in helping us to craft this Bill.

Broadly speaking, the amendments focus on three areas: first, setting clear boundaries for good governance and transparency; second, safeguarding SP interests; and third, clarifying existing provisions to facilitate stakeholders' understanding of their roles and responsibilities.

Sir, let me go through some of the key features of the Bill.

First, we want to set clear boundaries, roles and responsibilities to enhance governance and transparency. To begin with, we want to better define the duties and responsibilities of developers. Developers are responsible for the design and construction of projects. But their responsibilities do not end there. They are also key stakeholders during the handing over of projects and after the constitution of MCSTs.

So, under clause 18, we propose to require that developers not only convene the first annual general meeting (AGM), but chair it, too. This is in light of feedback that some developers have devolved the duty of presiding over the first AGM to managing agents (MAs). As a result, SPs often felt that their concerns, such as workmanship defects in their units or common property, were not expeditiously brought to the attention of the developer.

We also want to ensure that the handover from the developer to the MCST is in order. Members may be surprised to know that there have been actual instances where developers transferred over maintenance accounts that were in deficit. So, under clause 17, we will require developers to transfer a positive balance of funds to MCST. This is to ensure that MCSTs should not have to take over deficits that they were not responsible for. In the light of the increasing adoption of prefabricated bathroom units (PBUs), we will also require developers to hand over the manufacturer's manuals to the MCST. This is in addition to other important documents like as-built drawings and warranties. This will help SPs maintain the installations in their lots in future.

After the handover, MCSTs become responsible for governance and management. A large part of this responsibility is vested in the management council. We have received examples where a single council member concurrently holds all three offices of Chairperson, Secretary and Treasurer. Such a situation can lead to poor governance, inadequate checks and balances, and possible conflicts of interest. So, clauses 37 and 40 explicitly prohibit council members from holding more than one of these offices concurrently.

However, we recognise that smaller MCSTs face practical difficulties in getting sufficient people to fill each of these three offices. Hence, we will, under the existing section 134 of the Act, exempt MCSTs with 10 or fewer lots from this requirement, provided they pass a resolution by consensus to permit the council member in question to hold more than one concurrent key office. This exemption will cover less than 5% of existing MCSTs. The remaining MCSTs are larger developments that should be able to find additional council members to take up key posts.

Second, we are adding more safeguards to protect the interests of SPs. One measure in clause 53 will empower the Commissioner of Buildings to place an MCST under official management when there is a failure in the management and operation.

This new section 125A of the Bill stems from our experience with an actual case. There was a strata development which was seriously at risk of falling into extensive disrepair because of disputes between the council and some SPs. The Chairperson, after being ousted, refused to relinquish his position and authorise the newly elected council members as bank signatories. The bank subsequently froze the MCST's accounts so the MCST could not pay its service providers. During this time, the development could not continue with its regular maintenance.

Let me emphasise that placing an MCST under official management is meant to be an interim solution, and the intent is not for the Commissioner to permanently take over the running of any strata estate. Instead, the objective is to ensure that management and routine maintenance are not impeded while internal issues are sorted out.

The principle of strata living remains one of self-governance. So, the bar is set high before this provision can be invoked. A prescribed number of SPs has to make a written request to the Commissioner. The latter must also be of the opinion that official management is necessary, for example, the mismanagement is so severe as to likely jeopardise the health or safety of SPs and occupiers.

Separately, Members would have read in media reports about ‘‘proxy wars" at general meetings where some proxy holders garnered enough undirected proxy votes to dominate proceedings. There was a case a few years ago where three council members held more than 60% of the votes at a general meeting. This allowed them to effectively block attempts to remove them.

Clause 59, therefore, limits the number of proxies one can hold and to introduce directed proxy voting. The First Schedule to BMSMA is amended to set a cap for any one proxy holder at either 2% of the total number of lots in a strata development or two lots, whichever is higher. Any proxy instruments held in excess will be treated as having no effect. There was overwhelming support for this proposal during public consultations. Many respondents felt that this would help rein in abuse and the ensuing spats. As an added safeguard, we will be prescribing an improved form of instrument to appoint a proxy. This will allow the proxy giver to explicitly direct his proxy to vote as he intended. This is an improvement from the current situation where proxy holders are essentially given "blank cheques".

We recognise that these proposals cannot totally eradicate the problem of proxy abuse. Several SPs can theoretically still come together to coordinate and exercise their proxy votes collectively. But again, it is about striking a balance. Abolishing the proxy system would mean that any SP unable to attend general meetings would be completely unrepresented. So, in our view, the 2% cap is a calibrated point between tightening the system and keeping it practicable.

On the issue of fair representation, clause 38 or the new section 53A provides that each class of use in a mixed-use development will be given a reserved seat in the council. Different classes of uses have different needs, so it is important for each to have a "voice". The classes of use include residential, commercial and single independent lot groups like hotels and serviced residences. There was feedback about a residential and retail development where the council was dominated by retail SPs. This resulted in a skewed decision by the council to lease common property cheaply to the retail shops in the development. The facility of reserved seats for each user class will go some way to address over-domination by any one user class and put each group in a more equitable position in managing the MCST.

Another amendment, at clause 15, reframes the requirement in section 18 for developers to seek approval from the Commissioner of Buildings for the maximum rate for maintenance charges it collects. Currently, developers need to seek the Commissioner's approval for maintenance charges, but we do not mandate when approval must be obtained. Often, developers seek approval just before handing over the strata lots to purchasers. We have received feedback that some purchasers were, at the point of sale, misled into thinking that the maintenance charges would be low, only to be shocked years later that the actual charges were almost more than double. The proposed change will support amendments to the statutory forms for Option to Purchase and Sale and Purchase Agreement, which require the approved maintenance charge rate to be reflected. This will ensure that the maximum quantum for charges will be transparent at the point of sale.

Next, we want to strengthen an existing provision to facilitate SPs' installation of safety equipment in their own lots. While an existing prescribed by-law states that SPs cannot be prevented from installing any structure or device that prevents harm to children, SPs are also required to seek the MCST's approval for installations which affect the appearance of the building. There have been cases of MCSTs vetoing SPs' installation of safety grilles on the basis that the designs affected the building's appearance.

With this amendment in clause 26, MCSTs can no longer disallow installations of safety equipment, such as grilles installed at windows or balconies. But a new section 37A(2) will place the onus on SPs to ensure that their installations maintain a certain uniformity of appearance. In this regard, developers and MCSTs are encouraged to provide design guidelines for such installations upfront, to guide SPs in achieving the overall desired appearance.

Third, we will amend some existing provisions for clarity. For example, the Bill will make clear at clauses 2(c) and (i) that "common property" includes shared building services like fire sprinklers and central air-conditioning systems, as well as structural elements like beams and floor slabs, even if they are physically within one lot. External walls, roofs or facades of a building will also be made part of the common property, provided they are being used or enjoyed by occupiers of two or more lots.

The amendment will also make clear that the responsibility for maintenance and repair of such services and structural elements is on the MCST and not individual SPs, unless the individual SPs were responsible for the damage. This is because such services and elements serve more than one strata lot, notwithstanding their physical location within one lot. But I should clarify that defining floor slabs as part of common property will not change the existing presumption clause for strata developments that the upper floor unit is responsible for inter-floor water leakage, unless it is able to prove otherwise.

Related to the management of common property, we will make clear what changes to common property require a special resolution. This amendment was triggered by a recent dispute over an MCST's intent to permanently remove a facility on common property. An SP challenged the MCST's mandate, as the Act currently only stipulates installation and provision of additional facilities as improvement works. The amendment in clause 20 will clarify that improving the common property extends to replacement or removal of facilities and structures on common property or changing the use of common property. All these will, henceforth, require special resolution.

In addition, we propose to make explicit the decisions that require ordinary resolutions. For example, the Act is currently silent on whether determining the amount of maintenance contributions and imposing restrictions on the council can be decided via ordinary resolutions. It was previously considered unnecessary to specify since an ordinary resolution is the default mode for an MCST's decision-making. However, we recognise that providing more explicit provisions will facilitate laypersons' self-governing efforts. The Bill, therefore, makes several amendments to the Act to specify where ordinary resolutions are required for various decisions an MCST can make.

Beyond enhancing the Act, we will help stakeholders to better understand their roles and responsibilities in relation to the self-governing framework. As many SPs find the BMSMA complex and technical, BCA will publish a series of Strata Management Guides covering areas where the bulk of feedback has been received. These guides will clarify the various provisions and provide references for good practices. More importantly, these guides will be presented in clear and simple terms to facilitate understanding.

There will also be targeted efforts to level up the competencies of council members of MCSTs and MAs. First, BCA will continue to hold regular seminars for council members, especially first timers, to guide them on their statutory duties and responsibilities under BMSMA. Second, we will raise the bar for MAs and help MCSTs select better performing ones. To do this, we are working with the relevant industry associations to develop an accreditation framework for MA firms. This will set benchmarks for MA performance. The accreditation framework will also feature a robust competency training component to ensure that MAs can deliver quality service. We will share more details on these plans when ready.

Sir, under BMSMA, all SPs have a say in the management of their estates. This self-governing approach helps to provide a broad and flexible framework that caters to the unique circumstances and interests of each MCST in Singapore. The strata system works well when there are cooperation and commitment from stakeholders. We hope that the proposed amendments will help SPs as they step up and get involved in their respective councils and estates. Sir, I beg to move.

Question proposed.

Mr Speaker: Er Dr Lee Bee Wah.

4.56 pm

Er Dr Lee Bee Wah (Nee Soon): Mr Speaker, one of the great things about public housing in Singapore is that not only do residents have Town Councils to manage their property professionally, but these Town Councils must be held accountable for their actions and expenses. They are also subject to annual Town Council Management Reports to ensure that they are kept on their toes in servicing the residents. In contrast, strata-titled properties get a lot more flexibility in terms of regulations and management. The downside is, this can result in slack and allows inefficiency to set in. Clearly, the amendments to the Bill are in direct response to a series of feedback concerning management woes in strata-titled properties. While strata-titled properties are private properties, the Government has a duty to ensure that the welfare of the people living in these properties are not being compromised.

The Bill is of great relevance to me as there are several condominiums in my Group Representation Constituency (GRC). I have discussed it with residents, management committee (MC) members and others, and I am pleased to use this opportunity to share their feedback. The majority of these amendments are welcome as it is believed that they will do right by the residents and safeguard their rights to the quality of life that they pay for.

Perhaps the most crucial amendment is that it gives strata-title property residents the right to a safe living environment. Concerned that window grilles would affect the seamless aesthetics of a condominium, the installation of such grilles is sometimes disallowed by the MCSTs. This can be a dilemma for those who have young children or elderly members at home. Aside from safety grilles, I hope that the amendment will also be extended to other items, especially in the interest of safety for everyone, such as replacement of windows.

Limiting the use of proxies is a good move to prevent any one person in the management committee from collecting votes and influencing decision-making to their own benefit. In some of the condominiums in my constituency, I received feedback about one or two persons holding many proxy lots. Many residents have been telling me that in one particular condominium, there is a property agent who owns a unit but she does not live in that condominium. But every time when an AGM is approaching, she will go round collecting proxies even standing at the guard house to collect proxies. This enabled her to sway outcomes at the AGM according to her desires even if the decision was, in fact, not a popular one or beneficial to the majority. The amendment will not only lead to a fairer decision-making process but will hopefully encourage residents and owners to be more actively involved in running their own estate.

In another condominium, I was told that there was one person who was the Chairman, Treasurer and Secretary. And with this change, the posts of Chairman, Secretary and Treasurer have to be held by three different persons. This is certainly a welcome move.

As the role of a Treasurer is heavily involved with the management of the finances, it would also be prudent to set some criteria to eliminate unsuitable candidates. Perhaps, the appointee should not have a criminal record, especially if it relates to financial crimes.

Realistically speaking, it would be impractical to enforce mandatory background checks on all would-be treasurers. But it is important to have a treasurer with good integrity and with some knowledge of accounts. One possibility is to ask a prospective appointee to make a declaration whether the person has a criminal record.

It is a fair move to allow rental and charges derived from common property to be placed into the MCST's Management Fund. This should help to create another viable avenue for getting funds for maintenance, thus reducing problems of poor or inadequate maintenance due to lack of funds and the need to raise service fees every year. However, when the rental fees for substantial amounts of common properties to commercial enterprises, such as a food and beverage (F&B) outlet, are involved, it should be a requirement to seek approval from the SPs through a special resolution to channel the money into the fund. And all the transactions on renting out the common property area should be arm's-length dealings.

On approval of maintenance charges before sale launch of the property, this is a welcome move, but it would be even better if the published charges could also include the expenses per share value for three years, taking into account a 3% per annum inflation. Additionally, the estimated time and expenses for the first replacement of lifts, pumps and water tanks should also be made known. This will not only help MCSTs to better manage finances but also give buyers a heads up. Some young buyers, especially, put their deposits on a dream condominium they can barely afford, without taking the monthly maintenance fees into consideration.

If an MA has been appointed for a three-year term, it might seem to be a waste of time and resources to do an annual review on his or her performance during the AGM. However, I believe the reason this was stipulated in the first place is because three years is a long period of time and could breed complacency if there are no reviews in place. A long-time trusted MA would not require such frequent reviews, but there should be an option in every strata-titled property to appoint MAs for shorter terms, such as a one-year term.

Once the MCST has been formally constituted, it is important that the balance of monies transferred by the developer from the maintenance fund to the MCST's bank account be a positive amount. This will ensure a smooth handover without deficit in the account and it would discourage misuse of funds. However, a minimum amount should be considered. After all, a $1 balance is still a positive balance. I am also pleased to note that it will officially be an offence to fail to return relevant documents to the MCST. Often times, developers and MAs hold on to the documents, regardless of whether it is done intentionally or not. Without relevant past records and references, it would impact on the management abilities of the incumbent MCST. I wish to ask if there should be a penalty for failure to return the documents within a stipulated period of time.

I would also like to suggest to go one step further in listing down what are the documents to be handled over from the developer to the MCST. Recently, I have just meditated between the residents and the developers. Because residents wanted to have the mechanical and electrical (M&E) as-built drawings of their unit, but the developers said that they are not obliged to supply, which I am quite surprised to learn. So, it is good to list down what are the minimum requirements, such as as-built drawings, certificates of guarantees and so on.

Transparency pertaining to management matters is important, but so is privacy. The switch to managing data by electronic means will no doubt make matters much more convenient for those involved. Given the rise in cybercrimes, security measures must be in place to prevent data theft. And as it has now become a requirement to display not just the names but also addresses of eligible voters for an AGM, it would be prudent to ensure that the data is not given unnecessary exposure. The duration of display should be stipulated, after which it should be removed. About four hours after the AGM would be a reasonable amount of time.

Online payment modes should also be allowed and encouraged, as they are more convenient for property owners, and it is also easier to keep records of transactions.

Last but not least, I would like to ask for standardisation in the use of either "working days" or "calendar days" because, in the Act, there are "working days", and "calendar days". Mr Speaker, in Mandarin, please.

(In Mandarin): [Please refer to Vernacular Speech.] This amendment will provide more protection for residents living in condominiums, especially with clauses, such as one person cannot hold multiple votes, and that the MCSTs cannot disallow residents to install window grills.

I suggest that upon launching the property, the MCSTs publish the maintenance charges for the first three years. This will give the buyers a heads-up, especially those young buyers who have less savings.

In addition, the Treasurer should not be the same person as the Chairman, and must disclose whether he has any criminal record, in order to better protect the residents.

(In English): Mr Speaker, I support the Bill and I believe it will help to facilitate more fairness and professionalism in the management of strata-titled properties.

Mr Speaker: Mr Yee Chia Hsing.

5.08 pm

Mr Yee Chia Hsing (Chua Chu Kang): Mr Speaker, Sir, I rise in support of the Bill. Amongst other things, this Bill aims to improve the governance and transparency in the running of strata-titled developments. There are three points which I would like to touch on today.

First, one of the proposed amendments is to limit the number of proxies that one can hold. Mr Speaker, Sir, I am concerned that after this, there will be many occasions that the minimum quorum is not met. We have to recognise that many residents are rather apathetic and being appointed as part of the management council is, indeed, a "thankless" job. Right now, the quorum for a general meeting is set at 30% of share values of all lots and, if the quorum is not met within half an hour, the meeting may be held if two or more SPs are present in person. While I understand the necessity for a meeting to carry on, I feel the minimum of just two under the "half hour" rule is a bar set too low.

Mr Speaker, I have two suggestions which I hope the Strata Titles Board (STB) would consider. My first suggestion is that we raise the minimum number of people under the "half hour" rule to 10% of the share values of all lots or two subsidiary proprietors whichever is higher.

My second suggestion is that all decisions made during a general meeting where the 30% quorum is not met are to be put on hold and condominium owners have the right to challenge the decisions. If two or more SPs challenge the decisions within 30 days of being informed of the decisions made, then a new general meeting has to be called.

The second point I would like to talk about is the checks and balances in place for the appointment of service providers, such as the MA or companies that carry out repair and maintenance works for the development. If the MCST members appoint their own companies to carry out service for the condominium, are the prices to be paid for such services reflective of general market rate and will the MCST pursue claims against such service providers if the standard of services delivered is poor?

What are the current regulations or guidelines governing situations where members of the MCST have interests in such service providers? At the minimum, there should be a declaration of potential conflict of interests and SPs who are conflicted should not be able to exercise their votes to appoint their own firms as service providers. However, more can be done. It would be good if there is a requirement for a minimum of three quotes or where they are barred from providing the service.

The third and final point that I would like to bring up is the responsibility of the property developer regarding the appointment of an interim MA. In the early stages after a condominium project's completion, the property developer appoints an interim MA until the first AGM is held. I would like to raise some ground sentiments from new condominium owners that the interim MA is not very effective in pursuing the condominium developer to rectify defects found in individual units and common property.

The impression is that the interim MA is beholden to the developer for its appointment and would wish to be appointed for other condominium projects and, as such, would not be motivated to pursue the developer to rectify defects during the Defects Liability Period (DLP). Usually, the DLP is only for 12 months after the unit is handed over and, usually, by the time an AGM is held and a new MA is appointed, DLP is already over.

Mr Speaker, Sir, I would like to propose that property developers extend their DLP to 12 months after the holding of the first AGM. This would provide enough time for the new MA to rectify any defect which is not resolved by the interim MA.

Sir, with a growing middle class, it is increasingly important that we regulate how a condominium project is managed. I hope STB will consider the issues I have raised today. Notwithstanding my comments and suggestions, I reiterate my support for the Bill.

Mr Speaker: Mr Dennis Tan.

5.13 pm

Mr Dennis Tan Lip Fong (Non-Constituency Member): Mr Speaker, may I congratulate you on your election.

Mr Speaker, this Bill introduces fairly substantial amendments. While I do agree with most of the amendments here, I have some concerns and require some clarifications regarding this Bill.

I will first talk about the suspension of Management Council and appointment of official management.

Clause 53 of the Bill introduces new sections 126A and 126B which confer on the Commissioner new powers to suspend the management council (MC) of the MCST if it is satisfied that the MC is unable or refuses to carry out a duty under the Act that must be urgently carried out to remove any danger to the health or safety of the owners or occupants of the units and for such MCST to be placed under so-called "official management". These are very stern if not drastic measures, potentially threatening the status quo of the management of an MCST.

I would like to ask the Minister what will be the circumstances that the Commissioner will be considering when making a decision to suspend the MC or to appoint an Official Manager (OM)? Will this recourse be abused by minority owners in the MCST who may, for reasons unrelated to the conditions in sections 126A and 126B, be disagreeable with the current management of an estate, for example, rival owners who may have lost out in MC elections or are disagreeable with the current management's plans or management priorities?

I am concerned that the condition stated in clause 126B(1b) is too general and may be open to unintended abuses. Perhaps, the requirements should have been spelt out in greater detail in this Bill, or even in the subsidiary legislation behind the Act, for greater certainty and to prevent abuse.

I next go on to the expansion in the definition of "common property". There is an expanded definition of common property under the interpretation section in the new section 2(c) with four areas, namely, (i) pipes, wires, cables or ducts used or capable of being used by two or more occupiers; (ii) the cubic space enclosed by a structure enclosing pipes, wires, cables or ducts; (iii) any structural element of the building; and (iv) the waterproof membrane attached to an external wall or roof. The amendment also provided five examples.

While the inclusion of the above areas may provide helpful access and management by the MCST and MA, I am concerned whether it will also provide more grounds for misunderstanding or disputes between owners and MCST or MA. There are likely to be cases that may be different from the five examples given and may not fit in clearly to the straitjacket of the four areas in section 2(c).

On the other hand, the new four areas in section 2(c) may create new scenarios where disagreement or dispute may result. Let us take example (d) in the new section. It appears that a fire sprinkler protection system is now part of common property. Owners of an office strata unit may now need MCST's consent to make changes to the fire sprinkler system within their strata unit. And if so, what if an MA or MCST unreasonably withhold consent to the work intended or requires something to be done to the disagreement of the owners for reasons of costs, design or otherwise? Would a renovation not be held up? What are the options open to owners in such a situation if they do not agree with the MA or MCST?

Finally, with the new areas in section 2(c), I am concerned whether or not this may become a double-edged sword for the MCST or MA or even owners as parties learn who will be responsible for what. Some owners may take the opportunity to push the boundary and push certain responsibility to their MCST.

I next touch on the area of imposing budget. A new section 38(3A) imposes upon the MC the need to have the budget for (1) the organising of any social, cultural, educational or sports activities that are for the benefit of all SPs and occupiers as well as (2) engagement of legal services for the MCST, to be placed for approval as part of an annual budget at the AGM. The above two items of expenses are new additions under this Bill and inserted in sections 38(3)(d) and (e). Organising of social, cultural, educational or sports activities is arguably not new to condominiums or private estates as such. Neither is the need for MC to use legal services. However, what is new is the budgetary requirement in section 38(3A), that is to say, the need to have the budget be approved for these items at an AGM. In section 38(3B), a further new amendment proposes that the MC may convene an extraordinary general meeting (EOGM) for approval of budget for unforeseen or urgent expenditure for the same two items. I find this slightly troubling.

First, the need to go to an EOGM for these two items of expenditure may be cumbersome for not just the MC but the residents as well. The attendance of residents in most MCST AGM is hardly ever glowing. If the MC wants to hold a simple event for the residents which was never budgeted previously, it would be put off by the trouble to try and hold the EOGM, not to mention the likely difficulty of getting a quorum. Residents may feel that it may not justify their time. The new measure of requiring the budget to be approved beforehand at the previous AGM may also mean that MCs may resort to the practice of setting aside a kiasu budget which is needlessly larger than necessary and may not encourage prudence. It may stifle attempts by active MCs to constantly come up with new activities to encourage residents to fraternise and also the building up of community relations within the estate. Would this lead to external organisations, whether commercial or statutory, coming up with sponsorships of events for their own agenda, particularly given that budget is always an issue which affects MCSTs?

Would it not be better to have a more general regulation leaving it to owners in each MCST to decide what kind of budgetary constraints or authorisation they wish to impose on their MC? This can be done at AGMs or even through individual by-laws of each MCST. Does the law need to interfere now with this new budgetary requirement?

Next, I would touch on the area of improvements which increase the floor area. May I clarify with the Minister, for the proposed amendments to section 37, specifically the new subsection in section 37(4A) where the MC will have power to require any owners to carry out rectification works in the case of any breach of sections 37(1) and (3), will the MC be able to take action against the current owners if the work was carried out by a previous owner? If the answer to my question is yes, would the owner be able to seek recourse against the previous owners and, if the position on this is unclear, would the Minister consider amending the legislation to allow the right of recourse at least in certain prescribed situations?

Separately, if an action is being taken by the MC under section 37(4A) against an existing owner and such action has not come to an end, will the MC be entitled to file a caveat against the property in case the property is being put on the market? This may serve to protect innocent buyers who may not be informed of the alleged breach or any related action the MC may be taking against the existing owner.

Finally, I touch on the ban on double appointment holders in the MC. The new section 53(9A) prohibits a person from holding more than one appointment in the MC for the following appointments of Chairman, Treasurer and Secretary. While I can understand the rationale for this new rule, I would like to ask the Minister, would the proposed exception that the Minister has just mentioned in his speech be applied in the case of an MCST that is owned by a few owners, for example, just two or three owners?

Mr Speaker: Assoc Prof Fatimah Lateef.

5.21 pm

Assoc Prof Fatimah Lateef (Marine Parade): Mr Speaker, I stand in support of the amendments in this Bill. In fact, it has been some 12 years since the last update.

It is an important Bill, with a significant proportion of our population today staying in private apartments. In fact, there are some 3,400 MCSTs today, a significant number, indeed. The level of sophistication of our property owners today requires the MCs to be more professional, with extremely high governance standards. I have several comments and queries as follows.

Firstly, pertaining to the proxy system, I support its tightening. The guidelines are clearer now with better definition, and these are clearly outlined to avoid abuse and misinterpretations. So, I support that.

Secondly, on the management of inter-floor leakages, there is mention of handling the cases which happen vertically, that is, between the upstairs and downstairs units. However, what about side-to-side leakages, which do happen as well? Can there be some guidelines or advisory on this as well, as I have had to handle a few cases in my constituency and they drag on for a long time? Of course, case-to-case considerations, such as the bathroom or the toilet of one unit adjacent to the bedroom of another unit could perhaps commonsensically assume that it is coming from one particular unit. But there may issues that may arise in individual cases.

Thirdly, for mixed development MCSTs, there are always issues in trying to balance the needs and wishes of the different stakeholders. Even with the allocation of one seat for each property user group, there is still a loophole because the proportion of each type of stakeholders is different. For example, 70%-80% could be residential and 20%-30% could be commercial entities within that development. I noticed that this has brought on a variety of issues as the demands and needs of the different groups vary. That is also why the combination of residential and commercial entities in the same development prove to have some challenges. Are there more innovative ways to handle some of these challenges moving forward?

Fourth, knowing the demands on MCSTs and MC members, it will be very useful and helpful for those elected to have an understanding of the regulatory framework and their commitments under the provision of the Bill.

Is BCA considering making it compulsory for new members elected to attend a course explaining the regulatory framework, roles and responsibilities and other topics which include budgeting, maintenance requirements, use of funds, minute keeping and even conduct of general meetings? This can certainly help the empowerment of council members and ensure they are stepping forward to be nominated as an informed choice. I have organised some sessions informally in my ward whereby BCA and the other agencies are invited to share and respond to queries and doubts. We have had very good feedback from the MCSTs and MAs as well.

I hope the Minister can address some of these issues and clarify the doubts. I support the Bill.

Mr Speaker: Mr Gan Thiam Poh.

5.25 pm

Mr Gan Thiam Poh (Ang Mo Kio): Mr Speaker, I support the Bill. The Bill will greatly improve the management of properties. I want to put on record my appreciation for the contributions of members of the public and various stakeholders who had given their feedback and recommendations over the last few years. We are now benefiting from their collective wisdom. I just have a few more suggestions for the Ministry's consideration.

Firstly, ensuring positive balance transfers of moneys from the developers to the MCSTs is a step in the right direction. However, there remains a possibility that some MAs will not be able to function properly during the first months of the estate's operations or during the transition period from the developer to the MA appointed by the MCST. This may affect the daily maintenance of the development project to the detriment of the residents. It may be more appropriate to require the developer to ensure sufficient balances such that the monies can pay for at least three to six months of estate maintenance and operations.

Next, in addition to the prohibition for a council member to hold the position of Treasurer concurrently as a Chairperson or a Secretary, all councillors should be required to make declarations to ensure there will be no conflict of interest in all appointments of contractors for the estate's maintenance. In some cases, after an open tender, an estate may face a limited number of choices for contractors, some of whom may be related to council members. I would like to ask the Ministry to consider drawing up legislation for such scenarios to protect the residents' rights.

As we see the completion of more development projects, we encounter more cases of dispute between new home owners and developers. From the quality of the finishings to differences between marketing brochures and the final products, many of these cases end up in Court. I hope the Ministry or Commissioner of Buildings (COB) can set up a mediation centre with a panel of industry and legal specialists to look into these claims and provide economical and amicable solutions.

Finally, I would like to make a comment about the use of the management fund. Although the management fund can be used to fund and organise social and sports activities for residents in an estate, it would be prudent to put a cap on such expenditure since its main purpose is for the upkeep of the development project. Residents in condominiums should be encouraged to form Neighbourhood Committees (NCs) whose objective is fulfilling the social needs of the residents, so that the MA can focus on and be primarily responsible for estate maintenance. Both the MA and NC should work closely together for the benefit of the residents while enabling and encouraging individual responsibility. With that, I confirm my support.

Mr Speaker: Miss Cheryl Chan.

5.28 pm

Miss Cheryl Chan Wei Ling (Fengshan): Mr Speaker, with the increasing number of private residential projects and executive condominiums, there is a need to ensure that the interests of residents in strata-title developments, particularly residential, are looked after. Over the years, we have heard of stories related to disputes and legal suits filed because of non-consensual actions and misrepresentations within such developments. Thus, the amendments in this Bill have been long overdue and would certainly provide greater clarity to the rules that can circumvent abuse or mismanagement by the representatives of MCSTs and preserve the rights of SPs.

There are several enhancements introduced in this Bill. I would like to seek further clarifications on a few areas.

First, tightening of proxy system. While the approach of limiting proxy votes is useful to prevent any individuals from garnering proportionately large numbers of proxy votes to influence decisions, how can we ensure that MCSTs do not pass resolutions that may override the benefits of a tightened proxy system? For example, by establishing special subcommittees to oversee or approve certain expenditure projects, the MCST could introduce such committees to enable a separate group to pass decisions or indirectly garner more proxy votes through other options.

Is the new proxy system applicable for all decision matters that need to be passed by MCSTs or only for major decisions during AGMs? If it is the latter, would it not be effective to consider compulsory enforcement of proxy voting, specific to certain categories of estate matters, that is, sinking funds, land strata-related matters?

For smaller developments, for example, the walk-up apartments and mixed development condominiums, I understand that some do not have sufficient members to form a council and thus appoints the Chairperson and two other key members on a rotation basis. Such smaller developments may have fewer common facilities but due to the age of their development and class of use, there is likely a more pressing need for collective decisions to be made in upkeeping the place. I have such condominiums in my constituency and, with age, some of the developments have more residents who are elderly and do not effectively have much sinking funds available. Such disputes arise and there is a need to replace or repair the facilities for safety reasons but it is always opposed by a few members. How can the other SPs seek assistance for intervention to mediate a resolution?

Second, consent of nominees for election as council members. I certainly support this change and feel this should have been the default arrangement when BMSMA was first introduced. Council members are residents of the development and any service they provide to the estate is considered voluntary. It is unfair to have anyone nominated and elected without their knowledge or not of their own free will. The real challenge for many developments is, however, a lack of willing individuals who want to step forward and serve, given the responsibilities and thankless chores within the estate. I would like to know what plans BCA has moving forward if more condo developments encounter the issue of having few or no council members to form a functional MCST?

Third, mandated approval of maintenance charges before sale of units. Under this clause, it requires developers to provide approved maintenance charge in the Sale and Purchase Agreement. The approach is useful in preventing wide disparity between what is committed at sales launches and the actual charge upon Temporary Occupation Permit (TOP). Can BCA elaborate how the Commissioner assesses the proposed maintenance charges are justifiable for the facilities that have yet to be built?

Before issuance of TOP, if the site assessment reflects that the prior approved maintenance charge by the commissioner may be insufficient to cover subsequent maintenance, are the developers allowed to make adjustments, capped at a specified rate, or will BCA request for actions to be taken before TOP? To prevent such risk, should a range be suggested instead to ensure the approved maintenance charge have adequate considerations for facilities under frequent operation or for post-warranty periods?

Lastly, MAs. I would suggest BCA further consider this area for MAs in future. From my discussion with different MCSTs, I understand the current pertinent issue is the lack of professional MA companies and the quality of the MAs that are available in the open market. It would be helpful if BCA could consider the need for MA companies to comply with some basic service standards, staff qualifications and audits conducted on its procurement processes.

Mr Speaker, I rise in support of the Bill and look forward to these amendments bringing about better clarity for some enforceable rules.

Mr Speaker: Ms Joan Pereira.

5.33 pm

Ms Joan Pereira (Tanjong Pagar): Mr Speaker, Sir, I support and would like to congratulate the Ministry for a well thought-through Bill which encompasses the most important updates required for private estate management. I would like to raise a few issues.

First, the Bill seeks to prohibit a council member from holding the office of Treasurer concurrently with the offices of Chairperson or Secretary. I hope the Ministry will take a step further and restrict the maximum number of consecutive terms to two terms any of these three positions which a council member can hold.

A council member should not be the Chairperson for more than two terms but he may run for the offices of Treasurer or Secretary during his third term as council member. Hopefully, such a regulatory requirement would encourage all owners to step forward and participate more actively in the management of their estate. A common complaint is that it is difficult to find volunteers to serve in the MC. However, it is only fair that all the owners of a development do their part and take turns to be council members. They can also encourage their neighbours to join the council as part of a concerted effort to renew the talent pool. Such an arrangement will also minimise the problem of a few owners dominating the management agenda for the estate.

Second, I had received feedback from some condominium residents in my constituency about how certain council members would bulldoze certain decisions through meetings and gain approval for maintenance projects which benefit themselves and their allies.

As MC decisions are usually based on the needs of the majority, small groups with real needs, such as the handicapped and the elderly, may have a hard time gaining approval for certain installations in their estates. I would like to request that for issues concerning safety, security, hygiene and barrier-free-access, such owners be empowered to turn to an external Government agency. Some owners had to take their councils to Court, as we had seen for parents wishing to install safety grilles in their balconies. This process is expensive and laborious. As a result, many residents are deterred from making perfectly reasonable requests. We should empower such residents, particularly the vulnerable elderly, by ensuring that such appeal processes be accessible and inexpensive.

Finally, I would like to voice my support for the amendment which will provide for electronic service of notices in the Bill. This will allow MAs and MCSTs to communicate with all owners and residents expediently, more efficiently and cost effectively. Residents should also be encouraged to submit their feedback, complaints and suggestions likewise. It is in line with our national objective to build a Smart Nation, to tap upon opportunities offered by digital technologies and keep Singapore a leading city. I would like to conclude with my support for the Bill.

Mr Speaker: Mr Melvin Yong.

5.37 pm

Mr Melvin Yong Yik Chye (Tanjong Pagar): Mr Speaker, I stand in support of the Bill. The amendments provide greater clarity to the responsibilities held by MCSTs. However, I would like to seek some clarifications on the Bill.

First, I welcome the new provision to encourage MCSTs to put in place design guidelines for safety grilles to prevent children from falling from heights. However, home owners will be required to ensure that the grilles look aesthetically compatible with the building. I am sure Members will agree that aesthetics is inherently subjective and this could lead to potential conflicts if the design sense of the home owners and the MCST is not aligned. This was precisely what happened in a case that made the news last year, when a condominium resident wanted to install window grilles to prevent his children from falling, but was blocked by the MC. While I can understand that the MCSTs would not want to ruin their building aesthetics with unsightly grilles, I feel that the safety of vulnerable children must take priority. Can the Ministry, therefore, clarify if there can be a clear definition of "safety" for parties to refer to, so that similar disputes can be resolved quickly instead of undergoing a long legal dispute?

Next, I would like to touch on fire safety. It was recently reported that 40 buildings in Singapore, including private condominiums, could potentially have used non-Class "0" composite panels as cladding on their external walls, which do not meet the Singapore Civil Defence Force (SCDF) Fire Code. Two of such condominiums reside within my constituency, and I understand that the cost of rectification is not insignificant. This discovery came about only after an industrial building caught fire in May this year, which claimed a precious life and prompted this review. I would like to ask the Ministry if any lessons have been learnt from this incident so that we can proactively prevent similar fire incidents from happening. Moving forward, would the MCSTs be required to conduct a regular fire risk assessment of their buildings?

Mr Speaker, another costly expense that is crucial to our seniors' safety is the installation of lifts in old private apartments. With a rapidly ageing population, there is a need to look after seniors living in old private apartments without lifts. There are several such apartments in my constituency and, during my house visits, the elderly residents living in the upper floors often tell me that they cannot navigate the stairs and feel "imprisoned" within their own homes. How can the Ministry help these groups of elderly residents? Are there any plans to help install or at least subsidise installation of lifts in such old private apartments, similar to the Housing and Development Board's (HDB's) Lift Upgrading Programme? If left on their own, it is unlikely that the lifts would ever get installed due to the differing interests between the residents staying on the higher floors and those on the lower floors.

Next, I would like to touch on the importance of neighbourliness and the limitations that the MCSTs face currently. My constituency has a large majority of private estates. Recently, I had to deal with a dispute similar to the infamous Astrid Hill rain tree case. In gist, the leaves of the trees planted by one MCST had dropped on the grounds of another MCST. This is a daily affair and arguments often occur over whose responsibility it was to deal with the problem. To resolve such and other similar disagreements, would the Ministry consider setting up a mediation board within a cluster of MCSTs or by districts? This would help to provide a neutral platform for the MCSTs to resolve disputes amicably before resorting to litigation, which could be a costly process.

Mr Speaker, I am strongly in favour of the Bill's intent to improve the governance and transparency of running strata developments. However, I believe that we need to take a step further to specify the composition of MCSTs, which will go a long way towards ensuring that decisions are made with the long-term interests of residents in mind. Are there any selection criteria to be elected as a council member or to hold key positions, such as the chairperson, secretary or treasurer? Should there be a requirement for such council members, especially those holding key positions, to be Singapore Citizens or Permanent Residents? Having some form of minimum criteria to govern the composition of the MCSTs would help safeguard against those seeking to use management rights for personal gains and ensure that decisions made by the council would be most well-meaning for its residents in the long term.

It would also be good to spell out clearly how monies from the management fund may be disbursed. Is there a limit on how much the MCST can be authorised to spend? For example, some residents have expressed concerns to me that legal costs can be enormous when the MCST pursues or defends a legal case. Would there be a limit that requires a vote before the MCST can authorise such an expense?

Finally, why is it possible for the AGMs of an MCST to be held without a quorum? It would be quite a stretch to call such AGMs held in such a manner as transparent when the residents are not well-represented.

Mr Speaker, it is important that we select key appointment holders appropriately as this would impact the MCSTs' governance. Meetings should also be held only when the quorum is met so that decisions will be representative of the residents' interests. I am sure that these efforts to improve transparency and governance will be appreciated by the residents in the long term. With that, Mr Speaker, I support the Bill.

Mr Speaker: Ms Thanaletchimi.

5.44 pm

Ms K Thanaletchimi (Nominated Member): Mr Speaker, Sir, I rise in support of the Bill for it is a move in the right direction to uphold governance and transparency. However, I would like to clarify the following.

The amendment to section 18(1) requires developers to give greater accountability as they are now required to submit a maximum rate of maintenance charges that is pre-approved by the Commissioner. This should result in greater certainty of the costs to the tenants and residents. It could also help ensure that developers act as greater stewards, ensuring better planning and are more careful of incurring any incidental expenditure. Having said that, how is this maximum rate of maintenance charges computed and how often is this reviewed?

Section 37A is a welcomed amendment that helps to safeguard lives and works around past rigidities that building managers may hold. Allowing home owners/SPs flexibility to install safety equipment that does not impact the building's structure is a reasonable change to the law. However, the owners/proprietors must be responsible enough to ensure that only contractors with safety track record are called upon to do such installation for home safety measures and not, when doing so, endangers the safety of others or the condition of the structures could potentially cause damage.

As for section 126B(5), what would be a guideline relating to the remuneration of an OM and how often does the Commissioner review this? It is good that safeguards are in place. Section 126B(4) includes the provision to rectify any foul play that could arise in terms of underpayment or overpayment. This is a positive change and I welcome it.

In the amendment to the First Schedule, clause 17(5) clearly outlines the number of proxy votes one can hold so as to prevent any abuse by a single resident in the estate. This is a rule that is upheld at most professional bodies and this is much welcomed.

Sir, I am, indeed, heartened that changes to the Bill reflect a well-balanced consideration for governance, safety and protection of stakeholders.

Mr Speaker: Mr Louis Ng.

5.47 pm

Mr Louis Ng Kok Kwang (Nee Soon): Sir, I stand in support of this Bill. Better governance and transparency are welcomed in light of the numerous cases brought to the STB and media on disputes involving SPs and MCSTs.

The Bill enhances the self-regulating nature of BMSMA, enabling our citizens to better manage their estates, which can only be a step in the right direction. There are two clarifications I seek.

Firstly, clause 15 amends section 18 of the Act. It now requires the developer to obtain approval from the Commissioner on the quantum of maintenance charges before the sale of any unit. This is a departure from the current provisions of section 18 read with section 16, where, in practice, see developers obtaining approval from the Commissioner just before TOP issuance.

This amendment will provide some comfort to buyers who can better assess their affordability since the property maintenance cost will be more accurately reflected at time of sale. However, a balance has to be sought.

In practice, the amendment means developers will have to project the maintenance charges payable years before property projects are completed. Can the Minister clarify what happens if the maintenance charges have to be increased due to inflation or other costs? In the long run, this will not benefit SPs, if the maintenance charges are insufficient to cover the costs of the MCST running the property or if, on the other hand, it is, in fact, excessive.

Perhaps, the Minister can consider incorporating flexible provisions which allow the rate of maintenance charges, approved by the Commissioner, to be adjusted within a certain range based on market rate at the time of TOP. This means the charges can either be increased or reduced. This range can be provided to buyers in the Sale and Purchase Agreements as well.

Secondly, clause 53 introduces new sections 126A and 126B to the Act. This allows the Commissioner to appoint an OM to manage the estate in instances where there is a refusal or inability of the MCST to carry out a duty when there is a health or safety concern. This is triggered by a written request comprising at least 20% of the aggregate share value of total lots or not less than 25% of the total number of SPs.

Can the Minister clarify how this percentage threshold is derived? Has this been considered in light of the notoriously poor attendance rate during AGMs as reported in the media, which currently requires a quorum of 30% of the aggregate share value of total lots pursuant to paragraph 3, First Schedule of the Act? Presumably, if the 30% quorum can be formed, motions can be passed to resolve disputes and issues without requiring the need to invoke sections 126A and 126B.

Hence, can the Minister clarify how a slightly lower threshold of 20% of the aggregate share value of total lots accompanying a written request serves to provide SPs with an additional remedy in such dire circumstances?

If the rationale is to provide an interim remedy for MCSTs in deadlock facing situations involving health or safety concerns, perhaps the threshold criteria ought to be tweaked such that the Commissioner is provided with discretion and full powers to appoint an OM as long as it is satisfied that there is a health and safety concern. Also, as the other Members have raised, can the Minister also provide further clarifications on the definition of what "health and safety concerns" mean?

Lastly, I want to commend the Ministry of National Development (MND) for the extensive public consultation it has carried out with regard to these amendments. The public consultations and focus group panel dialogues since 2012 are very welcomed and this has engaged and empowered the community. Sir, notwithstanding the above clarifications, I stand in support of this Bill.

Mr Speaker: Second Minister for National Development.

5.51 pm

Mr Desmond Lee: Mr Speaker, Sir, I thank the Members for their comments. Let me address some of their questions.

Sir, Miss Cheryl Chan asked if the revised proxy system is applicable for all decisions that need to be passed by the MCST. The answer is yes. The revised proxy system is applicable for all decisions made at any general meeting, and not just AGMs.

Miss Chan also asked how to ensure that the tightened proxy system is not circumvented. She raised the possibility of a council forming subcommittees to approve and oversee certain projects, thereby making decisions without the general body's involvement. There is a natural check against this happening. While a council can establish subcommittees to oversee projects, the allocation of the overall annual budget is a decision that only the general body can take at the AGM.

Ms Joan Pereira suggested restricting the number of terms for the Chairperson, Secretary and Treasurer. For clarity, the Treasurer has always been limited to two consecutive terms, given the financial nature of the post. This is not the case for the Chairperson and Secretary whose duties are more administrative. I agree that a regular renewal of council Members, especially the leadership positions, is ideal. But the reality is that many MCSTs face challenges in getting sufficient SPs to step forward. So, we need to find a balance between wanting to encourage participation and not creating a larger problem of MCSTs being unable to form a council.

Let me also underline that any SP who wants to serve on a council has an opportunity to stand for election. This is because the Bill requires all council offices to be relinquished for re-election at every AGM.

Mr Dennis Tan asked about the situation where there are small councils with two or three lots. Sir, in my earlier speech, I mentioned that MND recognises that smaller MCSTs will face practical difficulties in getting sufficient people to fill each of the three offices, and so, we will make use of section 134 of the Act to exempt MCSTs with 10 or fewer lots from this requirement, provided they pass a resolution by consensus to permit the council members in question to hold more than one concurrent key office. And this should cover less than 5% of existing MCSTs. So, these are the small ones. Needless to say, in such situations, we will encourage these MCSTs to put in place the necessary governance measures catering to situations where some of these officeholders wear more than one hat, and possibly for prolonged durations of time.

Assoc Prof Fatimah Lateef asked if there are more innovative ways to balance the needs of different stakeholders in mixed-use developments. She felt that the allocation of one seat for each user group on the council may be inadequate because it may not account for the proportion of share values held by each user group. The new amendments reserve a seat so that each user group is represented in the council. But Assoc Prof Fatimah is correct that it does not ensure that each user group is represented in the exact same proportion as their share value would hold. This would be, unfortunately, quite a prescriptive method to ensure that everyone has a "voice" in the council. And this is not to say that SPs of specific user groups cannot step forward in AGMs to make their views known clearly and directly.

Developers are encouraged to design their mixed-use developments under a two-tier management corporation (MC) scheme. This scheme has a main MC for the entire development at the first tier, and subsidiary MC of the individual user groups at the second tier. The sub-MCs can then manage their own needs. For example, they can make their own by-laws and effect improvements to the limited common property which is for the exclusive use and enjoyment of that user group. Each sub-MC will also have a reserved seat in the main council to have a say where the common property is shared with the main MC.

Ms Joan Pereira, Mr Gan Thiam Poh and Mr Yee Chia Hsing touched on the issue of conflict of interest, particularly in the appointment of service providers by MCST councils. Ms Joan Pereira noted that there have been instances where council members would bulldoze certain decisions through meetings for their own benefit, while Mr Gan Thiam Poh commented that all council members should be asked to disclose their interests. Mr Yee Chia Hsing emphasised the need for checks and balances to ensure that service providers are appointed on their own merits, rather than by affiliation to any council member. These are all important points about good governance.

There are existing safeguards in the Act. Under sections 60 and 61, all council members are expected to act honestly and exercise reasonable diligence in the discharge of their duties. Where there is a potential conflict of interest, a council member must declare the nature of his interest. The council member must also recuse himself from the discussion and voting on the matter, if pecuniary interest is involved.

MCSTs can also ensure that their contractual agreements with service providers contain expected levels of performance and/or service quality to facilitate greater transparency and tighter financial governance. MCSTs can also implement internal controls and procedures when selecting and appointing service providers. This could include requiring a minimum number of quotes to be solicited as part of the procurement procedure. To guide MCSTs, BCA's strata management guides, which I mentioned earlier, will highlight such good practices for reference.

Miss Cheryl Chan suggested that we consider the need for MAs to comply with some basic service standards, staff qualifications and audits of procurement processes. Service standards can be subjective and they also tend to vary according to the needs and preferences of different MCSTs. Hence, our sense is that it is better for MCSTs to specify their expected service standards in their contractual agreements with the MAs instead.

But we recognise the importance of having competent MAs. As I mentioned earlier, we are working with industry associations to implement a voluntary accreditation system with the aim of improving the level of competency and professionalism of MAs. The BCA Academy also offers courses covering the strata management framework and the relevant rules and regulations, and we encourage MAs to make use of these training opportunities.

Er Dr Lee Bee Wah suggested that there should be an option for MCSTs to appoint MAs for shorter terms, shorter than three years. Let me clarify that it is already possible. The Act allows MAs to be appointed for terms of up to three years. So, MCSTs already have the option of varying the term of appointment. Of course, both parties would have to agree to the terms. In any case, the MA's performance must be reviewed at every AGM.

Miss Cheryl Chan asked how the Commissioner assesses proposed maintenance charge rates to ensure that they are justifiable, considering that the facilities have yet to be built. While the Commissioner will have a broad sense of what comparable projects are charging, the onus is on developers to provide realistic estimates of the maintenance budget needed. Developers will need to take into account the costs for essential services like cleaning, security, utilities, insurances and maintenance of lifts and other common property. They should project these costs in relation to the development size, amenities provided, and the construction timeframe to factor in possible inflation. Developers can tap on their past experience in building and managing other properties to come up with reasonable estimates.

Developers will also need to submit supporting documents like quotations from service providers and consultants' estimates to the Commissioner to substantiate their proposed rates. The Commissioner will review the documents and compare the proposed maintenance charges with those of developments of similar size and facilities in the same vicinity. The Commissioner may also require developers to submit additional information to justify the proposal.

Mr Gan Thiam Poh suggested that developers should be required to transfer at least three to six months' worth of maintenance funds to the MCSTs, while Miss Cheryl Chan and Mr Louis Ng also asked related questions of what happens when the approved maintenance charges are subsequently found to be excessive or insufficient for the development, as the case may be.

Let me first address Mr Gan's point. The funds to be transferred are the balance of the maintenance charges which the developer has collected from SPs after handing over the keys to the units. The handover period from the developer to the MCST is typically about a year. So, accumulating a balance of three to six months will be quite a challenge. In fact, it would run right smack into the concerns raised by Miss Cheryl Chan and Mr Louis Ng, that there will be questions as to why after collecting fees meant to service a year's maintenance costs, you can have a three- to six-month balance to hand over.

On Miss Cheryl Chan and Mr Louis Ng's queries, the Commissioner actually approves the maximum rate of the maintenance charge. I shared earlier that this approved rate will be reflected in the prescribed Option to Purchase, as well as the Sale and Purchase Agreement forms. This arrangement is the most flexible in meeting the needs of both developers and SPs. If the rates are found to be too high, developers have the option of revising the rate downwards without the need for the Commissioner's approval. If the charges are too low, developers have the flexibility of revising the rate upwards, but this comes with conditions. For example, the developer will need to obtain the consent of all purchasers and seek the Commissioner's approval again on the revised rate. To assess the validity of the developer's proposed revision, the Commissioner can ask for supporting documents like revised quotations from service providers and proof of purchasers' consent. After the MCSTs are formed, of course, SPs can review and revise the maintenance charges at any general meeting.

Er Dr Lee Bee Wah also spoke about the amendment to make maintenance charges known upfront to purchasers. She suggested taking the amendment a step further by making known the maintenance charge rates for the first three years as well as the estimated time and expenses involved for the first replacements of lifts, pumps and water tanks. The maximum rate proposed by developers would already reflect what SPs need to pay on average for the initial years.

It may not be easy for the developers to provide accurate estimates of what it might cost to replace major equipment as replacement schedule would depend on several factors, including usage, maintenance and alternatives. But it is not that it cannot be done. These kinds of capital expenses are financed by sinking fund contributions. So, MCSTs should conduct annual budget reviews to ensure that their sinking funds are adequate for the expected replacements.

Mr Gan Thiam Poh and Mr Melvin Yong spoke about placing a cap on the utilisation of management funds, while Mr Dennis Tan spoke about the fact that the practice of setting aside a budget or the expenditure by MCs, out of maintenance funds for social, educational, sporting as well as legal matters, is already quite common, and he felt that it will be an encumbrance to require general meetings and EOGMs to set the caps on these budgets, and for the MCs to go back to the general meeting to get approval.

Maintenance charges, as the name goes, are intended for maintenance. There are, of course, MCSTs that would use some of this funding from time to time to organise events like festivals and celebrations which bring all the SPs together for bonding. But from time to time, we also hear cases where SPs complain why maintenance charges are being used for things other than maintenance. In fact, this amendment takes a step forward in regularising and facilitating some of these activities that are already happening, and which help to foster within developments a sense of activity and for people to come together. Having said that, it is a good first step to ensure that there is some safeguard on the use and the extent of use of these funds, and it is up to the MC, together with the general meeting and the caucus of the general meeting, to agree on how the budget will be set.

In keeping with the spirit of self-governance, we believe that MCSTs should decide how their common funds are used. Therefore, our proposal requires the general body to decide, as I said earlier, by way of passing an ordinary resolution at the AGM, if they wish to allow funds to be utilised for such activities. As an additional safeguard, MCSTs can also introduce caps on related expenditure to minimise overspending.

Er Dr Lee suggested that the rental fees for the leasing of common property to commercial entities should be channelled into the MCST's management fund, by way of a special resolution. Let me clarify that the Act already requires income derived from the rental of common property to be deposited into the management fund. There are also existing provisions to seek approval from the general body prior to the renting out of common property. The specific level of approval needed depends on the duration of the lease. For instance, 90% resolution is required for the MCST to lease out common property for more than three years. Hence, there is no further need to authorise the MCST to do so by way of a special resolution.

Mr Louis Ng and Mr Dennis Tan asked about the threshold for invoking the provisions to place an MCST under official management was derived. Mr Louis Ng also asked about the rationale for introducing new sections 126A and 126B, if motions can already be passed at general meetings to resolve disputes. Let me address these points raised.

First, the 20% aggregate share value threshold is pegged to the existing threshold criteria for SPs to ask for an EOGM.

Second, while the preference is for MCSTs to resolve their differences at general meetings, this is not always possible even if there is a quorum present. Hence, the new provisions empower the Commissioner to exercise the power to intervene, but only as a last resort.

Third, the Commissioner may decide to appoint an OM if he deems that the disputes have resulted in a lack of maintenance and threatened the health or safety of people living in the development. For example, health concerns might result from the accumulation of refuse, if not cleared. Safety concerns could also arise from disrepair to buildings when maintenance has not been done.

And now to address the concerns of both Mr Louis Ng and Mr Dennis Tan as to the way in which it was crafted, and the manner in which the Commissioner will exercise this power and when he will do so and invoke the power to introduce an OM. It is very important to bear in mind that, keeping with the self-regulating principle of BMSMA, we believe that the Commissioner should only intervene at the behest of SPs of the MCST and as the last resort. Furthermore, there are costs to be borne by the MCST if an OM is appointed. Hence, the decision should remain in the hands of the SPs.

At the same time, we are mindful not to be drawn into disputes and to allow the Commissioner and OM to be used as tools to facilitate the resolutions of disputes between different factions of MCSTs or different factions of SPs. So, the Commissioner will exercise his power sparingly and look at each fact or each circumstance and determine whether the health and safety of the SPs of the estate are, indeed, threatened before they invoke this measure.

Miss Cheryl Chan asked about BCA's plans to address the issue of developments with insufficient members to form a functional MC. We recognise that some councils face challenges in identifying enough SPs to serve. That said, most MCSTs do not face this issue because SPs generally recognise that it is in their interests to be active in managing their estates' affairs.

In cases where no one is willing to be nominated to form a council, SPs will be collectively responsible for the running of the estate. Alternatively, any SP can apply to STB for an order to appoint an MA to assist with the running of the estate. And the MA will report to the general body or general meeting.

On a related note, Mr Melvin Yong asked if there was a need to specify the composition of the council. Our sense is that we should leave the composition and makeup of the council to individual MCSTs and the SPs. Any MCST council is made up of owners who wish to volunteer their time to make their estate a better place. Every SP who steps forward wishes to contribute in some way or other. If SPs are concerned about how representative their council is of the SPs in their estate, then they should be prepared to step forward, serve and be counted.

Mr Yee Chia Hsiang suggested setting a more stringent requirement for the "half-hour rule" which allows general meetings to commence if there is no quorum by the appointed meeting time. While we appreciate the intention behind this suggestion, there is a practical issue, of course, to consider.

The problem is that some MCSTs experience poor attendance. Raising the bar for the application of "half-hour" rule may pose practical difficulties for these MCSTs to proceed with their general meetings. This may be detrimental if there are critical decisions relating to safety or maintenance that need to be made.

We are also mindful that any adjournment of the meetings will incur additional costs for the MCSTs. Having said that, it is open, of course, to MCSTs at the general meetings to decide, and members to decide, whether they wish to carry on after invoking this rule or to postpone it to another day, where more SPs can attend.

Mr Yee Chia Hsiang also suggested putting on hold all decisions made at general meetings where the 30% quorum was not met. SPs would then have a 30-day period to challenge these decisions. The concern is that such a move might be counter-productive as it will open many decisions to review and essentially lengthen the process of decision-making. It could also lead to prolonged discord. All SPs have a stake in the management and maintenance of their developments. So, we hope that they make the effort to attend general meetings or at least appoint a proxy. This also addresses the query by Mr Melvin Yong on why AGMs can be allowed to commence without a quorum. It is about striking a practical balance.

Mr Melvin Yong sought clarification on what constitutes "safety" in the context of "safety equipment" which SPs can install without the MCSTs' approval. This will depend on the purpose of the equipment. For example, grilles, when installed at a balcony, will be deemed safety equipment as they serve the purpose of preventing fall from heights.

Er Dr Lee asked for the definition of "safety equipment" to be extended to cover other items. The proposed definition will cover a host of other items, including balustrades, railings, fences, screens and lock or security mechanisms.

Ms Joan Pereira asked if SPs, particularly the elderly and handicapped, could be empowered to seek assistance from Government agencies directly for matters relating to safety, security, hygiene and barrier-free access. There are already existing regulatory requirements on matters concerning building safety, environmental health and barrier-free accessibility. For such issues, MCSTs can always approach the relevant Government agencies for their assistance. If SPs and MCSTs still cannot see eye to eye, the Bill has set out procedures for the resolution of certain disputes, such as by going to STB.

Mr Dennis Tan also asked about the definition of "common property" which is being amended by this Bill, and his concern about the possibility of engendering further disputes between MCs as well as SPs on what amounts to "common property" and whether they can proceed with their own renovations.

Let me say that the aim of these amendments is to, in fact, clarify and to make clearer and more explicit the definition of "common property". So, I would agree, lawyer to lawyer, that the more definitions you put in has never dissuaded lawyers from helping to create more disputes. But always, we rely on the good sense of SPs and MCSTs to determine and dissolve the disputes amongst themselves and to resort to dispute resolution, including alternative resolutions, or to go to STB if these things stand in the way of a resolution.

Mr Melvin Yong asked if MND had plans to help subsidise lift installations in old private apartments without lifts. There is no specific plan to do so. But these types of MCSTs can tap on BCA's Accessibility Fund if they meet the eligibility criteria. The Fund provides up to 80% co-funding for accessibility upgrading, which could include lift installations. But there is an overall funding cap of $300,000 per development.

Mr Gan Thiam Poh, Mr Melvin Yong and Miss Cheryl Chan asked for dispute resolution platforms to address disputes through mediation, rather than legal action. Specifically, Mr Gan asked if we could set up a mediation centre with industry experts and legal professionals to look into claims and disputes between new home owners and developers. We are happy to say that existing mediation platforms, such as the Singapore Mediation Centre and the Real Estate Developers' Association of Singapore (REDAS) Conciliation Panel, are already able to provide this service.

Mr Melvin Yong suggested having a mediation board to resolve common disputes in MCSTs. For that, we have the STB to hear and resolve a list of MCST disputes. The list includes disputes on costs of repairs and rectifying a complaint in respect of a defect in a lot or common property. Alternatively, SPs may approach the Community Mediation Centre (CMC) when the disputes are between neighbours or with neighbouring developments. If mediation fails, SPs may seek legal advice.

Miss Cheryl Chan asked about the available recourse if there are disputes hampering efforts to replace or repair common facilities for safety reasons. Public safety is crucial. Hence, for safety critical situations involving structural defects in the building or common property, or any health hazard to the development, or if a Notice or Order has been served by any public authority on the MCST to undertake certain works, then the MCST must comply. It has powers under the Act to carry out the required works.

Mr Dennis Tan also asked about the situation where MCSTs take action against SPs in a situation where modifications had been made by previous SPs which were unauthorised changes made to their lots. If the contract for the Sale and Purchase between the SPs follows the terms in the conditions of sales from the Law Society of Singapore, then the new SP has the recourse of referring to adjudication under the Fourth Schedule of the Conveyancing and Law of Property Conveyancing rules of 2011.

This is because the previous SP, who is a vendor to the contract, had undertaken that he has not carried out any unauthorised additions or alterations to the property. So, it depends on the form of contract. Of course, MCSTs may initiate action against the former SP under common law, if it wishes to do so, for any breach of duty and care in relation to duties set out under section 37(3) and 37(4) of the Act.

Building defects are a common subject of disputes. Mr Yee Chia Hsing asked if the DLP could be extended until 12 months after the first AGM. The concern here seems to be with interim MAs being ineffective in helping SPs pursue defects rectification with developers.

But extending the DLP on its own will not address the root problem of poor quality by some developers and contractors. This is something that MND is looking into. Specifically, we are looking at providing home buyers with more information about the track record of developers and contractors with regard to design and construction quality. This will help home buyers make more informed choices. It will also put some pressure on developers and contractors to ensure that they deliver good quality.

Assoc Prof Fatimah Lateef spoke on the issue of water leakage and asked if there could be guidelines to advise SPs on handling such issues. To begin with, the statutory presumption clause, which assumes that the responsibility for inter-floor leakage is with the owner of the unit above, does not apply to cases of lateral seepage.

In the case of inter-floor leakage, the premise is that the floor finishing and/or the underlayment above the floor slab has been damaged, which then leads to water seeping through the slab and into the lot below. While the slab is deemed as common property, its definition explicitly excludes any layer that is the floor finishing or underlayment. Taken together, the leakage is deemed to originate from the strata lot above. Hence, it is the responsibility of the owner of the lot above to either prove otherwise or repair the defect.

But in the case of lateral seepage, the party responsible for repairing the defect would depend on whether the leak originates from the interior of a strata lot or from common property. For example, if rainwater seeps in through an external building wall which is common property, the MCST will be responsible for any necessary repairs.

For good neighbourliness, the relevant parties should first explore an amicable solution by cooperating to investigate and repair the leak. Parties could appoint a Building Surveyor to assist with the determination of the source and cause of the leak. Alternatively, parties may seek recourse through mediation channels like STB and CMC.

Mr Speaker, Sir, I would like to conclude by thanking Members once again for their many thoughtful suggestions, and to members of the public and to the industry who have given us many, many useful ideas and views that have helped us to shape and craft the Bill that you see before Members today.

The proposed amendments to the Act were meant to balance between the necessary regulatory oversight to safeguard the interests of SPs, and an architecture that is flexible and gives latitude to make self-governance possible for MCSTs. These amendments are the result of many rounds of consultation over the last few years and we hope that the proposed amendments will help SPs as they step up and get involved in their respective councils and estates. Mr Speaker, Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Mr Desmond Lee].

Bill considered in Committee; reported without amendment; read a Third time and passed.