Headline Things you need to know about residential and commercial-titled

MediaTitle The Edge

Date 09 Jul 2018 Language English
Circulation 25,785 Readership 77,355
Section City & Country Page No CC12,CC13
ArticleSize 1321 cm² Journalist ETHEL KHOO
PR Value RM 68,235

Things you need to know about

residential and commercial-titled properties
K N I G H T F R A N K MALAYSIA RESEARCH & CONSULTANCY

BY ETHEL K H O O (JMB) or management corporation (MC) of

city.country (3blzedge.com
' hen you are out looking for
a high-rise property, be it for
own stay or investment,you
are bound to hear real estate
agents and sales personnel
introducing their products
as condominiums or serviced apartments.
And more recently, small office/home offices
(SoHos), small office/versatile offices (SoVos),
small office/flexible offices (SoFos) and small
office/lifestyle offices (SoLos).
With so many names, what exactly are
the differences between these units? The
answer: the land title.
The title for a condo is residential while
} of its branches
that for a serviced apartment, SoHo, SoVo,
SoFo and SoLo is commercial.
According to Knight Frank Malaysia
Research & Consultancy, buildings with
residential titles are strictly for dwelling and
are regulated under the Housing Develop-
ment (Control and Licensing) (Amendment)
Act 2012 (HDA).
It says properties that sit on commercial
land are zoned for such use, but because ser-
viced apartments are for dwelling and SoHos
can be used for residential purposes as well,
they are also regulated under the Act.
But, did you know that the difference
in the land titles means different assess-
ment rates, utility charges, legal protection
and sales and purchase agreements (SPAs)
(see Table l)?The title also dictates the kinds
of activities that can and cannot be carried
out in these developments (see Table 2).
Must-knows before signing the SPA
Pure commercial properties such as SoVos,
SoFos and SoLos are not protected by the
HDA. Therefore, Knight Frank cautions that
purchasers should check the clauses in the
SPA drafted by the developer's lawyer before
signing it.
There are different building guidelines
for residential and commercial-titled resi-
dences, namely condos, serviced apartments
and SoHos. It is important for the purchaser
to understand his rights and what he is buy-
ing to avoid disappointments.
For residential-titled properties, the
real estate consultancy points out that
the density is lower and the built-up is
larger and, hence, the maintenance fees
Conversion of water and electricity charges
from commercial to residential rate
Electricity (TNB)^y
Steps to follow
• Provide proof that the unit is only
for dwelling
• Contact TNB via email or visit one
• Provide the TNB account number
and address of the unit
• Submit application with the
required documents, namely SPA
and photos of the interior of the
unit
• Pay RM10 application fee (if any)
• Wait for TNB's approval
• Once the application is approved,
sign the contract with the new
tariff rate
*Note: Developments located in different
areas may be subject to different
requirements or fees
1« ?" &
Table 1: Residential vs commercial title
RESIDENTIAL-TITLED
TYPE CONDOMINIUM/APARTMENT
the development is formed, it will help with
the process by collecting the relevant infor-
mation from the owners.
As for the water tariff, developers will not
help in the conversion as it will require them
to convert the commercial land title to resi-
dential, thus affecting the density provision.
However, the JMB or MC may approach Syari-
kat BekalanAir Selangor Sdn Bhd for the rate
£ conversion if the entire development is for
residential use only (see graphic).
For investors who want to rent out their
units for short-term stays via the Airbnb app,
Water
f* (Syabas) ^y
there is a possibility that the JMB or MC will
have a rale that prohibits such activities.
On the legality of Airbnb rentals, Chur
In Kuala Lumpur and Associates managing partner Chris Tan says
Selangor, water bills of this activity remains unregulated. "As long as
some developments are the JMB or MC allows it, the only thing the
issued to the JMB or MC, purchasers need to take note of is the addi-
which will then bill the tional by-laws passed by it."
owners. This is because the However, if the JMB or MC does not allow
bulk water meters have not such activities and there are owners who do
been migrated to individual not abide by this rale, he says under para-
ones. graph seven in the third schedule of Strata
Management (Maintenance and Manage-
Steps to follow
ment) Regulations 2015, the JMB or MC may
• The JMB or MC has to fine the offenders, the sum of which will be
convert the land or master determined at a general meeting.
title to residential use at "When an owner breaches the by-laws, the
the land office JMB or MC can apply for an injunction while
• Go through the process of
suing him for the infringement," he adds.
Some investors rent their units out for a
migrate from bulk to
longer term and there are cases where the
individual meter tenants fail to pay their rent. For those who
• The JMB or MC should wish to evict such tenants,Tan says the pro-
check out the procedure cedures are the same for residential and com-
with Suruhanjaya mercial-titled units.
Perkhidmatan Air Negara "In the event a tenant defaults, the land-
as such developments are lord (owner) may issue a letter to the tenant,
demanding payment within a certain period.
considered on a
Should the tenant fail to pay up, the landlord
case-to-case basis
may proceed to issue a notice of termina-
tion and eviction, demanding the delivery of
vacant possession," he explains.
If the tenant refuses to comply with the
notice, he says the landlord can take legal
action.
Upon obtaining and serving the judge-
COMMERCIAL-TITLED COMMERCIAL-TITLED
SOHO/SOVO/SOFO/SOLO
SERVICED APARTMENT

may be higher.
As for commercial-titled properties, the
planning and provision of privacy and secu-
rity within the mixed-use development such
as level of security at the car parks, entrances
and share of common facilities could be dif-
ferent. The utility and maintenance charges
are higher compared with that of residen-
tial-titled properties.
Purchasers of serviced apartments should
check on the possibility of converting the
utility rates from commercial to residential.
But there must be proof to show that their
units are used solely for living.
Normally,when a unit is handed over, the
owner will have to open an account with
Tenaga Nasional Bhd to get electricity sup-
ply. As each unit has its own account, indi-
vidual owners will have to approach TNB on
their own to apply for the rate conversion
(see graphic).
There are cases, though rare, where the
developer will get the conversion done
before the handover. However, it is more com-
mon that after the joint management body
Use of building • For dwelling only • For dwelling only • SoHos can be used for dwelling and/or
• Development may comprise commercial business* purposes
components such as retail units, offices and • SoVos, SoFos, SoLos are not designated for
hotels dwelling
• Development may comprise other
commercial components such as retail units,
offices and hotels
• Note: Approved businesses only
• Assessment fees and utility charges are
Utility rates, • Assessment fees and utility charges are at • Assessment fees and utility charges are
domestic rate at the commercial rate (higher than the at the commercial rate (higher than the
taxes and fees
• 'Once-in-a-lifetime' RPGT exemption residential rate) residential rate)
• 'Once-in-a-lifetime' RPGT exemption • Not entitled to the 'Once-in-a-lifetime'
RPGT exemption with the exception of
SoHos, which fall under the HDA
Legal protection • Under the jurisdiction of the HDA Do not come under the jurisdiction of the
&SPA • Use the standard SPA regulated under the HDA HDA. Disputes will be settled in the courts
• The homebuyer(l) can bring disputes to the Tribunal for Homebuyer Claims based on the SPA signed by both parties
As SoHos fall under the HDA, purchasers can
bring disputes to the Tribunal for Homebuyer
Claims
Density(2) • Lower density • Higher density
*Note:
(1) For the purpose of this port, "homebuyer" means the purchaser and includes the person who subsequently purchased the housing accommodation from the first
purchaser (Source: HDA)
(2) Manual Garis Panduan & Piawaian Perancangan Negeri Selangor Edisi Ketiga
 Headline Things you need to know about residential and commercial-titled
MediaTitle The Edge
Date 09 Jul 2018 Language English
Circulation 25,785 Readership 77,355
Section City & Country Page No CC12,CC13
ArticleSize 1321 cm² Journalist ETHEL KHOO
PR Value RM 68,235

TABLES BY K N I G H T FRANK MALAYSIA RESEARCH & CONSULTANCY

list utility rates and the density.

"Condominiums and apartments come
with parking bays, but for commercial prop-
COMMERCIAL-TITLED erties, developers are not specifically required
SOHO/SOVO/SOFO/SOLO to provide them," he says.
What you • Use the unit for dwelling Use the unit for dwelling SoHo But location-wise, commercial-titled resi-
can do • The homebuyer* can bring disputes to the The homebuyer* can bring disputes to the Use the unit for dwelling and/or business dences are usually more strategically located
Tribunal for Homebuyer Claims Tribunal for Homebuyer Claims purposes in city centres.
• Claim for defective workmanship from the Claim for defective workmanship from the The homebuyer* can bring disputes to the Knight Frank concurs, adding that con-
developer during 2 4 - m o n t h defect liability developer during 2 4 - m o n t h defect liability Tribunal for Homebuyer Claims dos, apartments and serviced apartments are
period period Convert the electricity tariff to residential
entitled to a "once-in-a-lifetime" exemption
Convert the electricity tariff to residential rate (subject to approval)
rate (subject to approval) SoVo/ S0F0/S0L0
on Real Property Gains Tax.
Use the unit for business purposes Serviced apartments, SoHos, SoVos, SoFos
and SoLos are usually a part of mixed-use de-
What you Carry out business activities or set up an office S0V0/S0F0/S0L0
cannot do Use the unit for dwelling
velopments and are more appealing in the
Bring disputes to the Strata Management rental market.
Tribunal "SoHos,SoVos,SoFos and SoLos are smaller
*Note:
units and the absolute purchase price may
be lower," says Knight Frank.
For the purpose of this part, "homebuyer" means the purchaser and includes the person who subsequently purchased the housing accommodation from
the first purchaser
However, SoVos, SoFos and SoLos are not
regulated under the HDA, so there is no
standard SPA. "As such, purchasers cannot
ment on the tenant and should he refuse the seller of the property is the legal owner Should a purchaser buy a completed prop- seek legal redress through the Tribunal for
to move out, the landlord can file for a writ and he or she is still solvent.They should find erty, he must be satisfied with its condition. Homebuyer Claims. Instead, arguments can
of possession and the court bailiff will go out the restrictions and conditions of the If the purchaser notices any default, a repair be brought to court and the judge will rule
to the unit and evict the tenant by way of particular property's title and make sure the request must be made to the vendor before based on the SPA signed by both parties,"
forced entry. constructed or to-be-constructed property the handover. says Knight Frank. It adds that there will
When one buys a residential-titled unit complies with them. be no RPGT exemption if these properties
from a developer, Tan says the agreement as He says it is important to make sure that The pros and cons are sold within five years.
prescribed in the HDA shall be adopted. "Take the title is free of caveats and complications. According to LaurelCap Sdn Bhd executive So, these are the important things one
note that the developer should have a valid "If there is a charge,get the vendor to confirm director Stanley Toh, the main difference should know before deciding to buy a
licence and an HDA account." that the redemption sum is lesser than the between commercial-titled residences and non-landed property to avoid unnecessary
He says purchasers must be certain that purchase price." residential-titled residences is the lower consequences and disappointment. •