PETALING JAYA, March 5 — The Goods and Services Tax (GST) is only expected to lead to an increase of between three and six per cent in maintenance fees for high-rise property owners, a housing industry expert said today.

Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEP) advisor Wong Kok Soo said only half of the total monthly maintenance fees for flat, apartment and condominium unit owners are from service providers that may charge higher fees after adding on the consumption tax.

“You will not hit 10 per cent, so the public do not have to be overly concerned,” Wong told reporters here today.

Some service providers already charge service tax, which would be replaced by the GST and will result in the total fees going up by less than six per cent, he said.

These service providers are security agencies, property management companies, property management onsite staff, who usually account for 20 per cent, 10 per cent, and 20 per cent of the total fees respectively, according to Wong.

He explained that the Building Managers Association of Malaysia’s estimate last Sunday of a potential 10 per cent hike had included the poor collection of maintenance fees from property unit owners.

For management firms that have avoided bankruptcy with collection rates of 60 per cent, Wong said their operations are “sustainable” albeit with a compromise in services.

He also agreed that a hike beyond six per cent in maintenance fees could be seen as unfairly penalising fee-paying owners over the defaulters’ failure to pay up.

When asked if the GST and the expected maintenance fee hike would lead to more defaulters, Wong downplayed the fears, pointing out that the impact should be measured based on the actual increase.

Wong said the actual increase in monthly maintenance fees could range from RM0.90 to RM3 and RM15 if overall fees go up by three per cent, citing as examples the estimated figures of RM30, RM100 and RM500 for low-cost, medium-cost and high-end units.

“I think it’s still within the affordable space,” he said.

National House Buyers Association secretary-general Chang Kim Loong, who was also present at the press conference, similarly disputed the estimated 10 per cent management fee hike, saying: “To us, it’s a bit exaggerated; it should be three per cent to six per cent”.

Speaking on behalf of four housing industry bodies, Chang suggested that joint management bodies and management corporations engage smaller companies that do not fall under Putrajaya’s GST instead of getting larger GST-eligible companies to provide maintenance services.

Chang also urged joint management bodies and management corporations to pursue defaulters through measures such as legal action and tribunals that will be introduced when the Strata Title Management Act comes into effect this year

“Don’t allow defaulters to go scot-free,” he said,

Both Wong and Chang were speaking at a joint press conference by the HBA, PEP, the Royal Institution of Surveyors Malaysia and the Malaysian Institute of Professional Property Managers on the outcome of a GST meeting with the Ministry of Finance on February 11.

According to Chang, the four groups are expected to get the Customs Department to provide a written response to their list of “Frequently Asked Questions”, with the government department tasked with handling GST to also issue a guideline on the tax for stratified properties.

On February 25, Deputy Finance Minister Datuk Ahmad Maslan said the maintenance fees for residential stratified properties — including people housing projects, apartments and condominiums — will be exempted from GST.

The GST will come into effect on April 1 at a rate of 6 per cent.