Property Management – A Key Element of Living Well and Ageing Well

In May 2023, the Consumer Council (the Council) published a report regarding property management in Hong Kong. It reveals some key findings on the transparency and governance of private housing estates. Property management plays a crucial role in maintaining the living quality of estate residents. This is, however, not the sole responsibility of property management companies (PMCs) but also of owners in the local context. In multi-owned buildings, ownerships are regarded as undivided shares stipulated in the deed of mutual covenant (DMC). Property owners can participate in estate management matters through multiple channels:

• Owners' Committees (業主委員會) - a non-legal body formed under and in accordance with the DMC. Its powers and duties are stipulated in the DMC. Members will be consulted and give advice to the PMC.
• Owners' Corporations (業主立案法團)) - a legal entity formed under the under the Building Management Ordinance (Cap. 344). It represents all owners, exercises the rights and duties of the owners related to the common parts of the building and can appoint or terminate PMC.

The shareholding of management shares is also specified in the DMC – which forms the basis for calculating management fees. Owners are obliged to pay management fees to main and manage the common parts (e.g. entrance lobbies) and facilities (e.g. fire service installations). It is expected that as residential properties age, management fees will follow a rising trend. Such trend could occur in many buildings, especially given the rapid ageing of buildings. In Hong Kong, there are about 27,000 buildings (including residential, commercial, composite and industrial) aged 30 years or above, with about 34% aged 50 or above (HKSAR Government Press Releases, 2022). Together with an ageing population, there is a more significant concern about how residential buildings shall be maintained and managed to ensure the living quality of senior residents without jeopardising the interests of residents of other ages.??

However, the property management practices may not address the trends mentioned. Based on the study of the relevant complaint cases, sales brochures, DMCs and other relevant information, the Council reveals that the current framework and mechanism governing property management have room for improvement. Some of the key findings include:??

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• Lack of transparency in the rationale of allocation of undivided shares – residents may not have sufficient information to evaluate the fairness of the management liability and expenses they bear;?
• Difficult for individual owners to amend unfavourable provisions in DMCs;?
• Conflict of interest of developers - in some circumstances, they hold a great number of undivided shares through their affiliates, undermining the influence of individual owners;?
• Expectation gap between property management companies and individual owners, especially in terms of handling financial matters and service qualities;?
• Weak owners’ participation in property management matters (lack of involvement in any form of owners' organisations and meetings) together with ineffective communication between owners and property management companies – owners may thus face a greater risk of mismanagement or disputes;??
• Lack of preparedness for financial resources supporting estate maintenance – owners may face a significant risk of bearing great maintenance costs when a major upgrade is required.?

Below are some of the recap of the key findings we concern:

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Happy Ageing Lab is concerned about the findings in the Council’s report. We advocate that property management is vital to the provision of (i) an age-friendly living environment and (ii) prompt and quality services to residents, particularly older adults. It is an essential component of ageing-in-place in the context of private housing estates.??

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Given the shared responsibility of property management and complex mechanism in Hong Kong, there is a need to explore innovative solutions to address the existing loopholes, particularly the last three findings mentioned, which could directly influence the quality of our living environment. Our past and ongoing studies found that

• Owners’ proactive participation and co-management of estate facilities help bring forth quality living to residents of varying needs;
• Property management companies and staff can play a significant role in maintaining residents’ health, especially for older adults, e.g. early detection of dementia symptoms of some older adults by security guards through observation and daily conversation;
• As aged buildings pose great health and safety risks for older adults, incorporating age-friendly design through building renovation and proper budgeting to ensure financial preparedness are essential to maintain quality of the living environment and enable ageing-in-place.??

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Happy Ageing Lab will consider the report findings and continue our advocacy work of building an age-friendly living environment. From time to time, we will share best practices and some of our study insights for idea exchange. We will also soon launch a series of programmes focusing on private housing estates in Hong Kong. Stay tuned!?

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