URA Partners with the Hong Kong Institute of Housing to Pilot 'Joint Property Management' to Facilitate the Joint Appointment of a Property Management Company for Old Single Blocks in the 'Lung Shing' Area
Under the existing legal framework, the costs for hiring property management companies must be apportioned according to undivided shares or management shares as specified in the deed of mutual covenant of the building. For single-block buildings with fewer units, each owner bears a larger proportion of the cost compared to those buildings with more units, discouraging them to appoint property management services. Without regular management, buildings may face issues such as fire hazards or deterioration over time.
Although enhancing building facility management standards is not within the mandate of the Urban Renewal Authority (URA), the URA has allocated additional resources and collaborated with The Hong Kong Institute of Housing (HKIH) to trial the "Joint Property Management" (JPM) model under the "District-based Building Rehabilitation Pilot Scheme" (Scheme) in the “Lung Shing” area in Kowloon City. The trial aims to coordinate single-block buildings to co-appoint a property management company, allowing owners to acquire professional management services at more affordable costs. The goal is to improve building maintenance and facility management, thereby enhancing the living environment and improve liveability.
Over the past two years, the URA and HKIH have jointly invited owners from over 20 single-block buildings within the Scheme area to attend briefing sessions and explained to them the JPM model and understand their management needs.
Owners from four of the above buildings expressed interest in trialling the JPM model. As two of them were “three-nil buildings”, namely Dragon Mansion and Kwok Ping House, the team formed by the URA and HKIH first assisted them in the formation of Owners’ Corporations (OCs), then coordinated with Jenford Building and Lung Wah Building, both of which already had OCs, to carry out the tendering process to appoint a property management company.
Assisting OCs and owners in appointing property management companies from scratch
Most of the owners in these four buildings lack experience and knowledge in appointing property management companies, many of whom are elderly or retirees. Despite their good intentions to improve building maintenance and management efficiency, they often lack the ability to do so.
In light of this, the team guided the owners and OCs in managing various tasks throughout the JPM tendering process. This included drafting service scopes, preparing tender documents, setting selection criteria, and offering professional advice on tender interviews and tender analysis. This initiative enabled the owners to select the most appropriate property management company for their buildings.
Compiling a JPM tender template for owners and the property management industry
To cater the diverse needs of different buildings, the team developed a JPM tender template for both owners and property management companies. Unlike existing tenders for private estates or buildings which bundled all management services together, this new template separates services into "basic services" and "optional services".
This approach allows participating owners to exclude services they already have, such as daily household waste collection, while opting for additional services on a user-pay basis. As a result, the monthly fee for "basic services" is more affordable than traditional contracts, thereby reducing the owners’ fixed expenses.
15 property management companies bidded for the JPM contract
In April this year, the team invited property management companies under three property management associations to tender for the JPM service contract, attracting 15 experienced and capable service providers of various sizes. The bidding fees were competitive, with monthly "basic services" fees ranging from around HK$40 to HK$500 per household. The diversity among bidders in terms of company sizes, management experience and fee levels provided OCs and owners with ample choices.
By the end of August, two of the buildings — Dragon Mansion and Kwok Ping House — passed a joint owners’ resolution to co-appoint a property management company, with monthly "basic services" fees slightly over HK$100 per household. The OCs signed a two-year contract with the appointed company, with services set to commence in mid-October. It has been noted that the owners did not take the "lowest price" as their primary consideration; instead, they selected a service provider that is larger in scale, possesses extensive management experience and professionals for building maintenance and management matters.
Owners' participation is the key to the success of JPM
Mr. Fong, the owners' representative of Kwok Ping House, believes that the property management company can effectively provide appropriate services for owners and the OC in four areas: (1) assisting the OC in collecting outstanding repair and management fees, (2) helping the building acquire third-party liability insurance, (3) managing daily building operations and government correspondence, and (4) assisting the OC with emergency repairs.
Of the remaining two buildings that participated in JPM, Lung Wah Building failed to pass the resolution to appoint a property management company in the onwers general meeting and had to withdraw. Meanwhile, the OC of Jenford Building OC decided to retain its current property management company. These instances highlighted that owners’ participation is key to the success of JPM.
The URA team will summarise the trial experience and share it with government departments and the property management industry. By the end of this year, the HKIH will upload the JPM tender template to its website for use by property management companies, OCs and owners.
Cross-district JPM to benefit more aged building owners
With the rapid development of internet services and Internet of Things (IoT) technology, the JPM model will no longer be constrained by geographic boundaries. Technology can connect single-block buildings across various older districts, enabling property management companies to coordinate services for these owners and OCs. This will enable residents of older districts to access high-quality property management services, enhancing both the safety of the common areas and livability of their buildings.