Shine light on high management fees
Homebuyers must be made more aware of exactly how much they will have to pay in charges and whether they are getting value for money
Hong Kong’s skyrocketing property prices are getting a lot of people hot under the collar. No less frustrating are the management fees, payable by either the landlord or the tenant. The amounts charged by some new housing projects can be so high that accommodation is becoming even more unaffordable.
Buyers of a residential project in Yau Tong are understandably dismayed after the developer raised the management fee by 17 per cent just before handing over the units. Originally, they were expected to pay about HK$1,584 to HK$3,409 a month, based on the estimate of HK$3.30 to HK$3.50 per square foot in 2015. But they now have to pay about HK$1,968 to HK$4,235, after the charge was revised to HK4.10 per square foot. Whether a 17 per cent rise in two years is justified is open to debate. The developer maintained that it was reasonable, taking into account inflation and higher staff costs.
More questionable are the fees for some new “nano flats”. For instance, residents of a Kwai Chung block can expect to pay HK$1,065 to HK$1,910 a month in management fees for their units, ranging from 222 sq ft to 398 sq ft. The HK$4.80 per square foot levy is on par with some luxurious projects in Ho Man Tin. The problem was also found in the low-end market. In 2014, some prospective buyers of a government-subsidised housing project on Lantau Island were put off by the management fees, after it was found that they might amount to as much as the monthly mortgage repayment.
Currently, sellers of new flats are required to state clearly how management fees will be calculated and shared by property owners. But as homebuyers have so many things to watch out for, management fees may not feature high on their check list. The fact that new flats are usually sold years in advance of completion means the actual fees may not be finalised until the units are ready. That makes it even more difficult for buyers to budget expenses.
Transparency is therefore essential. Owners and tenants should be made aware of the potential burden. They also have the right to know what they can expect from the management services and decide whether the charge is value for money.