Speech on Improving property management and operation of owners

From the 60s and the 70s, Hong Kong’s population started to increase continuously. At the same time, many private buildings were completed. The buildings built back then are now 40 to 50 years old. It is inevitable that signs of age start to appear. Many buildings lack proper management or have no management at all. In a dilapidated state, there are recently many cases of falling concrete injuring passer-bys. These ruinous buildings become the city’s time bomb.

 

To prevent the time bomb from going off, the government urges the formation of Owners’ Corporation to take on the buildings’ management and maintenance. Currently, Hong Kong has around 40,000 private buildings, including which around 17,600 buildings have formed 9,600 OCs together. Every year, around 250 new OCs are formed. After their formations, the management of the buildings subsequently improves. However, because the OCs have a lot of power over the building management as well as the financial source, it is very easy for corruption and management disputes to arise. With the encouragement of government, more OCs are to be formed and therefore, more arguments and issues may come up. The government needs to review the current laws to offer more help to the OCs as well as strengthening the supervision.

The government promotes the formation of Owners’ Corporations, but they have been failing to provide sufficient assistance such as an explanation to the owners of the responsibilities and risks after the OC is formed. The assistance the government has provided so far include setting up District Building Management Liaison Teams and Panels of Advisors on Building Management Disputes and launching the Building Management Professional Advisory Service Scheme. However, there are only 120 Home Affairs Department Liaison Officers to take care of over 40,000 cases of private building management issues; there is no doubt on the low quality of assistance. These officers are most likely overloaded with the average 1,600 cases of building management disputes they get every year. In order to successfully advance the formation of Owners’ Corporations, the government is responsible for providing more comprehensive and more precise assistance. The simplest way to achieve this is to greatly increase the number of Liaison Officers, so that they can directly deal with each OC about their management issues.

The government has always been reinforcing the advantages of forming Owners’ Corporations, in order to encourage owners to initiate formation. But according to local communities, they only gloss over its responsibilities, risks and the possibility of disputes. For the society, the formation of OCs is certainly a good deed, but it is not fair on the dedicated owners, if they are encouraged to be part of an OC without being fully informed of the risks, responsibilities and liabilities. In the recent years, there have been cases where the owners are afraid of legal responsibility and consequently resigned. In my opinion, the government should comprehensively explain the risks and responsibilities involved when promoting the formation of OCs; they should not avoid talking about this only because they worry about it making the owners reluctant to join the OC. What is more important is that, they should help the owners come up with ideas to solve the problems. If the management is done well, the risks which the owners take on are significantly lower.

At present, the government is comprehensively reviewing the “Building Management Ordinance”, in which there are issues that we should pay attention to and we hope the government can further consider them. The current Owners’ Corporations lack effective regulatory, causing corruption and other similar crimes. One of the most important problems is financial issues. The OCs have great control over the finances, which easily causes corruption. An average contingency fund for a building consists of a few hundred thousand to a few million dollars; sizable estates may have tens of millions to billions of dollars. This money is the asset of the owners, but for criminals, this is an extremely tempting target. Should the core members of the OC harbour malice in their hearts, they definitely have the opportunities to attempt corruption. It would also be difficult of the ICAC to investigate. The Home Affairs Department is often in cooperation with the ICAC and hold promotional activities about reliable building management and maintenance, but these activities are limited. During this comprehensive review, I believe the government should further look into supervising financial management or increasing its visibility, in order to lower the risks of corruption.

Another problem which we should investigate is the Power of Attorney. The current laws state that owners may use Power of Attorney during Owners’ Meetings to appoint a representative to attend the meeting and to vote. The government has even prepared a standard format of Power of Attorney for owners to use. The purpose of Power of Attorney is for the Owners’ Meeting to reach the quorum, so that important votes can be conducted smoothly. However, the use of the Power of Attorney is often abused. For example, people who have enough Power of Attorney may win the vote, but the result is not what the owners were expecting, because the representatives did not know how the owners would have voted; or that the owner is an elderly and has absolutely no knowledge on the OC. When the Power of Attorney is used on a personal level, many arguments or manipulation may ensue. Therefore, we should investigate into reforming the system of Power of Attorney and increasing its visibility, in order to lower the chances of disputes. For example, changing the current full authority system to listing particular authorized items, or stating voting for “approve” or “oppose”.

Social sharing