International Journal of Housing Markets and AnalysisMulti‐owner low‐cost housing management in Malaysia: Effects of owner‐occupantcharacteristics and occupancy ratesNor Rima Muhamad Ariff Hilary Davies

Article information:To cite this document:Nor Rima Muhamad Ariff Hilary Davies, (2011),"Multi#owner low#cost housing management in Malaysia",International Journal of Housing Markets and Analysis, Vol. 4 Iss 3 pp. 268 - 289Permanent link to this document:http://dx.doi.org/10.1108/17538271111153031

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Multi-owner low-cost housingmanagement in Malaysia

Effects of owner-occupant characteristicsand occupancy rates

Nor Rima Muhamad Ariff and Hilary DaviesSchool of Architecture and Building, Deakin University, Geelong, Australia

Abstract

Purpose – Homeownership is considered both economically and socially beneficial for homeowners.However, in the collective living arrangement, reaching a consensus with regard to the residentialenvironment is difficult. The purpose of this paper is to identify factors that can reduce the conflictamong the stakeholders in multi-owner low-cost housing in Malaysia.

Design/methodology/approach – This study tested three hypotheses examining whether thedemographic and socio-economic characteristics of owner-occupants and occupancy rates affectowner-occupants’ satisfaction with stakeholders’ relationships. Data were collected throughquestionnaires from owner-occupants of multi-owner low-cost settlements in Selangor state. Dataon housing characteristics were collected from chairpersons of the respective owners’ organisations.The data were treated as parametric, and analysis of variance was conducted.

Findings – Four factors – number of children in the family, duration of residency, participation insocial activities and participation in meetings – were found to affect owners-occupants’ satisfactionwith the stakeholders’ relationships. The significant effect of occupancy rates was also indicated.

Practical implications – The Management Corporations (MCs) should encourage socialrelationships among residents. To avoid conflict, the costs and benefits of participation must bebalanced. Policy makers should take two key aspects seriously: owner-managed strategy practices bythe MCs and high rates of tenant-residents. A mechanism should be identified for assisting the MCs inhousing management and for protecting the benefits of homeownership for owner-occupants.

Originality/value – Past studies on low-income household settlements examined public housing orlow-income homeowners of single detached dwellings. This study adds to the existing body ofknowledge by examining low-income homeowners in multi-owner low-cost settlements.

Keywords Homeownership, Housing management, Low-cost housing, Malaysia,Stakeholders’ relationships, Private ownership, Income

Paper type Research paper

IntroductionMulti-owner low-cost housing is the main strategy adopted by the MalaysianGovernment to assist urban low-income households to become homeowners. The term“multi-owner low-cost housing” refers to affordable units that are sold to low-incomehouseholds. The settlement is multi-storey and inhabited by more than one household.The standards and prices are controlled by the Malaysian Government under theadministration of the Ministry of National Housing and Local Government, through theNational Housing Department.

The existing residential property stock as in Q4 2009 shows that 43.8 per cent of thenational low-cost housing stocks are multi-storey development projects. At the statelevel, the proportion of multi-storey low-cost houses exceeded that of low-cost houses

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Received 15 February 2011Accepted 28 February 2011

International Journal of HousingMarkets and AnalysisVol. 4 No. 3, 2011pp. 268-289q Emerald Group Publishing Limited1753-8270DOI 10.1108/17538271111153031

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(landed property) by 70 per cent in urbanised states such as Selangor, Pulau Pinangand Kuala Lumpur (Valuation and Property Services Department, 2010, p. 5).

From squatter and slum areas, people move to multi-storey multi-owner low-costhousing environments where they share walls, floors, ceilings and hallways as well ascommon facilities and services, such as lifts and playgrounds. Owning a home in amulti-storey residential building requires that every aspect of the residentialenvironment be determined collectively by the residents. However, mismanagement isa major barrier to success when a consensus cannot be reached (Muhamad Ariff andDavies, 2009). If housing management is considered a low priority, there is no doubt thatthe residential environment will start to resemble the slums that these housingsettlements were meant to replace. Therefore, this study aims to provide insight into thecurrent practice of housing management for multi-owner low-cost housing in Malaysia.

This paper addresses two gaps in the literature on homeownership and housingmanagement. First, despite the fact that the well-being of low-income households hasreceived significant attention from the government and researchers, the issue of theirresidential environment remains largely unexplored, particularly in terms of housingmanagement. Previous research on multi-owner housing management has often beenfocused on upper market housing, while research on affordable housing managementmainly related public housing.

Second, while many studies have examined the conflicting relationship among thestakeholders that consist of the residents (including both owners and the tenant-residents),the owners’ organisation and the managing agents in housing management (Blandy et al.,2006; Budgen, 2005; Chen and Webster, 2005; Easthope and Randolph, 2009; Lim, 2002),few have examined the effects of the demographic and socio-economic characteristics ofowner-occupants and the occupancy rates of the settlements on the satisfaction ofowner-occupants with the relationship among stakeholders.

To reduce the conflicting relationship between the stakeholders in multi-ownerlow-cost housing management in Malaysia, this study has two aims. The first aim is todetermine empirically:

. the characteristics of multi-owner low-cost housing settlements in Malaysia,particularly settlements that have been issued the strata title;

. the housing management practices; and

. the demographic characteristics of owner-occupants.

Currently, no empirical data are available on these topics and therefore it is vital toobtain this information before any recommendations for improvement can be made.The second aim is to determine whether homeowners among low-income households ofmulti-owner low-cost housing could sustain their living environment. To achieve thisaim, this study investigates the effect of the demographic and socio-economiccharacteristics of owner-occupants and occupancy rates of the settlements onowner-occupant satisfaction with the relationship among stakeholders, namely,owner-occupants, the owners’ organisation and managing agents.

The paper begins with a review of homeownership benefits and housingmanagement. This is followed by reviews of the impact of the homeownershipbenefits on housing management. Then, data collection is discussed, and the effects ofselect demographic and socio-economic characteristics of owner-occupants and housingare tested. Finally, the paper concludes with a discussion of the results and implications

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for management and policy makers to improve the housing management of multi-ownerlow-cost housing in Malaysia.

HomeownershipPreference for homeownership over renting is an important deciding factor in housingpolicy (Saunders, 1990). Policy makers and researchers have argued thathomeownership contributes positively to an individual’s economic, social andpsychological status, which in turn improves the economic and social stability of thecountry. In terms of the economic benefits, homeownership creates real estate activities(Galster, 1987). Homeowners are also expected to have an interest in both goodsconsumption and investment (Galster, 1987; Rohe and Stewart, 1996; Saunders, 1990).In social psychological terms, homeownership is a status symbol in society(Megbolugbe and Linneman, 1993), and it contributes to family pride, self-expressionand security and improves how a family views its status. Homeowners are also freefrom the pressure imposed by landlords and have greater control over their property,which is not true in the case of tenants (Galster, 1987; Rohe and Stegman, 1994). Thisgreater control over one’s residential environment can lead to a greater sense of controlover life itself (Saunders, 1990; Wekerle et al., 1980).

Homeowners are likely to value their house and amenities more highly than renters(Rohe et al., 2001), and they are more likely to both maintain and improve their homes(Saunders, 1990). Further, this behaviour is influenced by social interactions in thecommunity and surrounding neighbourhood (Galster, 1987; Rossi and Weber, 1996).In contrast, renters are less attached to their homes and seldom engage in renovationand refurbishing. The main reason for this is that once they leave the house, they canno longer enjoy the benefits of the improvements (Galster, 1987; Saunders, 1990).Homeowners’ interest in maintaining the economic value of their home is thought tohave a social impact because it leads to a higher level of participation in local voluntaryorganisations and political activities and creates emotional attachment to theneighbourhood (Rohe et al., 2001; Rossi and Weber, 1996).

Owing to the stake they have in their homes, homeowners are far less likely to moveout compared to tenants (Rossi and Weber, 1996). They tend to spend more time andmoney on their homes and hence, the possibility of residential mobility is reduced.The high transfer costs associated with buying and selling homes versus the lowertransfer costs for terminating a lease agreement may affect homeowners’ decision (Cox,1982). The consequent decrease in residential mobility contributes to neighbourhoodstability, which is likely to provide better neighbourhood “health” and boost propertyvalues (Rohe et al., 2001).

Most work on the benefits of homeownership has concentrated on single detachedlow-rise dwellings. Are the determinants of homeownership influenced by the type ofresidential dwelling? Is the behaviour of the homeowners of single detached dwellingssimilar to that of those who own homes in multiple-unit dwellings? Glaeser andSacerdote (2000) found that owners of apartments (five to nine units) and largeapartments (more than ten units) are less involved in local politics than owners of homeswith fewer units but are more likely to be socially connected with their neighbours.

On the basis of the above review, this study argues that the positive benefits ofhomeownership are not necessarily realised through multi-storey residences.As Wekerle et al. (1980) argued, even though homeowners are free from

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the control of landlords, the social psychological benefits are difficult to realise in thecase of multi-storey residences since owners still have less control.

Housing managementIn contrast with single owner-occupied dwellings where the homeowner has controlover the property, multi-owner dwellings necessitate community action and theconsensus of all residents (Lau, 2002). There is a clear distinction between individualand common elements. Ownership involves responsibility for common property (areasand facilities), and some kind of organisation is required to manage the commonproperty (Lau, 2002; Yip and Dalholm, 2006; Yip and Forrest, 2002). This point hasreceived considerable attention because of the complexity associated with a resident’sparticipation and collective action, both of which were indicated to affect housingmanagement (Budgen, 2005; Christudason, 2004; Encon, 2005; Muhamad Ariff andDavies, 2009; Randolph, 2006; Walters, 2002).

The interests of unit owners are represented by owners’ organisations[1] such asOwners’ Corporation in Hong Kong, Body Corporate in Australia and ManagementCorporation (MC) in Malaysia. Once the organisation has been established, thecommittee and members (representatives of all unit owners) can decide on housingmanagement processes and strategies. The committee and members can directlymanage (owner-managed) the property or appoint a managing agent as a third party toact on behalf of the owners’ organisation. If they opt for direct management, thecorporation is entirely responsible for all aspects of housing management andmaintenance (Wekerle et al., 1980).

However, getting unit owners involved in housing management is a challenge.According to Mancur Olson’s group theory, participation involves the costs and benefits ofboth the individual and the group. However, an individual might have “personal interests”that contradict those of others, and this could hinder his/her participation in or support forthe organisation. Collective action will only be initiated and sustained if every participantfinds it beneficial (Olson, 1971). Although owners’ organisations are considered the besthousing management structure for controlling the constant conflicts of interest bybalancing the interests of all involved (Liias, 1998), the lack of participation from unitowners has been cited as the main barrier to the success of such owners’ organisations.

Malaysia has a system known as strata development, wherein any unit sold to anindividual purchaser must be given a document of ownership known as a strata title(Ministry of Housing and Local Government Malaysia, 2008, p. 5). The unit owners arerepresented by the MC, which is the proprietor of the common property andthe custodian of the issues of documents related to the title of the lot where the buildingis situated. The power of this body corporate and the members is circumscribed by:

. The Strata Titles Act (Act 318) 1985 modelled on the New South Wales StrataTitle Act 1973. This act deals with the application of subdivision, registrationand issuances of titles and provides a system for strata scheme management(Legal Research Board of Malaysia, 2007).

. The Building and Common Property Act (Maintenance and Management) 2007(Act 663). This act supplements the Strata Title Act with regard to unjustifiedscope and responsibilities of the stakeholders and implementation (Ismail, 2007).This act is applicable through the vacant possession stage by the developer untilafter the establishment of the MC.

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The formation of the MC for low-cost residences does not come into existenceautomatically with the registration of the strata title, unlike in the case of thenon-low-cost housing category. The original proprietor or the developer is giventhe responsibility to manage the building while the establishment of the MC is awaited.The MC may be formed under two circumstances:

(1) upon the receipt of the strata title for all the purchased parcels or after morethan half the total units of all parcels have been transferred and an applicationmade to the Commissioners Land and Mines (CLM) for an order that the MC beestablished; or

(2) as ordered by CLM when the CLM is satisfied that the original proprietor hasfailed to discharge his duties satisfactorily or there is a valid reason to supportthe application by the original proprietor (Ministry of Housing and LocalGovernment, 2008, p. 10).

Once the MC is established, the right and responsibility to maintain and manage abuilding with common properties are similar to those of buildings from thenon-low-cost category.

Ownership of multi-owner low-cost housing in Malaysia makes sense because itsatisfies the demand for homeownership while keeping the cost of entry low. However,can homeowners in multi-owner low-cost housing units sustain the homeownershipbenefits gained? In collective living arrangements, some of the benefits need to becollectively sustained by unit owners through housing management. The followingsection reviews the relationship between homeownership and housing management inthe case of multi-owner housing.

Homeownership and housing managementDiscussion on homeownership demonstrates the connection between homeownershipand property improvement. Further, previous studies have also examined therelationship between homeownership and neighbourhood attachment, which has beenshown to influence homeowners’ satisfaction with the neighbourhood, expectations ofthe neighbourhood’s future, social interaction, participation in the organisation anddecision making regarding upkeep (Cox, 1982; Galster, 1987; Rohe and Stegman, 1994;Rohe and Stewart, 1996; Saunders, 1990). However, whether homeownership in acollective living environment generates positive or negative outcomes has not yet beenstudied, especially in the case of low-income households.

While homeownership is the main goal, property management is crucial to preventthe building’s condition from deteriorating and to ensure that the building is safe,secure and comfortable for habitation (Encon, 2005). The significant relationshipbetween homeownership and property improvement, including upkeep behaviour, hasencouraged many researchers towards examining the impact of homeownership rateson an individual’s behaviour or the residential environment. Settlements with a higherproportion of homeowners are likely to set the ground for shared common andlong-term interests (Forrest et al., 2002). The proportion of homeownership has beenfound to be related to:

. neighbourhood satisfaction (Galster, 1987), as homeowners could have developedlong-term interests in the neighbourhood (Forrest et al., 2002);

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. neighbourhoods’ socio-economic status such as property values (Haurin and Gill,2002; Rohe and Stewart, 1996); and

. social outcomes such as improved child discipline and increased propertymaintenance activities (Haurin and Gill, 2002).

In contrast, other researchers did not find any relationship between high rates ofhomeowners and property upkeep behaviour of homeowners of single detacheddwellings or the property condition of single detached dwelling buildings (Galster,1987) and between high rates of homeowners and neighbourhood attachment andinvolvement (Carson et al., 2010).

Thus, the effects of the rate of homeowners on improved property condition orparticipation in neighbourhood activities among low-income households living inmulti-owner low-cost housing settlement remain unclear. While previous studiesdetermined the homeownership proportion by comparing the rates of homeowners andrenters of one neighbourhood area, this study compared the rates of unit occupied bythe owners and the rates of unit occupied by the tenant-residents for one particularsettlement that is managed by a single housing management organisation. Therefore,this study suggests that occupancy rates are a more appropriate reflector of thesituation of multi-owner housing. None of the previous studies on multi-storey housingmanagement has investigated the influence of occupancy rates on multi-storey housingmanagement.

Unit owners can be owner-occupants or investment owners (Guilding et al., 2005),and both can be divided into original purchasers and subsequent purchasers(Christudason, 2007). The original purchasers have bought their units directly from thedeveloper, while subsequent purchasers have bought their units from original ownersor other subsequent owners (Christudason, 2007, p. 307). Owner-occupants who areresiding in their units are close to their residential environment and mainly directlyinvolved in housing management. Meanwhile, investment owners normally rent outtheir units to a tenant or, in some cases, short-let to tourists. Conflicts betweenowner-occupants and investment owners arise because of different interests.Owner-occupants are primarily interested in taking care of the building and ground,whereas investors are primarily interested in sub-letting services (Guilding et al., 2005).

Tenant-residents are not entitled to participate in housing management as the rightremains with the unit owner. Tenant-residents have no voting rights and can onlyinfluence decisions made by the owner of their unit; however, they are a part of thecommunity because they have personal ties within the unit and may have socialrelationships within the community (Easthope and Randolph, 2009). Their actions canaffect the efficiency of housing management (Muhamad Ariff and Davies, 2009). A highproportion of rented units contribute to high occupancy mobility. Frequent changes inoccupancy may create more conflicts in housing management (Muhamad Ariff andDavies, 2009; Randolph, 2006). Owners’ organisations will experience difficulties inhousing management when their building is dominated by tenants (Muhamad Ariffand Davies, 2009).

The conflicts occur as unit owners and tenant-residents may not share the samegoals related to their residential environment. Unit owners, when in the minority, maydisagree about repair and maintenance work, and this will have an impact on theresidents’ behaviour and attitude towards each other (Randolph, 2006), possibly

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resulting in neighbourhood disputes (Budgen, 2005). Thus, this study aimed to identifywhether owner-occupants of the settlement with high rates of owner-occupancy couldlead to better housing management practices by examining their satisfaction with therelationships among the stakeholders, namely the owners, the owners’ organisationand the managing agents.

Satisfaction with stakeholders’ relationshipsThis study suggests that conflict between stakeholders can be reduced ifowner-occupants are satisfied with the stakeholders’ relationships. Drawinginspiration from the literature review on homeownership and housing management,satisfaction with stakeholders’ relationships variable is proposed and measured by thesum of seven items, including two behavioural and perceptual components:

(1) stakeholders’ behaviour towards their relationship with other stakeholders; and

(2) their perception of other stakeholders’ participation.

As shown in Table I, the stakeholders’ behaviour towards their relationships withother stakeholders consists of three items that measure their relationships with otherowners-occupants, tenant-residents, the owners’ organisation and the managingagent. Four items measure the stakeholders’ perception of other stakeholders’participation. Although tenant-residents are not owners of units, previous studieshave shown that they may have an impact on housing management (Budgen, 2005;Easthope and Randolph, 2009; Muhamad Ariff and Davies, 2009). Thus, one itemconcerning tenant-residents is included to examine the overall stakeholders’relationships.

To examine the factors expected to influence the owner-occupants satisfaction withstakeholders’ relationships, this paper outlines the following factors:

. Demographic characteristics of owner-occupants. Age (AGE), gender (GENDER),marital status (MARITAL), number of people living together (PEOPLE), numberof children living together (CHILDREN), duration of residency (RESIDENCY)and future mobility plan (MOBILITY).

Components Measurement parameter

Stakeholders’ behaviour towards theirrelationship with other stakeholders

Relationship between owner-occupants and theowners’ organisationRelationship between owner-occupants and themanaging agentRelationship between the owners’ organisation andmanaging agent

Stakeholders’ perception of other stakeholders’participation

Owner-occupant participation in owners’organisationOwners’ organisation acting on behalf of the ownersManaging agents’ participation in activities of theowners’ organisationTenant-residents’ participation in housingmanagement and maintenance affairs

Table I.Dependent variables ofeffective stakeholders’relationships

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. Socio-economic characteristics of owner-occupants. Highest educational degreeattained (EDUCATION) and household’s gross income (INCOME).Further, two parameters related to owner-occupants’ participation are groupedamong these variables: level of participation in social activities (Part_activities)and participation in meetings (Part_meetings).

. Occupancy rates. Comparison of the proportions (in percentage) ofowner-occupants, tenant-residents and vacant units (OCCUPANCY RATES).

MethodThis study assumed that by understanding the differences in demographiccharacteristics of owner-occupants of multi-owner low-cost housing settlements andthe effect of occupancy rates, the conflicting relationships among the stakeholders inhousing management can be reduce. Therefore, this research set out to test the followingmain formulated hypotheses:

(a) Null hypothesis (H1o). Owner-occupants’ socio-demographic characteristics haveno influence on stakeholders’ relationships.Alternative hypothesis (H1a). Owner-occupants’ socio-demographic characteristicsaffect stakeholders’ relationships.(b) Null hypothesis (H2o). Owner-occupants’ socio-economic characteristics andparticipation level have no influence on stakeholders’ relationships.Alternative hypothesis (H2o). Owner-occupants’ socio-economic characteristics andparticipation level affect stakeholders’ relationships.(c) Null hypothesis (H3o). Occupancy rates have no influence on stakeholders’relationships.Alternative hypothesis (H3o). Occupancy rates affect stakeholders’ relationships.

The data used to test the above hypotheses were collected from multi-owner low-costhousing settlements located in urban areas of Selangor state, Malaysia. The rationalefor selecting this area is based on the rapid urbanisation and economic growthexperienced by Selangor, which these two factors combined with the state governmentpolicy have contributed to Selangor’s dominant position in that it has the majority ofmulti-owner low-cost housing stock in Malaysia. This survey was conducted in 2009.Of 97 low-cost housing settlements reported by the Selangor State Strata Division ashaving been issued the strata title, 73 settlements were successfully identified, which isequivalent to 34 per cent of the total number.

These 73 settlements are represented by 34 owners’ organisations. In total,30 settlements have set up MCs, and the remaining are still in the process of transferringstrata titles and are represented by four residents’ associations. The informationobtained from the chairpersons of these associations showed that, at the time of thesurvey, 2,335 units were occupied by owners. Of these, 618 respondents were recruited inthis survey, representing 26.5 per cent of total number of owner-occupants.The respondents were individuals who were responsible for representing theirhouseholds with regard to housing management matters.

In order to obtain valid results, owner-occupant respondents of particularssettlements were recruited if their chairpersons agreed to be interviewed to explain thebackground of the settlements and the housing management. This approached was alsoadopted to avoid errors due to misleading by or incorrect data provision by the

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respondents about their housing characteristics and housing management background.The data from the chairpersons were later merged with the owner-occupants’ responses.

The questionnaire was divided into two major parts, namely, demographic questionsand content questions. The demographic questions sought factual information on thesocio-demographic and socio-economic characteristics of owner-occupants. The contentquestions measured the respondents’ satisfaction level with their relationship with otherstakeholders, namely, the owner-occupants, the owners’ organisation and the managingagent. The responses were scored on the seven-point Likert scale, where 1 – verystrongly dissatisfied, 2 – strongly dissatisfied, 3 – dissatisfied, 4 – undecided,5 – satisfied, 6 – strongly satisfied and 7 – very strongly satisfied. The data collectedwere analysed via a parametric analysis using Statistical Package for the Social SciencesVersion 17.

ResultsCharacteristics of multi-owner low-cost housingTable II shows that of the housing settlements selected, 55.9 per cent of the chairpersonsclaimed their buildings were built by the government, 29 per cent of the settlementclaimed their buildings were developed by joint venture between the government andthe private sector and remaining 5 per cent of the settlement were developed by theprivate sectors. With regard to the height of the buildings, 33 chairpersons stated thattheir buildings were less than five storeys high. The remaining confirmed that theirbuildings were between 13 and 20 storeys high.

According to the information from the chairpersons, 91.2 per cent of the settlementshad been occupied for more than 20 years. Only 8.8 per cent of the settlements had beenoccupied for 15-20 years. About 80 per cent of the settlements had access to facilitiessuch as a multi-purpose hall, prayer hall/room, children’s playground and playingcourts. A majority of housing settlements had units with two bedrooms (52.9 per cent);very few housing settlements had three-bedroom units. This is because most of thesesettlements were built before the recent establishment of the low-cost housingrequirement of three bedrooms per housing unit. Table II shows that 32.4 per cent ofthe owners’ organisations had an average owner-occupancy rate of about 51-70 per cent.However, a closer examination indicates that 49 per cent of the housing units hadowner-occupancy rates of less than 50 per cent.

Housing management practicesAll 30 MCs manage their properties without a third party’s (managing agents) services.Housing management by residents associations’ remains the developers’responsibility. During the survey, three low-cost settlements were being managedby managing agents appointed by the developers. The remainder were temporarilybeing managed by residents’ associations because of conflicts with the developer.

Table III shows that 76.5 per cent of the chairpersons stated that their current owners’organisations had been in operation for two to five years. About 17.6 per cent of themclaimed the organisations were less than a year old. The remaining 5.9 per cent said theowners’ organisations had been established more than ten years ago, and this groupmainly comprised chairpersons of the residents’ associations. All the maintenancecharges are calculated per unit per month. Only one chairperson claimed to have tworanges of maintenance charges according to the different number of bedrooms per unit.

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Among all the settlements, more than 60 per cent had maintenance charges betweenRM20 and RM30 (29.4 per cent ¼ RM20, 29.4 per cent ¼ RM25 and 26.5 per cent ¼RM30). The lowest maintenance charge was RM15 per unit per month, and 82.4 per centof the chairpersons stated that they do not insist on contribution to a sinking fund. Onlyfive owners’ organisations (14.7 per cent) imposed a sinking fund levy, with two of thecorresponding chairpersons stating that the value of the levy is RM5 per unit per month.“House rules” were set up by 55.9 per cent of the chairpersons as an additional guidelineto simplify housing management; the rest did not establish such rules.

Demographic characteristics of owner-occupantsTable IV indicates that most of the owner-occupants were 41-50-year old(31.1 per cent), followed by the group over 50-year old (29.1 per cent). Of the total

Variable Levels No. %

Housing development built by Government 19 55.9Private 5 14.7Joint venture (government and private) 10 29.4Total 34 100.0

Type of housing development Below five storeys 33 97.013-20 storeys 1 3.0Total 34 100.0

Age of housing development 15-20 years 3 8.8More than 20 years 31 91.2Total 34 100.0

FacilitiesMulti-purpose hall No 8 23.5

Yes 26 76.5Total 34 100.0

Prayer hall No 6 17.6Yes 28 82.4Total 34 100.0

Children’s playground No 6 17.6Yes 28 82.4Total 34 100.0

Court No 11 32.4Yes 23 67.6Total 34 100.0

Number of bedrooms One and two bedrooms 8 23.5One, two and three bedrooms 1 2.9Two and three bedrooms 4 11.8Two bedrooms 18 52.9Three bedrooms 3 8.8Total 34 100.0

Owner-occupancy rate (%) ,30 8 23.431-50 9 26.551-70 11 32.471-90 4 11.891-100 2 5.9Total 34 100.0

Note: n ¼ 34

Table II.Chairpersons’ housing

characteristics

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respondents (n ¼ 618), 24.8 per cent were in the 31-40 age group. Only a small portion(14.7 per cent) of the respondents was in their 20s. As expected, male respondents werefound to be more likely to be the individuals representing the household with regard tohousing management matters; 53.2 per cent of the respondents were male versus the45.8 per cent female respondents. An overwhelming number (84.3 per cent) ofrespondents were married. Most (73.6 per cent) of the respondents had one to fivemembers in their households, while 24.4 per cent had six to ten members, and theremaining 0.6 per cent had ten or more members. More than half (64.4 per cent) therespondents reported having between one and five children living together with them,and 28.8 per cent of the total respondents had no children living with them.

With regard to the duration of residency, 45.1 per cent of the respondents had beenresiding in their units for more than 15 years, followed by 20.9 per cent respondents,who had been residing in their unit for ten to 15 years. Further, 16.2 per cent of therespondents indicated they had occupied their units for one to five years, and only3.4 per cent had been residing in their units for less than a year. When questionedabout the period for which they expected to continue living in these units, 62.9 per centof the respondents said they would live there for the rest of their lives, 18.4 per centexpected to stay on for the next three to ten years, 10.7 per cent stated their intention tostay longer than 11 years but not for the rest of their lives and only 7.9 per cent of thetotal respondents said they intended to stay on for less than two years.

Socio-economic characteristics of owner-occupantsAs can be seen from Table V, most of the respondents (58.9 per cent) hadattended primary school, and 18.6 per cent had received higher education within

Variables Levels No. %

Period of existence of the current organisation Less than one year 6 17.62-5 years 26 76.5More than ten years 2 5.9Missing data – –Total 34 100.0

Maintenance charges per unit per month RM15 2 5.9RM20 10 29.4RM20-RM50 1 2.9RM25 10 29.4RM30 9 26.5RM40 1 2.9RM50 1 2.9Total 34 100.0

Does your housing development have a sinking fund? Yes 5 14.7No 28 82.4Total 33 97.1Missing data 1 2.9Total 34 100.0

Have you established any house rules? Yes 19 55.9No 14 41.2Total 33 97.1Missing data 1 2.9Total 34 100.0

Table III.Housing managementaffairs

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the “diploma and above” level. About 13.8 per cent had reached the secondary schoollevel, while a small portion (7.9 per cent) reached the certificate level. With regard tohousehold income, 31.6 per cent of the respondents had a monthly income aboveRM2,001, and 26.9 per cent were earning between RM1,501 and RM2,000 per month.Less than a quarter of the respondents (23.1 per cent) were reported to be earningmonthly incomes of RM1,001-RM1,500.

With regard to participation, about 49.4 per cent of the respondents were quite activein their communities’ activities. Another 36.9 per cent said they were somewhat active,

Variables Levels No. %

Age 20-30 91 14.731-40 153 24.841-50 192 31.1Over 50 180 29.1Missing data 2 0.3Total 618 100.0

Gender Male 329 53.2Female 283 45.8Missing data 6 1.0Total 618 100.0

Marital status Married 521 84.3Not married 69 11.2Single parent 25 4.0Missing data 3 0.5Total 618 100.0

Number of people living together 1-5 455 73.66-10 151 24.4More than ten 4 0.6Missing data 8 1.3Total 618 100.0

Number of children living together None 178 28.81-5 398 64.4More than five 34 5.5Missing data 8 1.3Total 618 100.0

Duration of residence in current unit Less than a year 21 3.41-5 years 100 16.25-10 years 82 13.310-15 years 129 20.9More than 15 years 279 45.1Missing data 7 1.1Total 618 100.0Period for which residence in the current unit

is expected to continue Two years or less 49 7.93-10 years 114 18.411 or more years 66 10.7Always 387 62.6Missing data 2 0.3Total 618 100.0

Note: n ¼ 618

Table IV.Socio-demographic

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10.8 per cent were not active and only 2.3 per cent considered themselves very active.A similar trend was observed for meeting attendance.

Testing hypothesis 1From univariate analysis of variance (ANOVA), only two items were found to have asignificant influence on the respondents’ satisfaction with stakeholders’ relationships.As shown in Table VI, these two items are the number of children living together(CHILDREN) and the duration of residency in the current unit (RESIDENCY).The p-values for both items i ,0.05.

The mean scores for each item show that owner-occupants of ages (AGE) between 41 and50 years (mean ¼ 5.11) had the highest satisfaction with stakeholders’ relationships. Olderrespondents (over 50 years) had a lower satisfaction level (mean ¼ 5.02). The next item,GENDER, shows that male respondents (mean ¼ 5.09) were marginally more satisfiedthan female respondents (mean score ¼ 5.04). With regard to marital status (MARITAL),married respondents (mean ¼ 5.10) recorded higher satisfaction levels than non-marriedrespondents (mean ¼ 4.94) and single parents (mean ¼ 4.80).

Respondents with more than ten people living together (PEOPLE) were moresatisfied with stakeholders’ relationships (mean ¼ 5.42) than those with one to fivepeople (mean ¼ 5.05) or more six to ten people (mean ¼ 5.42) living together. Familieswith children (CHILDREN) were more satisfied than those without children were

Variables Levels No. %

Highest education received Secondary school 85 13.8Primary school 364 58.9Certificate 49 7.9Diploma and above 115 18.6Missing data 5 0.8Total 618 100.0

Gross monthly household income Below RM1,000 107 17.3RM1,001-RM1,500 143 23.1RM1,501-RM2,000 166 26.9Above RM2,001 195 31.6Missing data 7 1.1Total 618 100.0

Participation in social activities Very active 14 2.3Quite active 305 49.4Somewhat active 228 36.9Not active 67 10.8Missing data 4 0.6Total 618 100.0

Participation in meetings Very active 16 2.6Quite active 312 50.5Somewhat active 225 36.4Not active 62 10.0Missing data 3 0.5Total 618 100.0

Note: n ¼ 618

Table V.Socio-economiccharacteristics ofowner-occupants’

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(mean for more than five children ¼ 5.11; mean for one to five children ¼ 5.13; meanfor no children ¼ 4.88).

Respondents who had been residing for one to five years (RESIDENCY) had thehighest satisfaction with stakeholders’ relationships (mean ¼ 5.31). Conversely,those who had been residing for more than 15 years had the least satisfaction score(mean ¼ 4.89). Finally, with regard to MOBILITY, respondents who planned to stayfor 11 years or longer (mean ¼ 5.11) were the most satisfied with stakeholders’relationships. Respondents who planned to stay on for a short period, three to tenyears, had a low satisfaction score (mean ¼ 4.92).

Testing hypothesis 2Table VII shows that satisfaction with stakeholders’ relationships is not influenced bythe socio-economic characteristics of owner-occupants ( p. 0.05 for EDUCATION andINCOME). However, participation in activities (Part_activities) and meetings(Part_meetings) organised by owners’ organisations had a significant influence onsatisfaction with stakeholders’ relationships ( p , 0.05 for both).

ANOVA resultsVariables and levels p Mean SD

Age (years) .0.0520-30 5.08 1.2531-40 5.06 1.2041-50 5.11 0.96Over 50 5.02 1.14

Gender .0.05Male 5.09 1.13Female 5.04 1.10

Marital .0.05Married 5.10 1.07Not married 4.94 1.30Single parent 4.80 1.44

People .0.051-5 5.07 1.126-10 5.05 1.12. 10 5.42 0.50

Children ,0.05None 4.88 1.151-5 5.13 1.12. 5 5.26 0.76

Residency ,0.05, 1 5.25 0.83

1-5 5.31 1.075-10 5.05 1.1310-15 5.27 0.90. 15 4.89 1.21

Mobility .0.05Two years or less 5.04 1.133-10 years 4.92 1.2411 or more years 5.14 0.92Always 5.11 1.10

Table VI.Relationship between

satisfaction withstakeholders’

relationships andsocio-demographic

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A closer examination of the differences in the mean scores for EDUCATION showedthat respondents with primary school qualification had the statistically highestsatisfaction level with stakeholders’ relationships (mean ¼ 5.13). However, the mosteducated respondents (with diploma level or and higher education) showedthe least satisfaction level (mean ¼ 4.69). The INCOME variable indicates theopposite results, that is, the lower the respondents’ household income (mean ¼ 5.09),the more satisfied they are with stakeholders’ relationships. The group least satisfiedwith stakeholders’ relationships is that comprising households earning betweenRM1,501 and RM2,000 per month.

With regard to Part_activities and Part_meetings, the “quite active” respondentsinvolved in both activities (mean ¼ 5.25) and meetings (mean ¼ 5.31) showed thehighest satisfaction with stakeholders’ relationships. “Very active” participants inactivities had a mean satisfaction score of 5.11, while those “very active” in meetings hada mean satisfaction score of 5.08; the “least active” group for activities had a meansatisfaction score of 4.99, and that for meetings had a mean satisfaction score of 4.90.The mean satisfaction score for the group “not active” in activities was 4.47, and that forthe group “not active” in meetings was 4.44. As expected, the results of Part_activitiesand Part_meetings showed similar patterns.

Testing hypothesis 3Table VIII, which shows the ANOVA results, indicates that OCCUPANCY RATES hasa significant relationship with the differences in satisfaction with stakeholders’relationships among owner-occupants (OCCUPANCY RATES; p , 0.05). Closerexamination of the mean values of OCCUPANCY RATES shows that respondentsfrom the settlement with the highest owner-occupancy rate (91-100 per cent)

ANOVA resultsVariables and levels p Mean SD

Education .0.05Secondary school 5.08 1.18Primary school 5.13 1.11Certificate 4.89 1.13Diploma and above 4.96 1.08

Income .0.05, RM1,000 5.19 1.12

RM1,001-RM1,500 5.03 1.14RM1,501-RM2,000 4.96 1.01. RM2,001 5.15 1.16

Part_activities ,0.05Very active 5.11 0.97Quite active 5.25 1.03Somewhat active 4.99 1.07Not active 4.47 1.41

Part_meetings ,0.05Very active 5.08 0.89Quite active 5.31 1.04Somewhat active 4.90 1.11Not active 4.44 1.20

Table VII.Relationship betweensatisfaction withstakeholders’relationships andsocio-economiccharacteristics ofowner-occupants

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have the highest satisfaction with stakeholders’ relationships (mean ¼ 5.54). The leastsatisfied respondents are those residing in settlements with 71-90 per centowner-occupancy rate (mean ¼ 4.26). Thus, the null hypothesis of this variable isrejected and the alternative hypothesis is accepted.

DiscussionDescriptively, this study had proved that most of the selected multi-owner low-costhousing settlements are aged buildings (over 20-year old) that can be categorised asamong the first available stocks of multi-storey low-cost housing in Selangor, Malaysia.The majority are medium-density, medium-rise buildings. A significant number (nearly45 per cent) of original homeowners are still occupying units and plan to continue residingin the unit for as long as they live. These outcomes led to a question of whetherhomeownership among low-income households in Malaysia could maintain the high rateof owner-occupancy and could have a positive effect on the stability of the neighbourhood.

Although this study found that 387 (62.6 per cent) owner-occupant respondents intendto stay longer, they were a minority (0.2 per cent) of the overall units’ owner-occupiedpopulations of the selected housing settlements, especially in housing settlements thathave low owner-occupancy rates. These findings suggest that in the long term, thishomeownership program for low-income households may not be achieving its objectivessince, as this study indicates, such settlements are dominated by tenant-residents.

In terms of housing management practices, the data collected indicate that at thetime of the survey, all the established MCs had begun operating within the previous12 months. This means that the housing settlements had been managed by thedevelopers for a long period before the MCs took over. However, MCs prefer not toemploy professional managing agents for economic reasons and to keep charges low.The charges were only sufficient to cater for the daily maintenance and utility billpayments. With only five settlements having established a sinking fund, the remainingowners’ organisations will certainly find it difficult to make any major repairs in thefuture (such as replacing the plumbing system) without a sinking fund.

For the effect of owner-occupants’ demographics characteristics, the factor relatedto the number of children living together (CHILDREN) is a predictor of satisfactionwith stakeholders’ relationships shows that families with children may feel insecureabout their safety and want to protect the children. This pressure is likely to persuaderesidents to develop good relationships with other stakeholders, because of which theyparticipate in housing management. The results pertaining to the duration of residency(RESIDENCY) demonstrated that while newer owner-occupants are satisfied with thestakeholders’ relationships, older owner-occupants are not.

ANOVA resultsVariables and levels p Mean SD

Occupancy rates (owner-occupancy) (%) ,0.05, 30 5.17 1.12

31-50 5.04 1.0651-70 5.10 1.1271-90 4.26 1.0691-100 5.54 0.83

Table VIII.Relationship between

satisfaction withstakeholders’

relationships andoccupancy rates

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This finding indicates an expectation gap, since newcomers might accept the currentliving conditions without complaint, while the older households may witness thedeterioration of their living conditions and expect strong action from the stakeholdersto correct this. Thus, a long duration of residency did not guarantee a good relationshipbetween owner-occupants and other stakeholders. However, as shown in thecross-tabulation result in Table IX, older owner-occupants showed interest towardsparticipation in a platform to bring up their concern related to the residentialenvironment. This finding is consistent with the findings of Rohe et al. (2001) and Rossiand Weber (1996), which showed that homeowners are likely to participate in localcommunity organisations.

With regard to the socio-economic variables, only Part_activities and Part_meetingswere found to significantly affect owner-occupants’ satisfaction with stakeholders’relationships. As expected, less active and inactive owner-occupants were less satisfiedwith the relationships among stakeholders. Therefore, this study confirms thesignificant relationship between homeownership and local participation (Rohe et al.,2001; Rossi and Weber, 1996) in the context of multi-owner low-cost housing.

In contrast, EDUCATION and INCOME were not found to be important indicators ofthe overall satisfaction of owner-occupants with the relationships among stakeholders.This lack of an association may be attributed to that fact that many respondents were nothighly educationally qualified; they had only studies up to the primary and secondaryschool levels. With regard to INCOME, the distribution did not very substantially amongthe respondents, and this lack of variation was reflected in the satisfaction levelsmeasured using the Likert scale. OCCUPANCY RATES yielded ambiguous results, eventhough this factor is considered an important predictor of the satisfaction withstakeholders’ relationships. While settlements with the highest rate of owner-occupancyshowed the highest level of satisfaction with the relationships among stakeholders, thosewith the second highest rate of owner-occupancy showed the least satisfaction. Perhaps,a factor that has not been considered in this paper is responsible for this result. However,this finding could suggest that settlements with a high rate of tenant-residents couldbe barrier to successful housing management, as previous studies have shown that

Duration of residencyLess than a

year1-5

years5-10

years10-15years

More than 15years Total

Participation in socialactivities

Very active 0 1 0 1 12 14

Quite active 4 47 37 75 139 302Somewhatactive 11 40 32 45 97 225Not active 6 12 13 7 27 65

Total 21 100 82 128 275 606Participation in meetings Very active 0 0 0 4 12 16

Quite active 4 49 41 68 148 310Somewhatactive 13 42 26 47 93 221Not active 4 9 15 9 23 60

Total 21 100 82 128 276 607

Table IX.Cross-tabulationpertaining toparticipation in socialactivities and meetingsand duration of residency

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tenant-residents are not interested in housing management (Chen and Webster, 2005;Easthope and Randolph, 2009; Muhamad Ariff and Davies, 2009). Although Galster(1987) found no relationship between high rates of homeownership and the behaviour ofhomeowners living in single detached houses, the current study proved that there is asignificant relationship between high rates of owner-occupancy and satisfaction withrelationships among stakeholders in multi-owner low-cost housing management.

ConclusionOwnership of low cost units in multi-storey developments is a key strategy of theMalaysian Government to assist low-income households in urban areas to becomehomeowners. In the wealthy state such as Selangor, such development has dominatedmore than 70 per cent of the state’s low-cost housing stock compared to low-cost houses(landed property). Known as strata development in Malaysia, this development providesindividual titles on each residential unit and collective ownership of common property ofthe building. Although there is legislation relating to the practice of housingmanagement, housing management problems remain an obstacle to the creation ofvibrant living environment. This is due to the conflict in the housing managementorganisation itself. Housing management requires collective action; however, it isdifficult to reach a collective agreement between the stakeholders, namely the owners,the owners’ organisation and the managing agents (if using a service agent).

To improve the housing management of multi-owner low-cost housing in Malaysia,this study has identified the characteristics of such settlements that have been issuedstrata title, management practices of these settlements and the demographic andsocio-economic characteristics of unit owners who still occupy their units. Based on theinformation obtained, this study has examined the effects of owner-occupants’demographic and socio-economic characteristics and occupancy rates of selectedsettlement on the owner-occupants’ satisfaction with stakeholders’ relationships.

This study reveals that all the selected MCs chose to manage their housingsettlements without the use of managing agent services. Other multi-owner low-costhousing settlements are expected to follow suit. Without the managing agents’ services,active owner participation in owners’ organisation is vital at all levels of policy anddecision making and at the policy implementation level (Wekerle et al., 1980). However,of the selected settlements that are over the age of 15 years, nearly 50 per cent of themhave a higher tenant-resident occupancy rates than the owner-occupied. Although,45 per cent of the owner-occupant respondents have occupied their units for more than15 years and are involved in the housing management organisation, high rates oftenant-residents could have an impact on housing management as the collective ownersinvolved in housing management are a minority group for the settlement.

To improve the relationships among stakeholders, this study suggests thatowner-occupants should develop good relationships with other stakeholders in housingmanagement organisations, with special attention to the following factors: duration ofresidency (RESIDENCY) number of children living together (CHILDREN) participationof owner-occupants in social activities (Part_activities) and meetings (Part_meetings)and the rate of occupancy (OCCUPANCY RATES). These factors have managerialimplications for housing management organisations and can provide guidelines fororienting policies aimed to improve the low-income households’ well-being.At the managerial level, owners’ organisations should make efforts to strengthen

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the social relations between older owner-occupants and newcomers, so that these groupswill have shared interests in the residential environment. The former are more investedin housing management, since a safe residential environment is their main concern.Equal attention should be paid to households with children and those without. Withregard to tenant-residents, if the proportion of tenant-residents is substantial, owners’organisations should consider this group in their management strategy. In low-costhousing, MCs prefer to be owner-managed, and these bodies play a very important rolein balancing the costs and benefits of participation among the stakeholders. Socialactivities should be regularly planned and include all residents.

For policy makers, the findings of this study can act as guidelines for orientingpolicies such that slum inhabitation can be avoided in the future while simultaneouslyfostering inhabitants’ well-being. Irrespective of their results, investigations into thefactors that can yield the most satisfaction or dissatisfaction in relation to stakeholders’relationships will provide policy makers with additional information on where to targetimprovement efforts. The existing Malaysian policy to ensure decent affordablehousing for urban low-income households should be appended with another policyto sustain and improve the people’s well-being. Two key findings that require theattention of policy makers are:

(1) the owner-managed approach for housing management adopted by MCs; and

(2) the higher rate of tenant-residents compared to owner-occupancy.

Without professional agents, it is difficult for the MC to seek expert knowledge and advice.The relevant authorities should to continuously support and educate MC members.A solution must be formulated to develop systematic owner-managed organisations. Withregard to tenant-residents, a rental policy should be formulated by the policy makers, andfor the harmonious residential environment, the MC should be given the power to selecttenants. The rental agreement should be made in writing and include the MC acting as aleasing agent. Further, a service fee should be charged to the owner-investors. The MCshould be given the right to evict any tenant-residents who breach the agreement. Thisguarantees that the rights of owner-occupants will not be affected. If the unit owners arebound by the provisions in the acts related to housing management, tenant-residentsshould be bound by rental agreements developed by the relevant authorities.

For future research, the findings of this study are a step forward in research onmulti-owner low-cost housing in Malaysia. The findings can be validated byextrapolating and broadening this study. For example, consideration should be given tothe physical form of the development as high-rise and high-density residences are thecurrent focus of multi-owner low-cost housing in urban areas in Malaysia. Living inhigh-rise and high-density residences will affect an individual’s behaviour towardshousing management, as the individual’s evaluation of the residential environmentmight be different. Consideration should also be given to the owner-managed approachadopted by the MC, because this study predicts that the different approaches taken byMCs could influence housing management. In terms of occupancy rates, this studyrecommends that the impact of tenant-residents on housing management beinvestigated in future research. This is because in the collective living arrangement,the tenant-residents enjoy the benefits of owner-occupant participation in housingmanagement to some extent.

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Note

1. This term refers to organisations established by the purchaser or occupier of the residentialpremises involving the collective living arrangement. The term “owners” organisation’ usedto represent the various terms used by different countries, for example, the terms “resident’sassociation”, “owner’s association”, “owner’s corporation”, “management corporation”, and“body corporate” are among the terms used to represent management by or for any owners’organisation.

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Further reading

Bengtsson, B. (1998), “Tenants’ dilemma – on collective action in housing”, Housing Studies,Vol. 13 No. 1, pp. 99-120.

Boelhouwer, P. (1997), “Management of social rented housing in Western Europe”, HousingStudies, Vol. 12 No. 4, pp. 509-29.

Boelhouwer, P. (1999), “International comparison of social housing management in WesternEurope”, Journal of Housing and the Built Environment, Vol. 14 No. 3, pp. 225-40.

About the authorsNor Rima Muhamad Ariff is a PhD candidate at Deakin University, Australia. Her research areais housing management and maintenance. Nor Rima Muhamad Ariff is the corresponding authorand can be contacted at: nrm@deakin.edu.au

Hilary Davies, FRICS has worked in the surveying profession for over 25 years. She qualifiedas a Chartered Building Surveyor whilst working for a Local Government Department in the UKengaged in building surveying and enforcement of national building regulations. She nowlectures in Construction Management and facilities subjects at Deakin University.

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