A Case of Barking up the Wrong Tree

A Penang local council has been urged to reclassify a condominium project from commercial to residential.1st of all, the land the project is built on is commercial land where only commercial buildings such as hotels, offices or retail outlets are allowed. To circumvent this, developers market and sell their condominiums as SOHO or serviced residences. Secondly, they do this to avoid putting the compulsory schedule H into the S&P agreement. However, since serviced residences are now considered as residential and developers must incorporate the schedule H, their only loophole now is to call their condos SOHOs.

Instead of screaming at the council for their classification, which in my opinion befits the land title and the SOHO status i.e. commercial project, buyers should boycott SOHOs altogether unless they are buying the property for real commercial purposes.

‘Unfair to classify condo units as commercial’

Athi Shankar

| April 9, 2014

 

http://www.freemalaysiatoday.com/category/nation/2014/04/09/unfair-to-classify-condo-units-as-commercial/      

MPPP has been urged to reclassify two condominium blocks under the small-office-home-office from commercial to residential.

GEORGE TOWN: It is unfair of the Penang Island Municipal Council (MPPP) to classify the two 26-storey condominium blocks of One World and One Sky in Bayan Baru as commercial, said a non-governmental organisation.

The council has classified the two condominium blocks under the small-office-home-office (Soho), which comes under the commercial category.

Penang Chant, an NGO to create public awareness on environmental protection and sustainable development, said it was unfair for the condominium units in Bayan Baru to pay commercial rates for electricity, water and assessment rates.

The 538 condominium owners said the assessment rates were even higher than other commercial units in the municipality.

The owners said the assessment rate of a commercial centre in Bukit Jambul was RM3,100 for a 730sq ft unit, while they were being charged between RM22,800 and RM28,000 for units measuring 1,160sq ft to 1,450sq ft.

Although the units were classified as Soho in their sales and purchase agreement, the assessment rates were much higher than other commercial units, they said.

The owners are willing to pay the commercial assessment rates but the amount was too high.
MPPP Financial Management Committee alternate chairman Joseph Ng Soon Siang had said the residents could write to the council to review their case.

On March 27, the council announced that the appeal by the condominium residents to reduce the assessment rates had been rejected on grounds that the premises were commercial lots.
Chant said it had told the Penang government several times that Soho projects were going to be a problem.

The group argued that the developers benefited by selling Soho units but it had caused hardship to the people.

“The state government must inform the people that they will be charged commercial rates if they bought Soho units,” Chant said in a statement today.