Commentary: Ageing condos in Singapore need a leg up with better rules, not a handout

SINGAPORE: More than 1,000 of Singapore’s 3,750 private residential developments are at least 30 years old and for some, ageing infrastructure is beginning to show.

These are lifts, waterproofing, fire safety systems and electrical infrastructure that are reaching the end of their design life, but not all estates have sufficient funds to have them fixed.

The result, as media reports have shown, is hefty special levies that come as a shock for some homeowners. But it should not have. Buildings age. Systems wear out. The real question is why so many private estates treat foreseeable costs as emergencies.

The government’s move to review the Building (Strata Management) Act, with proposed amendments to help management corporation strata titles (MCSTs) maintain adequate sinking funds, is hence welcome and timely.

FIXING SINKING FUND WOES

All MCSTs are required by law to establish a sinking fund for maintenance and improvement works, though they have the flexibility to determine the amounts raised.

The Ministry of National Development said in a 2019 parliamentary reply that setting a uniform minimum was impractical given the wide variation in maintenance needs across private developments.

That position should now be revisited. The prolonged absence of any prescribed floor for sinking funds has allowed many MCSTs to collect too little for too long.

The proposed amendments could introduce prescribed minimum amounts calibrated to building age, number of units and the type of infrastructure installed. For example, smaller estates have fewer owners to share the cost of big repairs, while estates with more equipment like lifts and pumps face higher long-term replacement bills. Any minimum should reflect these differences.

A prescribed floor alone is not the answer. A portion of it ought to be ring-fenced for essential facilities, such as lifts, fire safety systems, water tanks and structural repairs, so that funds cannot be drained on cosmetic upgrades while life-safety works sit in the queue.

MCSTs managing developments over 20 years old could also be required to commission a building condition assessment at least once every five years, feeding into a necessary works plan covering the next 10 years.

The Building Control Act at present mandates a 10-yearly structural inspection for residential buildings and a 7-yearly facade inspection for buildings more than 20 years old. However, both of which stop at the skeleton and the skin. Lifts, fire systems, water tanks and other long-life essential equipment sit outside the statutory net, even though they account for the largest drawdowns on the sinking fund.

These assessments should be funded by MCSTs. While they add to the costs, early identification of wear and tear may be able to prevent far more expensive repairs later.

THE ISSUE OF CO-FUNDING

When announcing the review on Mar 4, Second Minister for National Development Indranee Rajah said authorities are exploring co-funding support for “select essential safety features to eligible private building owners and operators”.

The Building and Construction Authority on Mar 20 clarified that such support will be targeted at upgrading older lifts with key safety features not available when they were installed.

It does not intend for public funds to be used for repair, redecoration and maintenance works or general lift repairs and replacements, which should be funded by the private developments’ sinking funds, the authority said.

Any intervention will have to navigate a hard political reality given how about 76 per cent of Singapore residents live in HDB flats. Tapping public funds on private facilities that most taxpayers have no access to would be difficult to justify.

There is, however, a narrow but genuine case for public funding support in two categories – lift and escalator safety features, and barrier-free accessibility improvements in older developments.

When an older condominium lacks step-free access or its lifts fall short of current safety standards, the consequences extend beyond the private owners, particularly in an ageing society. The government’s review of the Accessibility Fund, including a possible expansion to cover active ageing and dementia-friendly installations, reflects this broader public dimension.

Beyond co-funding, another approach is government-facilitated low-interest financing for strictly defined essential works relating to safety and habitability.

But financing alone will not solve the problem. Section 38 of the Building (Strata Management) Act allows an MCST to borrow money, yet the same MCST must still secure internal approvals to service that debt. A government-backed loan scheme could therefore fail in the very estates that need it most.

That is the real governance bottleneck. Where an independent assessment certifies works as necessary for safety, accessibility or habitability, the law should allow both the works and the related borrowing to be approved by a lower threshold.

If the motion still fails after proper notice and a second vote, the MCST ought to be able to apply to the Strata Titles Board or the Commissioner of Buildings for an order authorising the borrowing limited to the certified works.

IMPROVING FINANCIAL TRANSPARENCY

Proposed amendments to standardise financial information submissions and make selected key financial information available to the public are also steps in the right direction. Such financial transparency improvements will benefit existing owners and prospective buyers.

Today, a buyer must request the audited accounts, which include the sinking fund balance, through a conveyancing lawyer and pay a fee to see them. Few buyers think to ask, and fewer know how to read what they see. The result is that one of the most financially consequential facts about a home, namely whether the estate has set enough aside for its next round of major works, is the last thing most buyers learn, if at all.

Standardised disclosure would give buyers the information they need before committing to a purchase, while ensuring discipline in the MCST’s spending decisions.

TRAINING AND PROFESSIONALISATION

The public consultation also proposes mandatory training for council members.

Many serve with genuine commitment but limited technical, financial or legal knowledge. Requiring basic training for office-bearers will strengthen decision-making where it counts, particularly in ageing estates with large capital budgets.

Working hand in hand with MCSTs are managing agents who provide professional advice as well as manage the day-to-day operations and administrative duties of a private development.

Yet, accreditation of managing agents remains voluntary. This should be made mandatory for those managing estates above a certain size and age, or with essential facilities like lifts and fire safety systems.

The latest proposal for MCSTs to set performance indicators for managing agents is a useful complement but not a substitute, because a council that cannot set meaningful performance indicators on its own is precisely the one that most needs a qualified managing agent to advise it.

Singapore should not treat ageing condos as a purely private matter, nor should it treat them as candidates for broad subsidy.

What it can do is to hold private homeowners primarily responsible, require better planning, stronger disclosure and more capable governance. At the same time, lower procedural barriers for certified essential works and make sure that when financing is offered, the law provides a realistic pathway for deserving estates to accept it.

That is how Singapore can help ageing condominiums in a fair and sustainable way.

Gabriel Kor is Associate Professor of Law and Deputy Head (Academic) at the Department of the Built Environment, National University of Singapore (NUS). The opinions expressed are those of the writer and do not represent the views and opinions of NUS.