Laws on Formation and Management: Guarded Neighbourhood in

Malaysia Being Neglected?

Eng Siang Tay

and Zalina Abdul Halim

Faculty of Law, University of Malaya, 50603 Kuala Lumpur, Malaysia;

Faculty of Law, Multimedia University, Jalan Ayer Keroh Lama, 75450 Melaka, Malaysia

Faculty of Law, University of Malaya, 50603 Kuala Lumpur, Malaysia

Keywords: Community, Stratified, Non-stratified Properties, Gated, Management.

Abstract: Urban lifestyle in a gated and guarded community became a trend in the modern era. This trend is driven by

various factors such as safety, security, privacy, facilities and amenities. Appropriate legal framework is

necessary for the formation and management of the gated and guarded community in order to achieve better

quality of life. Prior to 2007, there was no clear demarcation between the terms and concepts of ‘gated

community’ and ‘guarded neighbourhood’ in Malaysia. The scope of strata laws including formation and

management was extended from parcels in a building to land parcels via Strata Titles (Amendment) Act

2007. However, not all landed parcels nor all parcels in a building come within the ambit of strata laws.

Strata properties are basically categorised as ‘gated community’ and the issues on formation and

management of the strata properties (including the common property) are now governed by the Strata

Management Act 2013. There are no comprehensive laws governing the formation and management of

‘guarded neighbourhood’ in non-stratified properties. This paper intends to examine the lacuna on the

existing strata laws on the aspects formation and management and also to explore the laws on formation and

management of guarded neighbourhood in Malaysia.

1 INTRODUCTION

There is a rapid growth in the urban population in

Malaysia over the last decade where 67% is urban

population in Peninsular Malaysia (Tenth Malaysian

Plan, 2010, p.248) and over 70% of Malaysia’s

population will be urban by the year 2020 (Tenth

Malaysian Plan, 2010, p.249). The government has

drawn up various strategies under the Tenth

Malaysian Plan (2011-2015) to build a vibrant and

attractive living environment and community that is

safer. The approach is in line with paragraph 11 of

the New Urban Agenda 2016 (‘NUA’) which “share

a vision of cities for all is, inter alia, to promote

inclusivity and ensure that all inhabitants, … are

able to inhabit and produce just, safe … and

sustainable cities and human settlements, to foster

prosperity and quality of life for all” (Habitat III

2017, p.5).

Modern lifestyle in urban and city focuses on

safety, security, privacy, facilities and amenities

(Mohammed Osman, Rabe & Bachok, 2011).

However, Numbeo reports (a world database of

users contributed data about cities and countries

worldwide) indicate that crime index in urban areas

in Malaysia is alarming with Kuala Lumpur

registering a high Crime Index of 66.95 as at June

2018 (Numbeo, 2018a). The Numbeo website

provides current and timely information on world

living conditions including cost of living, housing

indicators, health care, traffic, crime and pollution

(Numbeo, 2018b) and the indexes are based on

perceptions of visitors of the website in the past 3

years. Local newspapers also report that rampant

crimes such as house breaking and murder happened

in the gated and guarded communities (Daily

Express, 2015; Malaymail Online, 2017).

Thus,housing developments that focuses on the

security and safety aspects of daily life in urban

areas are in urgent demand (Tahir & Hussin, 2012)

to ensure that Malaysia is a preferred place to live,

work and play (Tenth Malaysian Plan, 2010, p. 250).

Also this may safeguard not only the economy but

also to help to ensure unity and social well-being of

Malaysians (Mustaffa, 2007).

196

Tay, E. and Halim, Z.

Laws on Formation and Management: Guarded Neighbourhood in Malaysia Being Neglected?.

DOI: 10.5220/0010050801960201

In Proceedings of the International Law Conference (iN-LAC 2018) - Law, Technology and the Imperative of Change in the 21st Century, pages 196-201

ISBN: 978-989-758-482-4

It is stated that the demand of gated and guarded

communities is increased due to lifestyle changes

among Malaysians (Shamsudin, et.al., 2017). Living

in a gated and guarded community is preferred in

urban areas as it provides better level of safety and

security features (Shamsudin, Ying & Omar, 2016).

Gated and guarded communities may have, among

others, the following characteristics: security (such

as guard service, intercom system), privacy

(controlled by physical barrier, privatisation of

public space and private roads), facilities and

amenities (common facilities such as recreational

park, swimming pool, spa, gymnasium and golf

course, which are maintained by a management

corporation) (Adnan, et.al., 2015; Shamsudin &

Ying, 2016 at p.579).

1.1 Strata Laws

Prior to 2007, there was no clear demarcation

between the terms and concepts of ‘gated

community’ and ‘guarded neighbourhood’ in

Malaysia (Xavier, 2008). The terms “gated

community”, “guarded community” and “gated and

guarded community” were used interchangeably

(Xavier, 2008) to refer to parcels in a building issued

with strata titles are basically equipped with the

gates and/or guard services. These parcels in a

building basically fall within the scope of the strata

laws i.e. Strata Titles Act 1985 (Act 318) (‘STA

1985’) on the aspect of formation and management.

The law requires the formation of a management

corporation to manage and maintain the building and

the common properties.

In 2007, the scope of application of strata laws

was further extended to land parcels when the STA

1985 was amended via the Strata Titles

(Amendment) Act 2007 (Act A1290) (‘STA(A)

2007’) in line with the introduction of the Building

and Common Property (Maintenance and

Management) Act 2007 (Act 663) (‘BCPA 2007’).

The BCPA 2007 provides for the proper

maintenance and management of buildings and

common property. This amendment and introduction

of new law has allowed subsequent housing

development involving landed properties to come

within the ambit of strata laws. Thus the landscape is

such that the developers of housing estates with

landed properties after 2007 may opt for strata titles

issued under STA 1985, instead of individual titles

issued under National Land Code 1965 (‘NLC

1965’). Those areas in this type of housing estate

(other than individual designated parcel/land parcel)

are known as common properties and will be

managed by the management corporation. Common

property means those areas of the lot as is not

comprised in any parcel as shown in a certified strata

plan (STA 1985, s. 4), which area is used or capable

of being used or enjoyed by occupiers of two or

more parcels (SMA 2013, s. 2).

A classic example is Desa ParkCity housing

development in Kuala Lumpur which comprises

various housing development schemes covering 473

acres in area such as vertical development projects

(apartments and condominiums) and horizontal

development projects (bungalows, terrace/linked

houses, and semi-detached houses). According to

its’ website homepage, it is stated that Desa

ParkCity is “truly a self-contained township, centred

on the ideals of good, wholesome living, where its

residents are able to foster family, neighbourhood

and community ties.” (Desa ParkCity, 2019).

The Department of Town and Country Planning

has distinguished the two terms ‘gated community’

and ‘guarded neighbourhood’ in its Planning

Guidelines on ‘Gated Community and Guarded

Neighbourhood’ dated 2 September 2010 (Planning

Guidelines, 2010). According to the 2010 Planning

Guidelines, a gated community is referred to as a

gated and guarded residential community

comprising strata title properties, while a guarded

neighbourhood is referred to as a residential

community comprising landed properties held under

individual land titles) with security services, either

with or without a security house (Planning

Guidelines, 2010 at p.3). The definition by the

Department is for the purpose of application for

approval to enclose the housing areas (either gated

community or guarded neighbourhood only) for the

security scheme. There is no other written law which

provides for the meaning for both terms.

Not all landed properties nor all parcels in a

building come within the ambit of strata laws.

Stratified properties are categorised as ‘gated

community’.The Strata Management Act 2013 (Act

757) (‘SMA 2013’)is the current law that governs

the issues on formation and management of the

stratified properties (including the common

property). The SMA 2013 has repealed and replaced

the BCPA 2007. Non-stratified properties may be

classified as ‘guarded neighbourhood’ if similar

features such as security and safety are provided in

the housing estate’s “public space”.

There are no comprehensive laws governing the

formation and management of ‘guarded

neighbourhood’, especially the “public space”

within the housing estates. This paper intends to

examine the lacunae on the existing strata laws on

Laws on Formation and Management: Guarded Neighbourhood in Malaysia Being Neglected?

197

the aspects of formation and management of that

community and to explore the laws on formation and

management of guarded neighbourhood in Malaysia.

2 MATERIALS AND METHODS

2.1 Method

This research study is purely a doctrinal legal

research where the data collected are mainly from

primary sources such as the relevant statutes and

case laws; and secondary sources thesis/dissertation,

books/book chapters, articles, conference

proceedings, and newspapers.

2.2 Scope of Existing Strata Laws

The application of the STA 1985 and the SMA 2013

is only limited to properties issued with strata titles.

Once the building or land is capable of being

subdivided into parcels, the original proprietor may

apply to the Director of Lands and Mines for the

respective State for subdivision (STA 1985, s. 4).

The SMA 2013 shall thereafter be operative in the

respect of the maintenance and management of

building and common property, joint management

body (‘JMB’) and the management corporation.

JMB is established under s. 17 of the SMA 2013,

after the handing of vacant possession but before the

issuance of strata titles, as an interim body before

the existence of the management corporation. The

membership of JMB comprises the developer and

the purchasers (SMA 2013, s. 17(5)) whereas the

membership of the management corporation consists

of the proprietors of parcels.

All legal responsibilities of the JMB shall be

transferred by the developer to the management

corporation when strata titles are issued (Master title

in Form 3 registered in the name of the management

corporation and individual strata title in Form 4

registered in the name of respective registered parcel

owners). Once the management corporation is

established, JMB shall cease operation. Basically the

SMA 2013 has spelt out the duties and powers of the

relevant parties. The responsibility of JMB and

subsequently the management corporation basically

is to maintain the common property and to serve the

community living in the stratified properties. These

include the establishing of maintenance account

(SMA 2013, s. 50), and sinking fund account (SMA

2013, s. 51) in the name of the management

corporation, the convening of the annual general

meeting, and the dispute resolution mechanism.

There is a proper set of laws and by-laws governing

the management on finance risk, safety and security,

and dispute actions (Strata Management Regulations

2015, Third Schedule).

The presence of the management corporation is

necessary to collectively maintain and manage the

building and common property to reach a sustainable

and equitable communal living environment. A

common challenge in communal living is the

insufficient fund (non-payment of Charges by some

parcel proprietors) to upkeep the surrounding shared

facilities, common areas which may trigger

consequential issues of safety and security.

Eventually the property price may also be affected.

All aspects of the stratified properties are

regulated to ensure that the moneys (Charges paid

into the maintenance account and contribution to the

sinking fund) paid by the parcel proprietors and held

by the developer, JMB or management corporation

are properly accounted and audited. The

Commissioner of Buildingsis appointed by the State

Authority as the public authority to administer and

carry out the provisions of the SMA 2013 (SMA, s

4). Non-compliance and breach of any of the

provisions of the STA 1985 or SMA 2013 by the

relevant parties, be it developer, JMB, management

corporation or the parcel proprietors, may attract

civil and/or criminal sanctions. Parties are not

prohibited to contract out of the provisions of the

SMA 2013 (SMA 2013, s 149). Besides, disputes

may be referred to Strata Management Tribunal

instead of courts. (SMA 2013, Part IX).

However, these extensive set of strata laws only

cover those purchasers who are ultimately registered

parcel proprietors (having registered title), and not

those registered lessees (having registered interest).

This is one lacunae where the developer and/or

original proprietor may rely upon to escape legal

responsibilities and sanctions imposed by the strata

laws.

2.3 Guarded Neighbourhood

In contrast, there is no specific single law governing

the guarded neighbourhood (non-stratified

properties) in the aspect of maintenance and

management. The non-stratified proprieties are

basically properties which are issued or to be issued

with individual title or under a master title. It can be

categorised broadly into two: (a) existing housing

estate; and (b) new housing development projects,

where the developers often tagthe projects under

gated or guarded community as attractive selling

point.

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This is due to the fact that the proprietors

(registered or not yet registered) in the housing

development area to be responsible for ‘public

space’ outside their respective house boundary. Thus

there is no legal responsibility imposed on them to

maintain the surrounding environment such as

public road, drainage, and public garden.

Nevertheless, the management of the guarded

neighbourhood in some areas exist on an ‘ad-hoc’

voluntary basis based on the private agreement

among the residents in the housing estate by

establishing residents’ association.In the new

housing estate, the developer may require the

purchasers to execute deed of mutual covenants (in

addition to the standard sale and purchase

agreement) to set up a residents’ association to

maintain and manage the housing community.

The Common property concept does not apply in

guarded neighbourhood, thus the residents’

association must obtain prior approval from the

relevant authority (state government and local

authority) if it intends to privately restrict or regulate

public spaces such as to close, barricade or restrict

the access of a public road, drain or space within the

housing estate. Various laws are involved such as: s.

46(1) of the Street Drainage and Building Act 1974

(Act 133) which prohibits a person to build, erect,

maintain or issue permit to maintain any wall or

fencing in a public place; s. 80 of the Road

Transport Act 1987 (Act 333), and s. 62 and s. 136

of the NLC 1965 which prohibit obstruction to any

public road; and Town and Country Planning Act

1976 (Act 172). It requires a minimum of 51% of

residents to agree to establish a residents’

association under the Societies Act 1966 (Act 335).

Basically the residents’ association can only enforce

against the registered members for non-payment of

the charges in arrears based on contractual

relationship. In contrast, the management

corporation is empowered under s. 77(3) of SMA

2013 to take legal action against proprietor of the

parcel in strata properties in a court of competent

jurisdiction or before the Strata Management

Tribunal.

As not all residents in the guarded

neighbourhood are registered members of the

residents’ association, the residents’ association may

have financial restraint to manage and maintain the

guarded neighbourhood.

3 RESULTS AND DISCUSSION

The discussion on the lacuna in laws is divided into

two aspects: (a) gated community; and (b) guarded

neighbourhood.

3.1 Gated Community

The STA 1985 and the SMA 2013 only intend to

either cover those “proprietors” of the parcels or

land parcels only. The word ‘proprietor’ is defined

(STA 1985, s. 4; SMA 2013, s. 2) and basically

refers to those purchasers of the parcels or land

parcels who shall ultimately obtain the title

ownership over the strata titles via a valid instrument

of transfer of title in Form 14A (NLC 1965, s.

214(1)(a)). Only these proprietors are subject to the

statutory rights provided under the SMA 2013, such

as right to establish the management corporation,

right to attend the general meeting of the

management corporation and right to vote, together

with the obligation to pay sinking fund and Charges

(SMA 2013, ss. 34-38).

The strata laws have neglected the scenario

whereby the parcels or land parcels are leased to the

purchasers by the original proprietor via Form 15A

(NLC 1965, s. 221(3)(a) & (4)). In this case, the

original proprietor shall remain as the registered

proprietor on the strata title and not the purchaser

(being a registered lessee). The lessee technically

does not fall within the scope of ‘proprietor’ as he

shall only obtain an interest and not proprietorship

on the strata title if registered (NLC 1965, s. 227).

This can be seen in an unreported High Court

decision whereby the judge held that the registered

original proprietor couldnot form a management

corporation for the development project in Marina

Bay Condominium, Penang that consist of

condominium units, leased to the purchasers (Hunza

Parade Development v Lai Ah Han, 2011). The

Court acknowledged that the STA 1985 does not

provide for the situation where the original

proprietor only leased the land concerned to the

purchasers for 99-year lease where only the original

proprietor appears as the registered proprietor on all

strata titles issued and the purchasersareonly

registered as lessees. Similar view is also

highlighted by Tay, Kuek & Kung (2015) that the

strata legislations need to be ironed out immediately

on this aspect.

It is awkward that during the interim period of

the strata management before the existence of the

management corporation, the purchaser, being

member in the JMB has the right to attend the first

Laws on Formation and Management: Guarded Neighbourhood in Malaysia Being Neglected?

199

annual general meeting of the JMB (SMA 2013, s.

19) and exercises his rights empowered thereof,

including consider the annual budget, voting, and

etcetera. The term ‘purchaser’ means either ‘a

purchaser of a parcel which includes any person who

has acquired an interest or registered as a parcel

owner’ (SMA 2013, s. 4). However,

immediately,when the management corporation is

established, only the proprietor (registered) (SMA

2013, s. 4) assumes those rights and obligations, but

not those acquiring interest like lessee.

Perhaps it could be a genuine omission by the

legislature that not all purchasers will eventually

become registered owner of the respective parcel or

land parcel. No one foresees that the original

proprietor may want to retain ownership and lease

his parcel or land parcel to the purchaser for a

maximum of 99 years. This is especially so that

there would be some developers or original

proprietors who may be interested only to lease the

parcel or land parcel and at the same time remain as

registered proprietors.Possibly this could be a reason

for the developer to avoid the over-regulated strata

laws which are full with criminal sanctions since the

SMA 2013 prohibits the parties to contract out of the

provisions.

3.2 Guarded Neighbourhood

There is a lacuna in laws on formation and

management of guarded neighbourhood in Malaysia.

Currently it remains a private

arrangement/agreement among the residents within

the housing estate to form a residents’ association to

manage and safeguard the safety and security of the

housing estate. The legality of the residents’

association to fence the public road (entrance to the

housing estate) was tested in Au Kean Hoe v

Persatuan Penduduk D’villa Equestrian (2015). The

Federal Court dismissed the plaintiff (resident)’s

action for nuisance caused by the presence of guard

house and boom gates on access road into the

housing estate. The court ruled that the use of boom

gates across public roads and guardhouses in the

housing estate was legal on two grounds.Firstly,

local authority has approved the erection of the

structures; and secondly, such complaint of

obstruction was only inconvenience (not nuisance)

to the plaintiff who had earlier defaulted in

maintenance and security charges payment to the

residents’ association. The research output by Haji

Mohamad, Tan & Ahmad (2009) showed that the

letter of law clearly prohibits any form of blocking

of public spaces except if permitted by the local

authority via guidelines. There was an attempt to

propose a Gated and Gated and Guarded Community

Bill in 2009 by the residents of Tropicana but was

not accepted by the Ministry (Tan, 2009). Instead,

the 2010 Planning Guidelines issued by the

Department of Town and Country Planning (now

under the Ministry of Urban Wellbeing, Housing

and Local Authority) serves as guidelines for the

gated community and guarded neighbourhood in the

security scheme. The 2010 Planning Guidelines

cover these aspects, among others, the minimum and

maximum land area for gated community, requisite

Social Impact Assessment, maximum number of

houses, internal road systems, height restriction of

fence and masonry wall, entry and exit access,

location and size of the guard house and formation

of a residents’ association.

The formation and management of the guarded

neighbourhood will depend very much on the

collective decision of the residents in each housing

estate. In fact, the guarded neighbourhood could

adopt a similar model of the gated community (on

their choice) but there is no legal compulsion to do

that. In both situations (lessees in strata properties

and residents in guarded neighbourhood), the

existing possible solution is through deed of mutual

covenants among the residents as there is no uniform

law governing both situations.

4 CONCLUSION

In conclusion, the strata laws may require some

amendments to include the registered lessee within

the definition of “proprietor” in order for the

mechanism of the statutory rights and obligations

similar to those registered owners under the strata

titles.

A comprehensive legal framework to manage

and maintain the guarded communities is required to

achieve a better quality of life within the guarded

neighbourhood in Malaysia. Meanwhile, the guarded

neighbourhood may refer to the strata laws as a

guide only in formation and management of the

respective areas. However, there are other areas that

need to be addressed for landed properties.

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Statutes

Building and Common Property (Maintenance and

Management) Act 2007 (Act 663)

National Land Code 1965 (Act 56 of 1965)

Road Transport Act 1987 (Act 333)

Societies Act 1966 (Act 335)

Strata Management Act 2013 (Act 757)

Strata Management (Maintenance and Management)

Regulations 2015 (PU(A) 107/2015)

Strata Titles Act 1985 (Act 318)

Strata Titles (Amendment) Act 2007 (Act A1290)

Street Drainage and Building Act 1974 (Act 133)

Town and Country Planning Act 1976 (Act 172)

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