assessment rates by DBKL?
Datuk Chang Kim Loong / National House Buyers Association February 13, 2025 | Updated 1 month ago
The owners of strata properties (landed or multiple-storey) already bear the financial burden of maintaining their shared infrastructure and facilities through contributions to their joint management bodies, management corporations (MCs), or subsidiary management corporations.
In recent developments, Kuala Lumpur City Hall (DBKL) is contemplating an increase in assessment tax rates, following the Selangor state government's 25% hike effective from January this year. This move has raised concerns among residents, who are calling for greater transparency and financial accountability from DBKL before any rate adjustments are implemented.
Additionally, there have been discussions about the need for DBKL to take into account the various property classifications before imposing new rates on residential, commercial, industrial and mixed development projects.
This article will focus on stratified developments, be it landed or high-rise. The rationale could potentially lead to a more tailored assessment policy that considers the unique characteristics of stratified properties.
It's also noteworthy that in Putrajaya, the government has implemented assessment tax cuts, including a 5% reduction for strata-title residences (excluding affordable houses) and a 20% reduction for terrace houses, effective from July 1, 2023.
These developments suggest a recognition of the unique circumstances of different property types and may influence future assessment rate policies in Kuala Lumpur.
Maintenance borne by owners, not DBKL
The owners of strata properties (landed or multiple-storey) already bear the financial burden of maintaining their shared infrastructure and facilities through contributions to their joint management bodies (JMBs), management corporations (MCs), or subsidiary management corporations (SMCs). These monthly contributions, ranging from RM0.20–RM2.00 psf, depending on the standard of living the community opts for, cover the upkeep of internal service roads, drainage, lighting, rubbish collection, landscaping, and other common facilities. This leaves only the external public infrastructure, such as DBKL-maintained roads, drainage, streetlights and roadside landscaping, to be funded by assessment taxes.
As such, DBKL's role is limited to maintaining external public infrastructure outside these strata properties, which benefits all properties in the locality, not just the strata properties.
Hence, DBKL should adopt a more “equitable approach” by imposing lower assessment rates for strata parcels, reflecting the actual cost of DBKL’s services to these properties. It is important to clarify that while DBKL provides domestic waste disposal for residential strata properties, this service constitutes only a small fraction of DBKL’s overall operational costs.
Recalibrate with an ‘equitable’ formula
This context underscores the need for DBKL to recalibrate its assessment rates for strata parcels. The principle of fairness dictates that these rates should reflect the reduced scope of DBKL's responsibilities for stratified properties. Consequently, the assessment rate per parcel for strata developments should be strictly limited to DBKL’s actual costs for maintaining public infrastructure in each locality. These costs should be transparently calculated, proportionate to the limited scope of services provided, and are expected to be lower, not exceeding the current rates imposed on strata parcels. Overburdening strata owners with higher rates would be unjust, especially considering they already bear the cost of maintaining their common areas independently.
Such a recalibration would not only alleviate unnecessary financial pressure on strata parcel owners but also set a precedent for responsible and equitable taxation. It aligns with the broader call for financial accountability and transparency in DBKL's operations. For instance, DBKL must demonstrate prudent fiscal management, efficient use of non-rate revenues, and proactive measures to recover outstanding dues from defaulters before considering any tax hikes.
Moreover, public trust can be significantly enhanced if DBKL ensures that every ratepayer understands the basis of the rates they pay and sees clear value for his/her contributions. This includes publishing comprehensive audits, implementing value-for-money practices, and fostering public oversight mechanisms, such as an Ombudsman, to scrutinise spending.
Adopting such an approach would not only address immediate concerns but also lay the groundwork for a more transparent and equitable framework for local governance. It is imperative for DBKL to recognise the unique financial burdens of strata property owners and act accordingly, promoting fairness while ensuring adequate funding for public services.
Transparency and fairness in rate assessments are crucial to ensure taxpayers are not disproportionately charged while fostering trust and accountability in DBKL’s financial management.
