LCQ17: Adjustment of private building management fees

Following is a question by the Hon James To and a written reply by the Secretary for Home Affairs, Mr Tsang Tak-sing, in the Legislative Council today (May 11):

Question:

It has been reported that, in response to the Minimum Wage Ordinance (Cap. 608) (MWO) which came into force on May 1 this year, quite a number of private buildings will increase management fees and some will even have the fees increased significantly by 40% to 50%, in order to increase the wages of some security guards and cleansing workers of the buildings to meet the statutory minimum wage level and cope with other increases in expenditure due to inflation. In this connection, will the Government inform this Council:

(a) given that the existing Building Management Ordinance (Cap. 344) provides that, when the management committee (MC) of a private building is making an estimate for an increase in management fees, a general meeting of the owners to pass a resolution on such increase is required only if the amount of the management fees charged after the increase exceeds 150% of the preceding amount charged, of the reasons for formulating this stipulation; whether the authorities will consider conducting any review in this regard;

(b) given that it has been reported that some private buildings need to increase their management fees in response to the implementation of the MWO, whether the authorities will, while assisting owners' corporations (OCs) and owners in understanding their responsibility as employers under the Ordinance, also consider helping them to know how to avoid increasing management fees indiscriminately; if they will, of the kind of assistance to be offered;

(c) whether the authorities have sought information from OCs about any increase in management fees since July last year and the rates of such increases; if they have, in respect of the cases that the authorities know, of the number of private buildings concerned, broken down by the increase (i.e. less than 15%, 15% to 24%, 25% to 34%, 35% to 49%, and 50% or above) in management fees; whether they know the number of OCs involved, and among them, the percentage of those which had convened general meetings of owners to pass resolutions on such increases, as well as the highest and lowest rates of such increases; if they do not know, whether they will consider collecting such information;

(d) whether the authorities have advised and assisted OCs which had proposed to increase management fees in convening general meetings of owners as far as possible, to discuss the issue and pass resolutions thereon; if they have, of the number of OCs to which the authorities have given such advice since July last year, and among these OCs, the respective numbers of those which have accepted and rejected such advice; in case where the OC rejects such advice, whether the authorities will offer assistance to the owners in convening a general meeting on the increase of management fees to make the OC follow the resolution passed at the general meeting; if they will, of the assistance given; and

(e) whether the authorities have, since July last year, attended any meeting convened by MCs of OCs to discuss matters concerning the adjustments of management fees; if they have, of the total number of the meetings attended and among them, the number of meetings at which more than half of the members were present and resolutions on increasing management fees were passed by a majority of the members present?

Reply:

President,

Regarding the five parts of the question, the reply is as follows:

(a) According to Section 20 of the Building Management Ordinance (the Ordinance), an owners' corporation (OC) shall establish and maintain a general fund to defray the cost of the exercise of its powers and the performance of its duties under the deed of mutual covenant and the Ordinance (such as for employing security guards and paying cleansing fee) and other outgoings (including any outgoings in relation to any maintenance or repair work). According to Section 21(1) of the Ordinance, a management committee elected by an OC shall determine the amount to be contributed by the owners to the general fund. It is provided in the first paragraph of Schedule 5 of the Ordinance that the amount to be determined by the management committee shall be based upon the annual budget of an OC. In addition, Section 21(1A) also provides that if the amount subsequently determined by the management committee increases by over 50% of the preceding amount, the subsequent amount should be approved by the OC by a resolution passed at a general meeting.

The relevant provisions serve to ensure that there are clear legal provisions and guidelines for a management committee to follow in preparing its budget and making an increase in management fee. They strike a balance between effective operation of a management committee and protection of owners' rights. Appropriate flexibility is allowed for a management committee to adjust its management fee, while ensuring that any significant increase in management fee shall be subject to the resolution of all owners.

We will gather the views of Members and the public on the above provisions and reflect their views to the Review Committee on the Building Management Ordinance.

(b) The Labour Department (LD) has organised extensive publicity activities to explain the Minimum Wage Ordinance (MWO) to the public. The activities include broadcasting television and radio announcements of public interest through different media channels; advertising on public transport and in various publications; publishing leaflets and posters for wide distribution and display; inserting promotional message in electricity and water bills; placing newspaper supplements; issuing reference guidelines on statutory minimum wage (SMW); conducting briefings on the MWO; staging roving exhibitions; and providing information at LD's homepage. Members of the public may enquire about the MWO at LD's 24-hour hotline 2717 1771 and ten District Offices of the Labour Relations Division. Information about employers' obligations under the MWO is available to OCs, Owners' Committees, Mutual Aid Committees and owners of private buildings through these channels.

In addition, LD has since December 2010 sent three rounds of individual letters to invite more than 10,000 OCs, Owners' Committees and Mutual Aid Committees to attend briefings on the MWO, including seminars specifically targeted for them. Publicity materials have also been mailed to them. Moreover, LD's "Statutory Minimum Wage: Reference Guidelines for Employers and Employees" and concise guide to SMW are distributed at the Public Enquiry Service Centres of the District Offices.

Apart from the implementation of SMW, other factors may also lead to the increase in management fees. If owners have any queries or dissatisfaction to the increase level of the management fees, they may reflect to their OCs or management companies. If owners consider necessary, they may also convene a general meeting of the OC in accordance with the Ordinance to discuss the issue on the increase in management fees.

(c) In setting the level of management fee, an OC has to follow the provisions and procedures set out in the Ordinance. As OCs are not required to report to the Government on any increase in management fee, nor does the Ordinance require that OCs have to submit issues to be resolved in every general meeting of the OCs to the District Offices, we do not have any figures in this respect. The management fee of each building or estate may vary in view of its condition, facilities, services and residents' needs, which may not be directly related to the implementation of SMW. To collect information on the increase level of the management fees of private buildings in the past months may not be of material value to enable better understanding of the problem. Thus, we do not have plans to collect such information.

(d) An OC is an independent body corporate formed under the Ordinance. It acts legally on behalf of all owners in managing the common parts of the building, attending to their rights and interests as well as taking up responsibilities. It also adopts all reasonable and necessary measures to perform duties contained in the deed of mutual covenant in relation to the control and management of the building.

Generally speaking, if owners have any enquiries about the convening and procedures of an OC meeting and matters on procurement and financial management, the District Offices will actively provide assistance, support and advice. Increase in management fee is a management issue of private buildings, which should be settled by the OC and owners of the building. Owners should reflect directly to their management committees or management companies if they have any views on management issues. Under the Ordinance, a general meeting of the OC can also be convened at the request of not less than 5% of the owners made to the chairman of the management committee, so as to find solutions to resolve the problem.

If a management committee chairman refuses to convene an extraordinary general meeting of the OC at the request of not less than 5% of the owners, owners may apply to the Lands Tribunal for an order to compel the management committee chairman to convene a general meeting of the OC.

(e) Since July 2010, the District Offices have, by invitation, sent representatives to attend 1,675 management committee meetings of the OCs. However, we do not have the statistics on the contents of such meetings.

Ends/Wednesday, May 11, 2011
Issued at HKT 11:34