Malaysian Law & Legal Q&A

Hidden costs in Serviced Apartments

Hidden costs Serviced Apartments

Owning serviced apartments can be a costly affair if you are not aware of the hidden costs and such. This is where you will find that owning such properties might be more difficult than it seems because of such costs.

Services apartments can be hard to maintain if you are not aware of the maintenance clauses and conditions. While they can be small pieces of properties and costly in some ways but as you do not really need to maintain them yourself, you would have to pay the management office to do so.

Not most owners would stay in their serviced apartments because they would rather lease them out. You have to know though that owning serviced apartments is very different as compared to owning apartments and condominiums. Essentially, serviced apartments are not like condominiums which are residential units where the former is usually built on commercial status lands.

One of the earliest service apartment projects in Klang Valley was the Micasa Hotel Apartments and this sector has grown to thousands of service apartments available around the city centre. The booming tourist industry meant that there is more demand of these units apart from business travellers and expatriates, who used to be the most popular customers.

Most of the developers would provide a leaseback option when selling serviced apartments which usually come with housekeeping services, room service, concierge, laundrette, security and business centre services, very much like what you will get when staying in hotels.

In recent years, the rise of ‘service residences’ have begun to boom and where developers are targeting the owner-occupiers instead of the short-term occupants. Service residences are slightly different from serviced apartments in terms of their locality. Typically, the former are located not in the city centre and instead in prestigious suburbs like Sri Hartamas and Mutiara Damansara.

The development of serviced apartments are not under the governance of the Housing Development Act where they carry higher utility charges and this is where you need to be careful. One of the arguments going around the industry is that developers are selling residential properties and calling them serviced apartments to try and capitalize on the loopholes of the Housing Development Act.

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