PURPOSE

To brief Members on the criteria for fixing management fees for Home Ownership Scheme (HOS) estates managed by property management agents (PMAs) under the supervision of the Housing Authority (HA).

BACKGROUND

2. Currently, all HOS estates are managed by PMAs appointed by HA. As provided under deed of mutual covenant (DMC), HA appoints PMAs to manage HOS estates and supervises their performance. To cover the administration overheads and staff costs incurred by HA, a supervision cost is collected from flat owners.

MANAGEMENT FEE

3. In accordance with Building Management Ordinance, the management fee of an HOS estate is fixed to defray the cost of exercising the owners' powers and duties under the respective DMC and to pay all outgoings arising from its proper management. In fixing the fee, the age, state of repair, and owners' management expectation of their estate are taken into account. Apart from recurrent operating expenses, the fee provides for a reserve for non-recurrent expenses like maintenance of equipment, slopes and buildings, and a saving for emergency use. As mentioned earlier, the management fee also includes the supervision cost charged by HA.

4. A breakdown of the expenditure items of management fee is at Annex A.

SUPERVISION COST

5. The supervision cost levied by the HA covers costs of supervisory management and maintenance staff, and administrative overheads of HA. It is determined on the basis of cost recovery. Only actual expenses incurred are charged and shared among flat owners. The HA adjusts supervision cost annually, having regard to actual expenses incurred in the current year and anticipated changes in spending pattern in the coming year. In early 1998, the HA froze the supervision cost for 1998/99 at the 1997/98 level. Subject to the decision of the Home Ownership Committee of HA, we will maintain the existing level of supervision cost of $30.3 for each flat for 1999/2000. A breakdown is at Annex B.


Housing Department
January 1999

Annex A

The expenditure items of management fee for HOS estates include:

1. Recurrent operating expenses

• On-site court management staff of PMA
• Building and security staff
• Repairs and maintenance
• Cleaning
• Electricity
• Water
• Audit fee
• Insurance
• Stores, stationery and staff uniforms
• Remuneration for PMA (including management fee, staffing & administration cost)
• Miscellaneous

2. Transfer to maintenance and repairs fund (for planned maintenance of equipment, slopes and buildings)
   
   
3. Transfer to accumulated fund for emergency purpose¹
   
   
4. Housing Authority supervision cost

1.As a matter of policy, a saving of not less than three months the management fee level should always be kept for each HOS estate for good building management purpose.

Annex B

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