Sustainable development of condominium housing schemes in Sri Lanka

Wednesday, 5 May 2021 00:01 - - {{hitsCtrl.values.hits}}

CMA Chairman Sarana Karunarathna

CMA GM Dr. Indunil Liyanage

In a special series, the Daily FT based on inputs from Condominium Management Authority (CMA) Chairman Sagara Karunarathna and General Manager Dr. Indunil Liyanage focusses on how local property developers and foreign investors should be encouraged to launch condominium housing schemes in Sri Lanka

‘A comfortable home for each family,’ a key component of the Vistas of Prosperity and Splendour national policy framework, is a concept of special significance.

The prime objective thereof is to introduce a state policy of “multi-storey housing” transcending housing policies of all post-independence governments of the country. This multi-storey housing process or the creation of condominium properties which has already been initiated as a public private partnership giving premium value to the land is indicative of the importance attached to condominium housing in future.

One of the objectives of the ‘Vistas of Prosperity and Splendour’ is to provide affordable housing facilities from government housing schemes to underserved communities and shanty dwellers scattered across many towns of the island. Hence there is little doubt that the vast majority of proposed Government sponsored housing schemes in future will be condominium properties.

The developer of multi-storey housing schemes, being constructed or proposed to be constructed by the private sector, is either a private property developer or an institution.

Condominium housing schemes hitherto constructed or proposed to be constructed in Sri Lanka can be broadly categorised as luxury, semi luxury, middle class or low-income multi-storey housing schemes.

The proposed multi-storey housing schemes to be constructed under the state sponsorship are to be built jointly by the National Housing Development Authority, the Urban Settlement Development Authority and local government authorities or individually by these institutions and some of these schemes are already in progress. By being able to buy a housing unit upon an affordable long term hire purchase scheme, improves living conditions with a better social standing is assured for middle and low income earners.

By making available lands for construction industrialists for building multi-storey complexes within the income range of the middle class, local industrialists as well as local property developers will be able to make a direct contribution to the development process of the country, thus enabling the circulation of money within the country.

It also generates plenty of employment opportunities within the country and local property developers become direct partners of the country’s development drive. Consequently, local revenue situation will improve and local investors will be immensely benefited. Further, foreign investors are accorded more opportunities to contribute to the development process of the country under the facilities made available by the Board of Investments.

Based on policies and concepts of Vistas of Prosperity and Splendour, the Government constantly offers incentives to public sector institutions and local developers to undertake multi-storey housing projects. The Government also offers many concessions for housing projects constructed by private sector entrepreneurs and regulate the entire process.

Providing State-owned lands on long-term lease basis at reduced rates to entrepreneurs involved in the housing sector will serve as a booster for small scale entrepreneurs and the resultant growth in their businesses will augment the country’s revenue status. As these housing schemes are constructed under the supervision of public sector institutions, construction work should be completed within the stipulated timeframe adhering strictly to set standards which in turn will minimise the expenditure of the property developer while enhancing the quality of the construction.

For multi-storey housing schemes proposed by the Government, involvement of local property developers can be secured through agreements. Thus, the property developer will be relieved of the cumbersome process of finding a land and buyers will have the opportunity of purchasing fully-fledged house constructed in conformity with the condominium plan.

The construction of a house with minimum defects and equipped with all the requirements will result in the developer of the relevant property being awarded more constructions and thereby the developer will become a more trustworthy and reliable entrepreneur.

The supervision exercised by public institutions over all housing schemes constructed by the developer ensures minimal shortcomings and the property developer will find it easy to dispose of units of housing schemes so constructed leading to their institutional as well as economic advancement.

New trends in construction of multi-storey housing schemes or condominium properties

Population shift from rural to urban areas in search of new facilities and jobs.
Limited availability of lands in urban areas required for housing purposes.
Possibility of constructing a large number of houses in a relatively small area,
Increasing number of people employed in urban areas looking for houses in urban localities.
People looking for houses in urban areas with the objective of admitting their children to popular urban schools.
Extremely busy lifestyle compels people to live in an environment where all amenities are available.
Preference of increasing number of tourists visiting Sri Lanka to stay in condominium housing units at more concessionary prices rather than staying in hotels.
People adopting to luxury living styles with the increase in their disposable income.
Better protection offered by condominium living as compared to living in a separate house.
Constructing a condominium building at a lower cost for children instead of constructing a separate house for each child.
Vertical housing concept gaining more popularity over horizontal housing concept
At present condominium properties are constructed under the vertical housing concept as well as the horizontal housing concept.

Condominium housing schemes by the public sector

Luxury multi-storey housing schemes
Semi luxury middle class housing schemes
Multi-storey housing schemes for low income earners

Designing building plans, consideration of requirements for common elements and common amenities, preparing condominium plans, obtaining approval from the relevant Government institutions are carried out by the public sector institution functioning as the property developer.

Condominium housing schemes by the private sector

Luxury multi-storey housing schemes
Semi luxury middle class housing schemes

All aforementioned activities in respect of housing schemes constructed by the private sector have to be carried out by the developer of the relevant property and it is his responsibility to obtain the certificate for common amenities and common elements from the Condominium Management Authority and other relevant approvals from the respective public sector institutions.

Condominium housing schemes constructed through foreign investments

Such condominium housing projects are implemented through the Board of Investment and development of property is carried out either through a local property developer or a foreign property developer/institution. They are usually upscale housing schemes designed to appeal to affluent customers.

Condominium properties are also constructed as Public-Private Partnerships and the expenditure is shared by partners in terms of contractual obligations.

Role of Condominium Management Authority

The Condominium Management Authority is the sole regulatory body empowered to regulate common elements and common amenities of all multi-storey housing schemes in the country. The Common Amenities Board that was established by the Common Amenities Board Law No. 10 of 1973 for the regulation of common amenities and common elements of multi-storey housing schemes constructed by the United Front government gradually evolved and was statutorily established as the Condominium Management Authority by Act No. 24 of 2003.

The Condominium Management Authority is the regulatory authority in respect of condominium properties. It is a semi-government organisation that causes the common elements and common amenities of condominium properties (housing schemes) to be controlled, managed and administered through lawfully established management corporations while regulating activities thereof and supervising the quality of ongoing constructions.

Services rendered by the CMA

Issuing a preliminary clearance certificate for the approval of the building plan of the condominium property.
Supervising whether the construction of the condominium building is in conformity with the building plan and condominium plan.
Establishing management corporations to control, manage, maintain and administer common elements and common amenities of condominium or semi condominium properties.
Ensuring that common amenities and common elements of condominium or semi-condominium management corporations are maintained in good order and repairs are being carried out in order to maintain such property in good and serviceable order and to assist the MC or owners or occupiers to carry out such activities or to be directly involved with such activities which may also include resolving disputes between various parties of the condominium property.
Removing unauthorised structures
In cases where deeds of housing units have not been granted, initiating an inquiry and constituting legal action against the developer.
Ensuring that all buildings comprising such condominium parcels are insured against the risk of fire, civil commotion and riot or insure or keep insured, if so requested by the MC or by the owners, making inquiries annually whether the insurance is kept valid and impressing upon the importance thereof.
Examining whether the common elements and common amenities of housing units are maintained in good and serviceable order.
Regulating services and maintenance relating to common amenities and common elements of housing schemes. Common amenities are: Water supply system, sewerage system (septic tanks and waste treatment plant) gas system, firefighting system, telephone system, drainage systems, lifts and the generator. Common elements are: Staircases, roof, generator room, MC office, Club House, drivers’ room, security room, common toilets, toilets for the disabled, transformer room, garbage dump, gas bank, post boxes, electricity meters room, playground, daycare centre, preschools, septic tanks and waste treatment plant.
Making interventions when services are required for occupiers of units from Government or other agencies.
Making interventions to transfer the maintenance of common amenities of housing schemes where such amenities are controlled by an institution or to the MC of the housing scheme.

Legislation relating to condominium properties

Common Amenities Board Law No. 10 of 1973

A law to provide for the establishment of a public authority known as the Common Amenities Board for the control, management, maintenance and administration of the common amenities and common elements of units of accommodation and for the provision of common amenities thereto, and for matters connected therewith or incidental thereto.

Thereafter the Apartment Ownership Act No. 11 of 1973 was adopted conferring broader powers on the National Housing Commissioner for the control of multi-storey and apartment houses thus repealing the Condominium Property Law No.12 of 1970. It made a provision to the effect that it shall be lawful for the owners of all units of a registered condominium property to form themselves into associations or bodies.

The Apartment Ownership Act No.11 of 1973 was amended by the Apartment Ownership (Amendment) Act No. 45 of 1982. A host of new powers were added to the principal enactment through these amendments in respect of the role of the MC, funds of the MC, appointment of an administrator through the courts and insurance of properties.

The Apartment Ownership (Amendment) Act No. 45 of 1982 was again amended through the passage of the Apartment Ownership (Amendment) Act No. 39 of 2003. Through the amendments thus introduced, provisions were made for the registration of a condominium property on 03 occasions as provisional condominium property, semi condominium property and full condominium property.

The following powers were conferred on the CMA by the Apartment Ownership (Amendment) Act No. 39 of 2003 and the Common Amenities Board (Amendment) Act No. 24 of 2003 (Condominium Management Authority Act):

Registration of the relevant condominium plan and condominium declaration after the construction of the condominium property
Issuing a certificate for common elements of the property
Regulating all activities of the MC that is established subsequent to the registration
Resolving disputes that arise between various parties of the condominium property
Removal of unauthorised structures

The Apartment Ownership (Special Provisions) Act No. 23 of 2018 which amended the Apartment Ownership (Amendment) Act No. 39 of 2003 facilitated the registration and disposition of certain condominium properties owned by the state or by a state agency.

Further, Extraordinary Gazette No. 2025/26 dated 05.07.2017 introduced regulations to the Apartment Ownership Law No.11 of 1973 and the Condominium Management Authority Law No. 10 of 1973.

The Apartment Ownership (Special Provisions) Act No. 04 of 1999 was enacted to facilitate the registration of certain condominium properties whereof management corporations could not be established as they could not be disposed due to being constructed in violation of the National Housing Development Authority Act.

Factors taken into account in constructing a condominium property or selling a condominium housing unit by a property developer

Quiet possession of the land
A building plan of the proposed project drawn by an architect
Obtaining approval required for the proposed building plan from the National Housing Development Authority or the relevant local government authority
Obtaining a preliminary planning clearance letter authorised by the General Manager of the Condominium Management Authority to the effect that the property has been planned to facilitate the management of common elements and common amenities of the condominium property in terms of Act No. 39 of 2003.

Having prepared the condominium plan, the property developer can obtain a provisional condominium certificate at the preliminary stage itself which will enable the property developer to apply for a bank loan for the relevant project. The same facility will be made available to prospective buyers of housing units of that housing scheme. (The documents required to be presented by to the CMA for obtaining this certificate are given in the Gazette Extraordinary No. 2026/25 issued on 5 July 2017.)

A semi condominium certificate can be obtained for the completed section of a condominium property until the remaining sections are completed. The importance of obtaining this certificate is that it enables the granting of title deeds for the completed section of the condominium property. (The documents required to be presented by to the CMA for obtaining this certificate are given in the Gazette Extraordinary No. 2026/25 issued on 5 July 2017.)

A condominium certificate should be obtained after the completing the construction of the condominium property. (The documents required to be presented by to the CMA for obtaining this certificate are given in the Gazette Extraordinary No. 2026/25 issued on 5 July 2017.) Thereafter the developer can grant deeds.

In addition to the regulation of common amenities and common elements of a condominium property through the management corporation comprising of unit owners of the property, the CMA renders the following services:

Conducting workshops for creating awareness among the owners of housing units of both the public and private sectors
Providing consultancy services for problems that arise in condominium properties of both the public and private sectors
Conducting workshops for officers of public sector institutions who handle the issues arising in condominium properties of both the public and private sectors
Offering advice having negotiated with buyers and the property developer for resolving problems referred to the Authority due to the shortcomings on the part of the property developer in constructing a condominium property
Taking measures for minimising problems that arise amongst condominium unit owners by offering consultancy services

The objective of the Government is to expand the condominium housing schemes in the country as a solution to the housing problem by encouraging local property developers and foreign investors.

The role of the Condominium Management Authority is to regulate the common elements and common amenities of such housing schemes and the CMA has launched a systematic programme under a five-year corporate plan to popularise the condominium concept amongst the people.

The five-year plan has been designed to offer immediate solutions to practical issues that people may face consequent to the expansion of condominium properties to areas outside Colombo.