e-book 15th NAPREC Conference INSPEN 2019

15th NAPREC
CONFERENCE

4th SEPTEMBER 2019
INSPEN

2019

NAPREC

Organised by:
National Institute of Valuation (INSPEN)
Valuation and Property Services Department (JPPH Malaysia)

Ministry of Finance Malaysia

MAIN COMMITTEE OF 15TH NAPREC CONFERENCE

Director of INSPEN
Sr Haji Mohd Nazri Bin Ahmad Zahari
Registered Valuer

Deputy Director (KPPK)
Sr Yusneta Bin Idon
Registered Valuer

Head of Research and Inovation
Sr Dr Rohana Binti Abdul Rahman
Registered Valuer

Head Of NAPREC
Sr Siti Rosemawar Binti Mohd Sahi
Registered Property Manager

Secretariat
Nazatul Najahah Binti Mohd Sharif
Umi Rodhiah Binti Kamarudin

Editor
Sr Siti Rosemawar Binti Mohd Sahi

Cover Image
Norafni Juliana Binti Mahmud

Editorial Operation
National Real Estate Research Coordinator (NAPREC)
National Institute of Valuation (INSPEN)
Valuation And Property Services Department
Ministry of Finance Malaysia (MOF)
Persiaran INSPEN, 43000 Kajang
Selangor

Tel: +603-89118800/8888 I Fax:+603-89250640
Email: [email protected]
Website: www.inspen.gov.my

Copyright Reserved 2019
The copyright of this publication is held by National Institute of Valuation (INSPEN), Valuation And
Property Services Department (JPPH Malaysia) and Ministry of Finance Malaysia (MOF). No part of
this publication may be reproduced, stored in a retrieval system, transmitted in any form or any
means electronic, mechanical, photocopying or used in any manner without the expressed written
permission of the publisher. No responsibility is accepted for the accuracy of information contained
in the text.

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8.30 – 9.00 am 15TH NAPREC CONFERENCE PROGRAMME
Session 1 4th September 2019 (Wednesday)
Dewan Jubli, INSPEN
9.00 -9.45 am
Registration and Breakfast
9.45 -10.30 am Main Hall (Dewan Jubli)

10.30 – 11.00 am Paper 1:
1100 – 1130 am Affordability of Potential First Time Home Buyer in Urban Areas, Malaysia
Session 2
1130 – 1215 pm Presenter: Dr. Sr Ainoriza Mohd Aini, UM
12.15 – 1.00 pm
1.00 – 2.30 pm Paper 2:
Session 3 Integrating a Sharia Compliant Property Management Framework for Waqf
2.30 – 3.15 pm Properties

3.15 – 4.00 pm Presenter: Assoc. Prof. Dr. Ibrahim Sipan, UTM
Opening and Welcoming Note:
4.00 – 4.45 pm Director General
1645 – 1700 Valuation and Property Services Department
Ministry of Finance

Certificate Presentation & Photo Session
Tea Break

Paper 3:
A Conceptual Framework Eco-Based Residential Development in Malaysia

Presenter: Dr. Hj Abdul Shukor Bin Shamsudin, UUM

Paper 4:
The Effectiveness of Maintenance Management Through Implementation
of Building Maintenance Policy in Commercial High-Rise Building.

Presenter: Prof. Dato’ Sri Ar. Dr Asiah Abdul Rahim, UIAM
Lunch & Book Exhibition

Paper 5:
Index for Leveraging Growth Strategies and Corporate Governance Fit for
a Superior Financial Performance in the Malaysia Real Estate Industry

Presenter: Assoc. Prof. Dr Kartinah Binti Ayupp, UNIMAS

Paper 6:
Ageing In Place Overview For The Elderly In Malaysia - Home For
Generation X and Baby Boomers.

Presenter: Sr Dr Siti Uzairiah Binti Mohd Tobi, UTM
Paper 7:
Strategi Pengurusan Penjualan Program Perumahan Rakyat (PPR) Dan
Perumahan Awam (PA)

Presenter: Assoc. Prof. TPR Dr Dani Bin Salleh, UUM
Question And Answer
End of Sessions

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MEMBERS OF NAPREC PANEL OF EXPERTS

ADVISOR

YBrs. Sr Haji Ahmad Zailan Bin Azizudin
Director General of Valuation And Property Services

Valuation And Property Services Department
Ministry of Finance Malaysia (MOF)

REAL ESTATE MANAGEMENT AND SERVICES (REMS)
Sr A’zmi Bin Abdul Latif – Chairman

Profesor Emiretus Dr Noor Sharipah Sutan Sidi
Dato’ Sr Hj Rosli Bin Yahya

Profesor Sr Dr Mastura Binti Jaafar
Profesor Madya Sr Dr Noor Rosly Hanif
Dr Muhammad Najib Bin Mohamed Razali

Sr Dr Mona Binti Isa
Sr Ishak Bin Ismail
Sr Adzman Shah Mohd Ariffin
Sr Zaharin Ahmad Zamani
Sr Idris Abdullah
Sr Hj Salleh Bin Ali
Sr Rosliza Binti Ramli
Sr Kartini Binti Nordin

Sr Ari Bin Adam

REAL ESTATE LAWS AND POLICIES (RELP)

Sr Abdul Razak Yusak- Chairman
Profesor Datuk Dr Nik Mohd. Zain Hj. Nik Yusof
Profesor Dr Megat Mohd Ghazali Megat Abdul Rahman

Profesor Madya Dr Pakhriazad Hassan Zaki
Profesor Madya Dr Sharifah Zubaidah Syed Abdul Kader

Datin Saleha Yusoff
Sr Sulieman Hj. Ahmad
Sr Mohd Zam Mustaman
Sr Hj Nordin Bin Daharom
Sr Hj Hamidon Bin Haron

Sr Norhayati Awang
Sr Rahmat Kasim
Sr Maznah Ngah

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REAL ESTATE DEVELOPMENT AND FINANCE (REDF)

Sr Mohd Nazri Bin Ahmad Zahari - Chairman
Profesor Dato’ Sri Ar. Dr Asiah Abdul Rahim
Dato’ Dr Rahah Binti Ismail
Profesor Sr Dr Abdul Rashid Abdul Aziz
Profesor Dr Zainal Mat Sa’at
Profesor Madya Dr. Rubi Ahmad
Profesor Madya Zainal Abidin Hashim
Profesor Madya Dr Ibrahim Sipan
Sr Dr Fauziah Raji
Sr Khaidzir Abdul Rasip
Sr Gs Md Badrul Hisham Awang
Sr Aina Edayu Ahmad
Sr Azman Mab@Adnan
Sr Sarmila Husain

REAL ESTATE VALUATION (REV)
Sr Rashib Nang-Chairman (until March 2019)

Profesor Dr Hishamuddin Mohd Ali
Profesor Dr Nor’Aini Yusof

Profesor Madya Dr Sr Wan Nor Azriyati Wan Abd. Aziz
Sr Dr Mohd Hasrol Haffiz Bin Aliasak
Sr Prem Kumar A/L Subramaniam
Sr Kamaruzaman Jamil
Sr Aziah Mohd Yusoff
Sr Lee Tong Bian
Sr Sawiyah @ Sawiah Abdullah
Sr Khalid Bin Abdul Mutalib
Sr Mohamad @ Masri Jainaen
Sr Mohd Rizal Bin Mawi
Puan Norlinda Daim

REAL ESTATE INDUSTRY AND ANALYSIS STUDIES (REIAS)

Sr Rosni Nawati Ngah - Chairman
Profesor Sr Ts Dr Ting Kien Hwa

Profesor Sr Ts Dr Abdul Hadi Nawawi
Profesor Dr. Abdul Hamid Mar Iman
Profesor Madya Sr Dr Anuar Alias
Profesor Madya Adi Irfan Bin Che Ani

Sr Dr. Yasmin Mohd Adnan
Sr Sulaiman Akhmady Mohd. Saheh

Sr Basarudin Mohd Basir
Sr Arba’yah Ahmad
Sr Faziah Abd Rasid

Dr Rohana Abdul Rahman

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PREFACE

Dear Participants,
The National Institute of Valuation (INSPEN) has been the coordinator of National Real
Estate Research or better known as NAPREC for 15 years now. In this capacity,
INSPEN, the training, education and research arm of the Valuation And Property
Services Department (JPPH), Ministry of Finance Malaysia (MOF) has been charged
with the responsibility to coordinate the disbursement of research grants under The
National Development Plan.
15th NAPREC Conference provide a platform mainly for recipients of the grant to
present their research findings to the stakeholders and the key players of the real
estate industry. The total completed NAPREC research from 8th Malaysia Plan to 11th
Malaysia Plan was 118 projects.
NAPREC would like to thanks: -

• The Paper Presenters;
• Ministry of Finance Malaysia (MOF);
• Economic Planning Unit, Prime Ministers Department (EPU);
• Members of NAPREC Panel of Experts;
• Members of NAPREC Steering Committee;
• Research Management Centre and Innovation University (RMIC); and

All organisation, agencies and individuals for their tireless efforts and contribution, in
one way or another in the management and disbursement of the grant and to the
success of this conference.
Secretariat
15th NAPREC Conference

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EXECUTIVE SUMMARY: PAPER 1
AFFORDABILITY OF POTENTIAL FIRST TIME
HOME BUYERS IN URBAN AREAS, MALAYSIA

PRESENTER: DR. SR AINORIZA MOHD AINI, UM
Dr. Ainoriza Mohd Aini, Assoc. Prof. Dr. Wan Nor Azriyati Wan Abd Aziz, Assoc. Dr.

Noor
Rosly Hanif and Dr. Zairul Nisham Musa
Built Environment, University of Malaya

Kuala Lumpur
e-mail: [email protected]

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AFFORDABILITY OF POTENTIAL FIRST TIME HOME BUYERS IN URBAN AREAS,
MALAYSIA
Dr. Ainoriza Mohd Aini, Assoc. Prof. Dr. Wan Nor Azriyati Wan Abd Aziz, Assoc. Dr. Noor
Rosly Hanif* and Dr. Zairul Nisham Musa
Built Environment, University of Malaya
Kuala Lumpur
e-mail: [email protected]

ABSTRACT
The concern of housing affordability in urban areas gained substantial momentum in Malaysia
as middle income (M40) households began experiencing difficulty in accessing home
ownership with special attention to the internal determinants including socio-demographic and
buyer’s financing capacity. Semi-structured surveys was conducted on non-home-owners in
three cities; Kuala Lumpur, Petaling Jaya and Shah Alam. Focusing on the middle income
(M40) household category, the study delves into their financial position and housing
aspirations. Using their actual incomes and expenses, the Housing Income Index for the first
time home buyers was constructed to gauge the affordable house price and mortgage-to-
income ratio. The findings demonstrated that the inability to access home ownership is mainly
explained by inadequate income, high non-property monthly expenses aggravated by the
rapid rising house price. Empirically, the study found that down payment constraint is another
major impediment to home access among these urbanites. The study concludes by
considering some potential implications to policy makers, affordable housing provider and
financial institutions.
Keywords: Housing, affordability, middle income, home ownership, mortgage-to-income ratio

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1. INTRODUCTION

Several emerging economies including Malaysia share an important common goal to promote
home ownership as a mean to drive urban development and urban growth (Chen & Yang
2017). There are substantial evidences that home ownership has created many individual
and social benefits. However, the concern of housing affordability in urban areas gained
substantial momentum in Malaysia as middle income (M40) households began experiencing
difficulty in accessing home ownership. The high house prices in urban areas in Malaysia
have made it difficult for potential first-time home buyers to purchase a house. During 2012
until 2014, the growth in median house prices has outpaced the growth median household
income in Malaysia as shown in Figure 1 (Bank Negara Malaysia, 2017). This is more so in
urban areas of Kuala Lumpur, Selangor, Penang and Johor. New launches have been
increasingly skewed towards the higher end property segments, recording only 18.5% of new
housing launches in Malaysia were priced below RM250,000 (Bank Negara Malaysia, 2017).

CAGR*(%) 20 17.6
12.4
15

10
5.1 5.5

5

0 2012-2014
2007-2009

median house price Median household income
*Note: CAGR referes to Compound Annual Growth Rate

Figure 1 Median House Price and Median Household Income
(Source: Bank Negara Malaysia, 2017)

For many urbanites, living in the city means shorter commutes to workplace, better amenities
and various choices of entertainment. With the high cost of living in the urban areas,
overcrowding and the challenges of an always-on world, it may seem surprising that more and
more people are opting to live in the cities. The middle 40 percent of the nation household
income group is extremely important to the nation’s well-being. The M40 is central to the
nation consumption spending and private investments. A country can only reach progressive
growth, economically and socially with the full participation of the middle class. As such, the

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Malaysian government has been emphasizing home ownership for all Malaysian particularly
the B40 and M40 groups.

This study aims to examine the profile of the potential first-time home buyer in Malaysian urban
areas. Furthermore, housing-income index using primary data from the proposed empirical
work will be constructed to measure the housing well-being of potential first-time buyers in the
selected areas of Greater Klang Valley.

2. RESEARCH BACKGROUND

Home ownership has always been perceived as a good investment and financial benefit.
Home equity, the value of a home less the amount owed on the mortgage, typically constitutes
a family’s greatest financial asset and share of net worth and is fundamental to building wealth
(Riley & Quercia, 2011). Frequently cited reasons of home ownership include social
considerations such as providing a good place to raise children, a safe place, and having
control over living space (Drew and Herbert, 2012). To many individuals, home ownership
has many benefits including better mental and physical health (Rohe & Lindblad, 2013). Home
ownership also have positive impact on children cognitive and behavioural outcomes
(Aaronson, 2000). Previous literatures have identified the external benefit of home ownership
including better maintenance and appearance of the house and neighbourhood (Coulson &
Li, 2013).

Home ownership is influenced by the levels and distributions of home prices, household
incomes and structure of financing cost. Affordability factors play an important role in
determining access to adequate homes. Affordability can be defined as the challenge each
household faces in balancing the cost of its actual or potential housing, on the one hand, and
its non-housing expenditures, within the constraints of its income. Housing is the single largest
expenditure item in the budgets of most families and individuals. The average household
devotes roughly one quarter of income to housing expenditures, while poor and near-poor
households commonly devote half of their incomes to housing. As such, these high proportions
suggest that small percentage changes in housing prices and rents will have large impacts on
non-housing consumption and household well-being (Quigley & Raphael, 2004).

UN-HABITAT (2011) divided housing affordability into four basic components; (i) Cost to
Purchase the house, (ii) ability to finance the purchase, (iii) House Occupation Cost and (iv)
ability to financially service loans (Figure 2).

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•House Price House •Land lease, service
determined by purchase costs, building
cost of land, cost maintenance,
infractructure, assessment, quit
building materials, rent, insurance and
albour and profit maintenance fee

CAPITAL VARIABLES Occupation
Cost
(BEFORE PURCHASE)
OCCUPATIONAL VARIABLES

(AFTER PURCHASE)

Ability to Ability to
finance financially
purchase service

•Down payment •Interest rates and
requirement, loan period,
available savingsand income and non-
other assests and housing
existing debts expenditure

Source: Adapted from UN-HABITAT (2011)

Figure 2 Basic Components of Housing Financial Affordability

First-time home buyers, like all home buyers, are subject to various credit constraints when
trying to buy a house. Since first-time buyers are typically young and have relatively low
income and savings, these constraints are likely to bind more often than for older, repeat
buyers (Fischer & Gervais, 2007).

In the recent years, issue pertaining to housing affordability has been the major concerns to
household especially those living in urban areas in Malaysia. The recent report by Khazanah
Research Institute (KRI) (2015) revealed that Malaysia has a seriously unaffordable housing
market. Numerous efforts have been conducted by both the public and private sectors to
address the housing affordability issues. New housing schemes which are, My First Home
Scheme (MFHS) and 1Malaysia People’s Housing Scheme (PR1MA) were recently
introduced by the government. It shows that the state recognised the problem and is taking
steps to address the home ownership issues. Some developers have also actively building
affordable homes as part of their corporate social responsibility efforts.

However, housing is still inaccessible and the condition is especially difficult for the first time
home buyer especially the younger Generation Y or the younger working adults, whose wage
increases have in no way kept pace with house-price inflation over the past decades (Tan,
2012).

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The problem of declining housing affordability has been widely discussed in the media,
conferences and even social media. Based on the previous study by Wan Abd Aziz, et al.
(2009) housing affordability problems for middle-income households in Malaysia is not a new
issue. The problem has widespread in most major cities and towns in Malaysia where many
of them find it difficult to purchase a home as argued by Wan Abd Aziz, et al. (2009). The
escalating housing price in urban area is the main reason why the home ownership is difficult
especially among the younger working household (See for example Al Sadat, et al. 2014).
Furthermore, in the recent study by Baqutaya, et al. (2016), respondents brought up about the
less house choice available for the middle-income group in the area they like and that the
housing loan are getting stricter. This may be the case as the Bank Negara has imposed
stricter lending rules at the end of 2014. This has resulted in year 2015, when the affordable
housing loan application rejection was above 50%.

Affordability is not an issue of direct relevance to home owner occupiers who have already
purchase a home. Affordability must be viewed from the point of view of the potential first time
home buyers. A specific index is needed to measure the percentage of households that can
afford to purchase an entry-level home especially in the most urbanized areas in the Greater
Klang Valley. An index is the fundamental to measure the housing well-being for first-time
buyers in Malaysia especially those in the urban areas. As such, this proposed study aims to
address this by constructing index that takes into account actual income and expenditure of
potential first time home buyer rather than just median income and house price.

Limited research has looked into the profile of the first time home buyers. There is little
evidence with regards to the economic and socio characteristics of this group in the Malaysian
context. Therefore, it is imperative to explore the profile of the potential first-time home
buyers, their income and expenditure patterns. This study also aims to construct first-time
buyer housing-income indexes using primary data from the proposed empirical work to
measure housing well-being for first-time buyers in the most urbanised area in Malaysia.

This study was proposed based on the previous research conducted in collaboration with the
Sime Darby Property in establishing the Housing-Income Index 2013 and 2014. The finding
was endorsed by the Minister of Urban Well-being, Housing and Local Governments. This
index was constructed with homeowners as the main focus. To extend the research further,
this proposed study aims to look at potential first time home buyers.

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3. RESEARCH QUESTIONS AND OBJECTIVES
This research aims to examine the key problems related to issues and challenges in providing
accessing home for the potential first time home buyers in selected urban areas in Klang
Valley. Three key research questions to be addressed are:

1. What are the current income and expenses of first time home buyers in Klang Valley?
2. What is their current housing accessibility level?
3. What are the issues and problems faced by them in entering home ownership?

The research objectives are as follows:

1. To provide an indicative report on the financial position of potential first time home
buyers (FTHB) in selected urban areas in Malaysia

2. To measure whether the average family living within the urban areas who are non-
homeowner qualifies for a mortgage loan on a typical house based on the Housing-
Income Index.

3. To provide better understanding on potential first time home buyers’ (FTHB) profile,
financial position and spending patterns within the selected areas in urban areas.

4. RESEARCH METHODOLOGY

Semi-structured face-to-face survey were conducted on non home-owners in three selected
areas (Figure 3). The empirical work involved 1160 respondents in total, which comprised of
different backgrounds including age group, ethnicity, income distribution, employment and
much more. Face-to-face survey sessions took place mostly at the commercial areas, transit
stations (eg: KL Sentral, KLCC), mosque/surau and their workplaces. Upon receiving
permission, the survey was carried out. On average the survey took approximately 30 minutes
to be completed. The criteria or eligible respondents were those who do not own a house and
those with household income between RM3,800 and RM8,300 (Middle 40% income bracket).
Following Reed and Mills (2007), preliminary questions, such as “Have you owned a house
before?” were asked to determine eligible respondents.

Reflecting the research questions, a questionnaire was developed, structured as follows: (i)
socio-demographic profile; (ii) Household income (iii) Detailed housing (rental) and non-
housing expenditures (iv) housing aspirations (v) barriers to home ownership. Survey findings

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were analysed using SPSS and qualitative content were analysed manually, with a focus on
identifying key barriers. Using their actual incomes and expenses, the Housing Income Index
for the first time home buyers was constructed to gauge the affordable house price and
mortgage-to-income ratio.

Figure 3: Study area
5. STUDY HIGHLIGHTS
Research Question 1: What are the current income and expenses of first time
homebuyers in Klang Valley?
While there have been several studies focused on income and expenditure patterns of
Malaysian, this study attempted to provide a better and current expenditure patterns of those
who are non-home owners by location. The following diagrams illustrated the financial position
of potential first time home buyers (FTHB) in three urban areas including Kuala Lumpur (KL),
Petaling Jaya (PJ) and Shah Alam. Total median income of KL and PJ each stood at RM5,000
whilst Shah Alam has a slightly higher median income of RM5,500. The study found that there
are variations in the spending patterns among the respondents. Total median expenses are
higher in KL as compared to PJ and Shah Alam. However, the similarity found in all three

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areas studied is that these non-homeowners allocated a bigger proportion of their total
spending on vehicle loan. KL respondents spent the most on house rental compared to Shah
Alam and PJ. This is expected since rental average in Kuala Lumpur is higher and choices
are limited. Furthermore, Shah Alam respondents spent the least on dining out and groceries
compared to KL and PJ. Perhaps, this could be because food is easily available and more
affordable at most places in Shah Alam.

Figure 4 Summary of Income & Expenses (KL)

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Figure 5 Summary of Income & Expenses (PJ)

Figure 6 Summary of Income & Expenses (Shah Alam)
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Research Question 2: What is their current housing accessibility level?
The study has measured the average household living within the urban areas who are non-
homeowners eligibility for a mortgage loan. The following summarises the Mortgage-Income-
Ratio (MIR), Price-Income-Ratio (PIR) and Affordable House Price for Kuala Lumpur, Petaling
Jaya and Shah Alam.

Based on the above findings, with higher MIR and PIR, non-homeowners in Shah Alam are
highly likely to enter into home ownership as compared to those in KL and PJ. This suggests
that any future policies, strategies to assist non-homeowners in Malaysia should consider the
location. In another word, no one policy should fit all areas.
Research Question 3: What are the issues and problems faced by them in entering
home ownership?
The research illustrated the similar perception with regards to issues of home ownership in all
three study areas. In all three areas of this study, the respondents strongly perceived that the
house price is too expensive that the respondent could never afford it. Prices of newly
launches of landed and high-rise properties are beyond reach of majority of people especially
the middle-income earners. Furthermore, unstable financial position causes them to defer
going into the home ownership process. Several of these respondents were not ready for a
huge debt commitment as they are still unsure about their work and income stability. This is
because some of the respondents are still under contract/ non-permanent staff or still under

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probation. The one issue found in all three areas is the inability to prepare enough deposit
sum.

In sum, this study found that access to financing for the purchase of housing by middle income
households is very limited, particularly in Kuala Lumpur, where the affordable housing gap is
the greatest. If this middle income earners were to get credit at all, they would have to pay a
premium because of their risk profiles. The study found that many middle-income households
lack savings for substantial down payments, which means that they take out high loan-to-value
mortgages, which are riskier and require higher interest rates. Furthermore, these middle
income respondents are unbanked and lack standard records of income, savings and
payments that banks and financial providers can use to evaluate their credit-worthiness.

6. FINDING SUMMARY AND CONCLUSION

In most previous studies on housing affordability, general recommendations have been given
i.e. the government should continue to assist the middle incomers and for the developer to
build more affordable homes. The findings from this study have important implication in
developing three main recommendations as alternative to the current policies and programs
in improving the affordability of the potential first time home buyers in Malaysia. The
recommendations are to introduce (i) Mixed housing policy, (ii) Encourages more hybrid
approach of Rent-to-Own and (iii) Introducing shared ownership model.

i. Mixed Housing Policy: Housing Policies should be a combination of
ownership and rental.

Housing policies and programmes should be designed to cater the needs across income
segment and account for changes that will occur in the circumstances of residents and in the
economics and demographic of the city. Based on the findings of the affordable house price
of this research and comparing the average house prices, the study recommends the
following:

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Table 1 Type of Housing Policy Recommendation

Area Average Affordable House Price Type of policy
House Price House Price Gap recommendation
KL
PJ (JPPH Q1, from this Huge Gap Mixed Policy
Shah Alam 2017) study Huge Gap Mixed Policy
Medium Gap Homeownership
RM 760,369 RM239,195

RM 653,9481 RM376,318

RM 653,9482 RM502,267

Most western European countries (i.e. Germany, Austria) have lower rates of home ownership,
in part due to strong social rental systems (Lea, 2010). This study recommends “Mixed Policy”
which is a combination of policy encouraging home ownership and rental system. Where the
affordability gap is huge, it only makes sense to not encourage or push home ownership policy
solely any further. The study thus recommends that for KL and PJ, Mixed Policy should be
introduced with higher rental proportion in KL than PJ. Further research is needed to
determine the mechanism and percentage.

ii. Encourages Rent-to-Own initiatives

The research found that the main issue of entering into home ownership is the difficulties to
prepare down payment to purchase a house. Quite a number of respondents are not qualified
for mortgages due to the nature of work e.g. contract staffs, under probation or under a
particular work categories i.e. Oil & Gas sector. It is recommended that the rental market be
improved by encouraging more rent-to-own initiatives particularly amongst the private
developers. The rent-to-own model is not a new model. Developed countries like the United
States of America, United Kingdom etc. have already adopted this model as an alternative
solution to the housing ownership problems. As such, this can be a good option for the non-
home owners in Malaysia to have more time to boost their credit and save up, and at the same
time getting a head start on building some equity. In other words, this allows tenants to build
equity without having to qualify for a mortgage. The rent-to-own option can attract potential
buyers by giving them a chance to slowly build credit and pay their down payments over time.
However, it is important to make sure the potential buyers can have high enough credit to
qualify for a loan when it is time to buy.

1 Using figure from Daerah Petaling*
2 Using figure from Daerah Petaling*

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Rent-to-own agreement have many cited benefits including;
1. The seller or developer can lock in the future sale price of the house now, and not have
to worry about market fluctuations.
2. If the seller or developer renting to a tenant who eventually wants to own the house,
the quality of the tenant is likely to be much higher, and they will treat the house with
more respect.
3. The rent-to-own purchase model can be a good option for sellers or developers whose
houses have been on the market for some time and remained unsold for a variety of
reasons.

iii. Introducing Shared Ownership model
Shared Ownership is a hybrid model of ownership and has remained as an important
component of UK housing policy. It is a part-rent/part-buy hybrid tenure but is aligned with the
common expectations of home ownership (Wallace, 2012). The model has been adopted in
the UK, US and Australia which mainly aimed at first-time buyers particularly those who have
lower income and savings. The model brings many potential benefits including enhancing
housing choice, security of tenure for the owner/renter and sense of ownership (Wallace, 2012
and Wiesel et al, 2017). Buyer has the opportunity to purchase a share of the house (say
between 25-75% of the home value) and pay the rent on the remaining share. Buyer then will
have the option to purchase a bigger share when they can afford. In the UK, most of the
houses available for this scheme are newly built. The study therefore recommends this model
to be adopted in Malaysia as it has proven successful in other countries. However, further
study and detailing are required before it could be implemented.

7. STUDY LIMITATIONS & SUGGESTION FOR FURTHER WORKS

The findings of this study should be interpreted in the context of several limitations. First, the
samples were restricted to residents from the three urban areas which have different socio-
economic characteristics compared to other cities in Malaysia. As such, further research is
needed to explore the affordability of FTHB in other states or cities. Secondly, the study is
focusses affordability from the perspective of the potential FTHB only. In particular, the
recommendations laid out in the previous sub section only looked at the strategies to increase
access to financing and have not looked into housing delivery system, reducing development
costs or strategies to unlock land potential for residential development. Thirdly, the study has
not taken into account the potential influence of family background on the first time home
ownership.

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8. FINAL REMARKS

This paper summarised the findings for NAPREC funded research project on the issue of
affordability of potential first time home buyers in selected cities in urban concentrated area of
Malaysia. The study has looked into economic concerns and an understanding and
appreciation of non-economic factors (such as preferences and aspirations). In order to
develop policies and deliver affordable housing programs that meet the needs of the client
population particularly the M40 group (and avoid unintended consequences), a full
appreciation of the social, behavioural and attitudinal concerns of different groups is required.
While the knowledge of housing preferences of potential first time home buyers in Malaysia
from this study may not serve as the ultimate determinate in designing affordable housing
programs and finding sustainable long term solution, it can provide critical information in policy
development, such as in the specific location for assistance as well as the method of delivery.

REFERENCES
Aaronson, D. (2000). A note on the benefits of home ownership. Journal of Urban
Economics, 47(3), 356-369.
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16

EXECUTIVE SUMMARY: PAPER 2
SHARIA COMPLIANT TENANCY
MANAGEMENT FRAMEWORK FOR WAQF
PROPERTIES: TOWARDS SUSTAINABILITY OF

INCOME

PRESENTER: ASSOC. PROF. DR. IBRAHIM SIPAN, UTM
Dr Ibrahim Bin Sipan, Prof. Madya Dr Ahmad Che Yaacob, Dr Rohaya Abdul Jalil, Dr

Mustafa Omar, Dr Fauziah Raji, Farah Nadia Abas and Noor Azimah Ghazali
Faculty of Built Enviroment and Surveying
University of Technology Malaysia
Johor Bahru
e-mail: [email protected]

17

SHARIA COMPLIANT TENANCY MANAGEMENT FRAMEWORK FOR WAQF
PROPERTIES: TOWARDS SUSTAINABILITY OF INCOME

Dr Ibrahim Bin Sipan, Prof. Madya Dr Ahmad Che Yaacob, Dr Rohaya Abdul Jalil, Dr Mustafa
Omar, Dr Fauziah Raji, Farah Nadia Abas and Noor Azimah Ghazali
Faculty of Built Enviroment and Surveying
University of Technology Malaysia
Johor Bahru
e-mail: [email protected]

Abstract

It is still a loop in the management of waqf property; inefficiency in waqf
management still exists in Malaysia. As a consequence, the income of waqf
institutions in some states is relatively small as a result of large rental arrears. Thus,
the vulnerability of income generated by the waqf properties should be addressed
through sound principles of tenancy management (TM). This research seeks to
propose a Integrating Sharia Compliant Tenancy Management framework for waqf
properties as a means of increasing the waqf income which will ultimately strengthen
the value and nature of waqf. This framework is based on best practice tenancy
management (BPTM) while integrating sharia compliance with waqf needs and waqf
philosophy. Data has been collected from document analysis, focus group
discussion, in-depth interviews and in-situ observation. Semi-structured interviews
were conducted with waqf property managers and tenants to investigate tenancy
management attributes of waqf properties. The compliance of Sharia, adherence to
waqf needs and the issues of tenancy management are investigated too. By
considering the full spectrum of tenancy management, the attributes of tenancy
management could be categorized as (i) tenant selection, (ii) tenancy businesses,
(iii) rental determination, (iv) tenancy agreement, (v) enforcement and (vi) waqf
property manager. The findings of this research revealed that waqf property
manager were not adopting a full Sharia Compliant tenancy management and
implementing different practices of tenancy management because they have their own
waqf enactments, State Islamic Religious Council’s policies and standard operations
procedure. The proposed framework would assist to improvise the waqf properties to
be on par with the conventional building while Sharia principles are being fully
observed in the full spectrum of waqf tenancy management.

Keywords: Tenancy management; Waqf properties; Best practices; Sharia
compliance; Waqf philosophy

1.0. Introduction

Waqf real estate or property is seen as a catalyst for waqf philosophy
fulfilment if it could be well managed and produce a good mainstream of income for
various purposes. Al-Termidhi, Sunan al-Termadhi, al-Ahkam ‘An Rasul Allah fi al-
Waqf, (Hadith No. 12960) support that real estate or property (e.g. land and building)
is seen as an ideal asset for waqf (Mohammad and Mar-Iman, 2006). It embraces

18

commercial, retail and residential use. In essence, the usage of private wealth of
waqf for realizing waqf social objectives (Muhammad, 2016), must prioritised. Apart
from that, Osman (2017) emphasized that waqf philosophy is not just fulfilling the
objective and spirit of the waqf, but it is even more to ensure that objectives shall
being accomplished. Of importance, the disbursement of benefit is regularly
conveyed to the beneficiaries continuously as long as the waqf properties remain
intact.

For the fulfilment of the waqf philosophy, the State Islamic Religious Council
(SIRC) has been entrusted and empowered by the Administration of the Religion of
Islam Enactments to not only act as trustee but also to appoint any individual or
organisation to act as its representative. As the sole trustee of waqf properties,
SRICs have been cooperating with Department of Awqaf, Zakat and Hajj (JAWHAR)
and Waqf Foundation of Malaysia (YWM) by embarking on numerous waqf-
generated properties. Their duties are not limited to the development, administration
and management of waqf properties, but also value maximization while generating
sustainable income.

Even though the Federal Government has allocated about RM 256.4 million
through 9th Malaysian Plan (RMK-9) for waqf projects (Zakaria et al., 2014) and RM
1.9 billion in 10th Malaysian Plan (RMK-10) (Bernama, 2010), it was noted that these
grants focused on waqf land development only. Certainly, the cost for further
improvement of waqf properties from the government budget is always questionable
and remain unclear since is not sufficient at all (Samsudin, 2017). In addition, most
of the waqf projects funded by the government were not only for the social
contribution, but also to financially sustain waqf properties as well (Noor, 2011).

As the rental accumulations of waqf property are still low of many waqf
institutions in several states (Mohsin and Mohammad, 2011; Majid and Said, 2014;
Ali et al., 2016), thus, sound principles of tenancy management need to be practiced.
Thus, this research aims was to address the revenue shortfalls generated by waqf
property. This research proposed an adoption and adaptation of best practice
tenancy management (BPTM) issued by the Board of Valuers, Appraisers, Estate
Agents and Property Managers (BOVAEP) without disregarding the waqf and Sharia
compliant requirements. Effective and efficient management of waqf could provide
greater return and potential for the waqf properties so as to maximize the social and
religious benefits.

1.1 Problem Statement

In the context of Malaysia, it is still a loop in the management of waqf
property; inefficiency in waqf management still exists. As a consequence, the income
of waqf institutions in some states is relatively small as a result of large rental arrears
(Mohsin and Mohammad, 2011; Majid and Said, 2014; Ali et al., 2016). The result,
the only things can be covered are the expenses of waqf property such as building
maintenance and building insurance (Yaacob and Nahar, 2017). Series 3 of the
Auditor-General Report 2014 confirmed that some SIRC faced outstanding rental
issues; Kedah Islamic Religious Council (MAIK) (RM1,050,000), Penang Islamic
Religious Council (MAIPP) (RM4,560,000) and Melaka Islamic Religious Council

19

(MAIM) (RM420,083). Thus, this waqf property can be said to be financially non-
profitable. In relation, it can be perceived that growth of waqf property value is also
stunted.

What makes the situation worse is the dependence of SIRC on the allocation
of the state government and the contributions of the public to continue operating.
Based on the observation of this problem alone, it is possible to conclude that the
management of waqf property in Malaysia is still in disarray. In response to this
issue, activities to improve the generation of income through waqf property need to
be geared up and intensified to achieve the purpose of waqf and ensure the success
of the ummah in general. Karim (2007) through his writing noted that the potential of
effective and efficient waqf management was in terms of return on social and
religious benefits. To be more optimistic, it will pay back financially to the nation's
economy (Noor et al., 2014), as the value of waqf is experiencing positive growth in
the property market.

In order to ensure that waqf stays relevant, adequate funds are needed to
improve and maintain existing and future waqf management (Ismail and Arshad,
2009; Sanep and Muhamed, 2011). Speaking of funds, it is possible from the profit
management of the waqf property itself in terms of rent collected from rental of
premises. It is because, the premises can be rented but waqf property cannot be
sold and used as collateral (Mohammad and Mar-Iman, 2006).

As stated earlier, management of waqf property should be based on sharia
principles. Therefore, in order to adopt and adapt BPTM, it is necessary to follow
sharia justification to rectify the management of waqf property. Most of the previous
disciplines have given great attention to sharia waqf accounting, reporting and
financing (Ismail et al., 2015). However, there is a lack of disciplinary studies that
deal with the management of waqf property rentals. Othman (1982) and Rani and
Aziz (2010) examined in depth the management of waqf properties based on the
waqf requirements and the sharia laws embodied in them. They detailed and
discussed lengthy that some of the sharia feature which included terms of waqf
tenancy, duration, rental rate, income of waqf properties, tenancy agreement and
mutawwali. However, it still showed the gaps when inadequately described the full
spectrum of waqf tenancy management. There was also ambiguity on some
attributes such as tenant selection, default rent and non-compliance penalties. In
summary, identifying the tenancy management attributes based on waqf and Islamic
law requirements are important and need to be examined so that the waqf system
will become more compact.

In fact, there is still no sharia compliance standard for the management of
waqf tenancy in Malaysia. Waqf Land Management Manual (2006) was launched for
the sake of standardization of waqf management procedures throughout the country.
In this manual, there is a simple process and basic guidelines for use by SIRC. As
this manual is not yet comprehensive, there is more improvement on sharia
principles particularly. Furthermore, in the context of the provisions of the Special
Rules or the State Waqf Enactment in five states namely Johor, Selangor, Negeri
Sembilan, Melaka and Perak, there is no comprehensive regulation relating to the
management of waqf property rental.

20

Therefore, it is appropriate to conduct this research as it will bridge this gap.
This research focused on the ways to integrate the best practices, waqf
requirements and sharia compliance in an effort to optimize waqf sustainable income
generation that coincided with Islamic principles.

1.2 Research Objectives

The following objectives of the research are developed to fulfil the identified aim:

i. To identify the characteristics of waqf properties.
ii. To identify the attributes of waqf, sharia compliance and best practice in

tenancy management.
iii. To determine the issues in tenancy management of waqf properties.
iv. To develop a sharia compliant tenancy management framework for waqf

properties.

2.0. Literature Review: Tenancy Management Concept Based On Best
Practice, Waqf Needs and Sharia Perspectives

This section highlights the concept of tenancy management based on the best
practice, waqf needs and sharia perspectives. The section begins with the definition
of waqf and its philosophy that should be understood. Further, this section provides a
more inclusive understanding of tenancy management's attributes including of tenant
selection, tenancy businesses, rental determination, tenancy agreement,
enforcement and property manager.

2.1 An Overview Of Waqf

Waqf (pl;awqaf) as referred to traditional Muslim philanthropy, is a form of
perpetual, continuous and sustainable charity (sadaqah jarriyya), pious action or
endowment, and benevolence instruments (Raissouni, 2001; Sadeq, 2002; Kahf,
2003; Dahlia and Haslindar, 2013). Specifically to waqf, Muhammad (2016) claimed
that waqf philosophy is the use of private wealth to realize social objectives. Most
recently, Noor (2017) categorized waqf philosophy into five (5) characteristics of; (i)
express one’s submission and piety to Allah SWT, (ii) get closer to Allah SWT, (iii)
continuous charity in this and afterlife, (iv) sharing benefits with Muslim community
like building mosques and schools and, (v) strengthen the unity of Ummah. All the
characteristics listed here could be generalized as long as the objective of the waqf
is fulfilled.

There are two forms of property that can be endowed; immovable such as
land and buildings and movables such as cash and shares. However, according to
Al-Termidhi, Sunan al-Termadhi, al-Ahkam ‘An Rasul Allah fi al-Waqf, (Hadith No.
12960), property (e.g. land and building) is seen as an ideal asset for waqf
(Mohammad and Mar-Iman, 2006). The income generated (rental or usufruct) from
those assets could be the subject matter for continuity of rewards as long as the
physical of waqf assets remain intact. Moreover, such assets to be endowed as waqf

21

must be characterized as beneficial and has Islamic value (Omar et al., 2013).

2.2 Tenancy Management Concept

Tenancy management forms part of the types of services in a property
management. Meanwhile, property management can be defined as the act of
operating the property with aim of sustaining the capital value and income of the
property in the line with the objective of the owner. Christudason (2004) claimed that
it should be carried out to maintain the building and thereby prolong its lifespan.
Three main objectives of property management outlined by Richard (1961) consists
of (i) to optimize and maximize the property investment return and cost saving, (ii) to
prolong and maintain the physical property and (iii) to increase capital value of the
property in terms of investment. Additionally, Scarrett (1983) summarized that the
function of property management is a mixture of the achievement of financial
objectives and practical management as well which maintain investment and
occupational value to achieve for short-term and long-term objectives.

In Malaysia, the Board of Valuers, Appraisers, Estate Agents and Property
Manager (BOVAEP) will now regulate property management services, previously
known as the Board of Valuers, Appraisers, Estate Agents (BOVAEA). The
establishment and operation of this Board shall be governed by the provision of
Valuers, Appraisers, Estate Agents and Property Managers Act 1981. According to
this act, property management is defined as “the management, maintenance and
control of any land, building and any interest therein, excluding the management and
maintenance of property-based business, on behalf of the owner for a fee..” In order
to provide a high standard of service, a property manager shall adhere to the
Malaysian Property Management Standards (MPMS) issued by the BOVAEP and
strictly enforced since 1 Jun 2016. Overall, there are eleven (11) codes of practice
standards of property management as depicted in Figure 1.

1. Property Manager
2. Appointment of a Property

Manager
3. Handing Over/ Taking Over of

Property
4. Building Management
5. Maintenance Management
6. Financial Management
7. Administrative Management
8. Insurance Management
9. Health, Safety & Emergency

Management
10. Tenancy/Lease Management
11. Facilities Management

Figure 1: Malaysian Property Management Standards (MPMS) (2nd Edition
2016)

As concerns tenancy management services in this research, the standards

22

referred to are of property managers (Standard 1), maintenance management
(Standard 5), financial management (Standard 6) and tenancy management
(Standard 10).

Tenancy management basically deals with tenant-landlord business affairs to
sustain the building, its system and business for a lasting period (Iman and
Mohamad, 2014). The scope of tenancy management may involve tenant
recruitment, tenancy agreement, rental determination, rent review, provision of
services including maintenance services to tenants, bill collection, marketing, etc.
The entire task should be carried out by the landlord itself or may appoint the
property manager on behalf of the landlord. However, property managers are better
versed in the legal rights of both the tenant and the owner.

Hence, by considering the full spectrum of tenancy management and also
feedback from the focus group discussion (FGD) session, the attributes of tenancy
management could be categorized as follows.

Table 1: List of tenancy management attributes

Attributes Sub-Attributes
A: Tenant Selection A1:Tenant Criteria
B: Tenancy Businesses A2:Tenant Screening
B1: Types of Businesses
C: Rental Determination B2: Business Condition
D: Tenancy Agreement B3: Business Strategy
B4: Business Location, Facilities and
E: Enforcement Services
F: Property Manager C1: Rental Charged
C2: Rental Collection
C3: Rental Increment
D1: Duration
D2: Responsibility
D3: Security & Utility Deposit
D4: Sublet
D5: Early Termination
E1: Rental Default
E2: Penalty
E3: Eviction
F1: Qualification
F2: Property Inspection
F3: Governance
F4: Waqf Disbursement

The detailed discussions of TM attributes listed above according to the best
practices, waqf needs and sharia compliance were discussed in the next sub
section.

2.2.1 Tenancy Management Attributes: Waqf, Sharia Compliance and Best
Practice

With regards to MPMS (2016), the property manager’s role in tenancy or
lease management will involve aspects of billings, collection and disbursement of

23

rents, tenant’s liaisons, coordination between contractors, management of utilities
and services, and monitoring reinstatement of premises upon termination or expiry of
the tenancy or lease. Hence, the MPSM could be referred to as a basis for TM best
practices as well as taking into account the prior literature review as discussed in the
following subheadings.

In fact, there is no definition to describe what waqf needs really mean.
According to Abdul-Karim (2010) that waqf needs to have income to provide for its
beneficiaries. Hence, due to the inflation and increasing needs of waqf, the income
of property assets should be met as desired. As far as waqf can be created for the
benefit of specifically designated individuals or for general charitable purposes, waqf
needs to be designated to sharia-compliant deeds (Porter and Rubio-Vega, 2011).
Adherence to sharia principles are necessitated for the accomplishment of waqf
philosophy.

a) Tenant Selection

Overall, Muslim and non-Muslim were acceptable to be qualified tenants
based on the best practices, waqf needs and sharia principles provided that the non-
Muslim shall do halal activities and subjected to the Council's enactment. According
to Paragraph (5/1/3) of SS9 stated that if the use to be made of usufructs of rented
assets considered permissible, an Ijarah contract could be grant even with a non-
Muslim (AAOIFI, 2015). However, if the landlord knows or has reason to assume in
advance that the use of the asset to be rented is for an unacceptable purpose, and
thus it will not be allowable. However, Muslims should be given the priority on the
right to rent. On the contrary, waqf needs state that the right to rent must depend on
SIRC’s policy. For best practices, the nature of the tenant business becomes the
priority. However, waqf needs do not emphasize for asnaf category but it can be
considered. Moreover, it is also being subjected to the waqif condition stipulated in
waqf deeds.

Besides, the screening process for qualifying tenants is essential to ensure
that the tenant could sustain in paying the rent. The similarities that have been
discovered among best practices, waqf needs and sharia principles that level of
income and background of the tenant should be scrutinized during the screening
process. Other than that, best practices have revealed that clients’ requirement and
previous landlord testimony are important too. All this while, the market force was the
determining factor. If the vacancy is high, the tenant’s profile will not be strictly
inspected, as long as the tenant is good and able to pay the rental. Instead, in case
of normal market condition and smaller space, the selection for tenants would be
stricter.

b) Tenancy Business

Findings have revealed that the types of business permissible according to
waqf needs and sharia principles must abide Islamic law. Then, halal and cleanliness
also should take into consideration for waqf needs fulfillment. Instead, high and best
use was more emphasized from the best practices viewpoint. In terms of the
conditions for operating a business, the business license is crucial and compulsory

24

for operating the business in best practices. In fact, tenancy agreement also has
cover that business operator must apply consent from relevant authorities. If the
tenant got the summons, the landlord is not being responsible. While, the conditions
based on waqf needs shall refer to the business proposal. Then, a sharia principle
does follow the Standard Operation Procedure (SOP) for operating a business.

In term of the use of rental premises, the principles of Islam and best
practices agree that the premises shall not be used for any illegal or immoral
activities. According BNM (2009) of (No 63), the permissibility to rent an asset is
based on the permissibility of the tenant’s core activity, although it may involve
certain activities that do not comply with sharia. In the same theme, waqf needs and
sharia principles have the similarities that the business shall comply with sharia
principles and there is no elements of syubahah such as selling or serving alcohol
should be involved.

c) Rental Determination

Overall, the approach to determine the rental rate in the best practices, waqf
needs and sharia principles must be based on market rental. Majority of fuqaha have
signified the rental of waqf tenancy should not be less than customary rent (ujra al-
mithl). However, waqf needs facilitate that below market rental shall be applied to the
asnaf category but it is subject to SIRC’s policy. The participant argued that if low
rental was imposed to the tenants it will lead to depletion of commercial value. In
fact, different rental rates could be imposed by the best practices according to the
floor area and types of tenant. Also, it could be given to those who need to be
assisted through waqf such as the asnaf, based on their income. However, the
percentage of lower rental depends on SIRC policy. In line with this, sharia principles
also mentioned that the special rate shall be prioritized to the low income group.

Besides, the rental could be paid in the various mechanisms as practiced by
professional property managers. These include payment by cheque, online transfer
and websites are the alternatives done in best practices. Similar to ages ago,
payment at counter is still being practiced in waqf management. All mentioned
alternative methods are acceptable, as long as it is not jeopardizing. By the time of
expiry of tenancy, option to renew tenancy permissible was automatically based on
best practices and sharia principles. While, for waqf, it depends on maslahah and
benefit for waqf. In the context of rental renewal, the best practices normally would
review the rental in three years which was about five per cent increment. Whilst,
rental review based on waqf needs was carried out in two years and normally
Valuation and Property Services Department (JPPH) valuation took place during the
rental review. If any renovation was done, no rental should be charged. However,
sharia principles were based on the SOP.

d) Tenancy agreement

This attribute was further classified into duration of tenancy, security deposit,
responsibility, sublet, early termination and expiry of tenancy. Normally, tenancy
period permitted for best practices is 3 years which is the tenant and landlord would
feel more secured. There is also 3+2 (option to both parties), while rental will be
increased in 3 years. For waqf, normally it depends on the WPM. If the tenant is a

25

good tenant, then the duration should be longer according to Sharia viewpoint.

While, sublet is not permissible according to the best practices except for
whole building and subject to landlord approval. This clause has been embedded in
the tenancy agreement. To find tenants is crucial because it is due to the owner’s
prospects. Somehow, the tenant brings their own sub lessee. If the owner agreed, it
can proceed. In the case of tenant renting the whole building, then sublet to the other
tenants, which is fine. In the case of waqf, sublet is not permitted but it is subjected
to WPM’s arbitration. Sharia principles also do not allow the sublet. All this while, the
tenant shall comply with the terms and conditions of use of the asset until the expiry
of the tenancy or termination of the tenancy as agreed by both parties, whichever is
earlier (No 64) of BNM (2009).

e) Enforcement

The discussion for this attributes focuses on the rental default, penalty and
eviction. In the case of rental default, the reminders served 2 times of notices and
Letter of Demand (LOD) in the best practices. However, the waqf would serve
notices, calls and court orders three or four times. In fact, two notices shall be given
due to the sharia principles. Then, the deposit would be deducted accordingly.

Next, penalty for late payment imposed by the best practices were based on
the fix penalty and charged between eight (8) per cent to ten (10) per cent per
annum. The late charges are imposed because late payment affects the landlord’s
profit. For example, the tenant should gain RM10,000 for rental but if the tenant fail
to pay they actually lost the opportunity to gain the profit if they invest in other
investment the terms referred as opportunity lost cost. It based on the loss of the
income. In contrast, the penalty of Shariah might be implemented through ta’widh
(actual cost) and gharamah that will pay to charity or baitulmal. For example, one per
cent from the rental (based on covenants and market rate). Then, the penalty for
waqf needs was through letter, court order and sealed of premises.

Overall, eviction of tenants is permissible based on best practices, waqf
needs and sharia principles. In fact, it was difficult to be implemented for best
practices since it does involve many procedures. However, the most reasonable
causes are disrupting other tenants. The tenants shall not use the premises that
cause nuisance, inconvenience to the landlord and its tenant. Lawyer will send the
letter and mention that clause. In the sharia principles, the tenant will be alleged for
eviction if they breach the contract. But it was subjected to the negotiation between
landlord and tenant. While, based on waqf needs, tenant eviction permissible as the
reason of habitual late payment of rent up to 3 month.

f) Property Manager

The person chosen to be property manager must be competent according to
best practices. Nevertheless, waqf needs have suggested that understanding of
waqf and sharia Islamic expertise are essential. Then, professional and Islamic
qualifications are indispensable under sharia principles. In the case whereby the
property manager breaks the rules or violates ethics, it is subjected to the continuous
performance by the property manager. The appointment agreement of property

26

manager is made between the owner and property manager. As such, a two year
contract will be signed between the owner and the manager, but if the property
manager can renew the contract this means he is in that position. Based on waqf
needs, it is subjected to the appointment of position also. However, if the property
manager breaches the Islamic principal and normal practice, the property manager
could be removed according to sharia principles.

3.0. Research Methodology

This section discusses the way in which the research will be designed,
strategized and conducted within a research philosophy framework. That is how the
research questions will be answered throughout the research. Due to need a
specialized niche area in discussing waqf concept from the beginning, thus,
qualitative approach is adopted in this study.

3.1 Research Design

This research applies the qualitative study, involving two phases of data
collection and analysis. In the first phase, FGD 1 & FGD 2 were conducted to
discuss and verify all the attributes of TM based on waqf, sharia perspectives and
best practices collected from the secondary data. These findings were used for
constructing the two sets of interview questions for waqf property manager and the
tenants in the selected case study. Next phase, semi-structured interview was
conducted with WPM and the tenants in the case study. The purposes of interviewing
WPM are to investigate whether tenancy management is complying with sharia
compliance and adhere to the waqf needs or not. Then, the semi-structured interview
was conducted with the tenants to identify their characteristics as a tenant, factors
for default rental payment, the problems towards the waqf tenancy management and
WPM, the satisfaction towards the TM and any recommendation for the TM
improvement. Furthermore, the issues of tenancy management were investigated as
well. These findings were used for the development of the framework.

3.2 Data Collection

A case study was adopted in this research to understand complex
phenomena, within a real-life context. Four (4) case studies selected are of the
commercial waqf properties namely State A, State B, State C and State D. The
scope area covered the state of Johor, Selangor, WPKL and Penang. Overall, 7
premises were selected; two (2) premises in State A, State B and State C
respectively and one (1) in State D. It were selected due to certain criteria such as
diversity of commercial types, form of governance, strength and weaknesses of
rental performance and tenancy management issues which could achieve the
research objectives. It includes shop houses, shop office, waqf community bazaar,
commercial complex and stratified commercial office.

Overall, 27 participants participated in the interview. The code names are as
below;

27

Table 2: List of Interviewee as coded

No. Respondent Codes Sub-codes Total

1. WM1 - 6

2. WM2 - 1
3
3. Waqf Property WM3 - 4
2
4. Manager WM4 - 4
6
5. WM5 - 1
27
6. WM6 -

7. TA TA1

8. SL SL1-SL3

9. TB TB1-TB4

10. Tenant TC TC1 & TC2

11. TD TD1-TD4

12. TE TE1-TE6

13. TF TF1

Total Participants

These participants were divided into two groups; WPM and tenants. WPM
was selected from various institutions include, State Islamic Religious Council, waqf
subsidiary company and corporate body. It was coded as WM1, WM2, WM3, WM4,
WM5 and WM6. Meanwhile, tenant coded as (TA, TB, TC, TD, TE and TF)
representing six premises respectively and one (1) sublet premise coded as (SL).

4.0. Data Analysis and Findings

This section discusses the key findings from the semi-structured interview and
site observation. The case study analysis was then applied and initiated within-case
and continued with cross-case analysis. This cross-case analysis is carried out to
discuss the commonalities and differences or any conflicts raised in the TM attributes
within the multiple case studies. This study employs Nvivo12 application software to
do the cross-case analysis.

4.1 Waqf Tenancy Management Attributes

From these findings, it will be investigated whether waqf TM practices follow a
sharia compliant and adheres to waqf needs or not. Furthermore, the issues of TM
will be investigated as well from the WPM’s and tenant’s point of view. Then, the site
observation is carried out with the tenant after the interview session with tenants is
completed. Site observations were to clarify the questions answered by the WPM
and tenants and to get a clear picture of the TM issues at the premises.

As referred to tenant selection attributes, the result of cross-case map shows
that five (5) nodes for tenant criteria’s have been coded by the 27 participants
namely (i) Muslim, (ii) Muslim and non-Muslim, (iii) asnaf is not listed, (iv) have the
ability to rent and (v) depends on SIRC’s policy as shown in Figure 2.

28

Figure 2: Results of crose-case of tenants’ criteria
Overall, the Muslims nodes are most coded by the participants (n=25) which
reflected that the majority tenants who can rent out the waqf properties as shown in
State A, B, C, and D. Besides, the non-Muslims are coded by the participants of
WM2 and TC1 (n=2) representing State B. Indeed, FGD 1 was validated that the
tenant can be Muslim and non-Muslim as long as sharia principle has complied. It
does mean that the tenant selection for State B which permitted for non-Muslim to

29

rent out instead of Muslim was underpinned by sharia law. To sum up, the analysis
has revealed that all states conforming sharia principles in selecting their prospective
tenants.

In terms of tenancy business attributes, the result of cross-case map shows
that five (5) nodes for business conditions that have been coded by participants in
operating business in waqf premises as depicted in Figure 3. The business
conditions coded namely (i) sharia-compliant goods and services (ii) not contradict to
Islamic law, (iii) no “temple of worship” for non-Muslim (iv) immoral purposes
disallowed, and (v) comply with the tenancy agreement.

Figure 3: Results of crose-case of business condition

30

All the waqf premises conducted in four states were adhered to the sharia
principles though premise 4 of State B violated the rule in their tenancy. As
mentioned earlier, the permissibility to rent an asset is based on the permissibility of
the tenant’s core activity, although it may involve certain activities that do not comply
with sharia (No 63) of BNM (2009). However, the tenant shall comply with the terms
and conditions of use of the asset until the expiry of the tenancy or termination of the
tenancy as agreed by both parties, whichever is earlier (No 64) of BNM (2009).

However, the rental determination attributes was differed from previous
attributes in terms of their compliance with the sharia rules. As illustrated in Figure 4,
the WPM (WM1 and WM3) and most of the tenants claimed that the rental charged
was below market rental which was imposed in the State A and C. Instead, State B
and D charges were based on the market rental. The practice by State A and State C
clearly contradicted with the opinion of majority of fuqaha whereby the rental rate of
waqf tenancy should not less than customary rent (ujra al-mithl) (Othman, 1982;
Mohamed, 2001; Rani et al., 2010). On the same theme, Ibn Nujaim al-Hanafi
expounded that waqf rental must be at a standard price, or more. While, from the
sharia principle, there is no conditions what the best rental should be charged.
However, according to (Paragraph 76) of (BNM, 2009), the rental amount shall be
determined upon establishment of tenancy contract. Once the tenancy contract
comes into effect, the amount of rental specified and mutually agreed for the tenancy
period shall not vary during the period (Paragraph 77).

Rental Determination

16% Market rental
84%
Below market
rental

Figure 4: Results for rent payable

Moreover, most WPMs in four states acknowledged that they implementing a
sharia-compliant tenancy agreement. In fact there is no clearly guidance provided by
previous jurist on how the tenancy contract shall be documented. However, through
the document analysis of tenancy agreement and interview among the participants,
all the terms and conditions embedded are deemed as valid conditions listed by
Johansen (2016). Besides, once tenancy period and rental has been determined
during the execution of contract, it can be deemed as valid (Usmani, 2000).

As shown in Table 3, the enforcement implemented by State B with regard to
the penalty similar to the conventional financial system whereby the default tenants
were charged by interests. Since the imposition of interests or riba is prohibited by
sharia, the delay in payment by the tenant will create harm to the SIRC as the

31

trustee which suffer actual loss in terms of incurring additional expenditure, such as
cost for issuing notices and letters, legal fees and other related costs. These issues
should be avoided in order to ensure that business transactions are conducted
according to the principle of market efficiency.

Table 3: Penalty imposed (%) n=27
WM3
Focused coding
1 CTOS-HQ. Currently plan to reveal the name of tenants who are WM2
unable to pay their rent at the mosque. The rest
2 (4% p.a./ 365 days) x (total days in rental arrears)
3 No penalty

Further, for waqf property manager attributes, all the WPM conducted a
periodical inspection for safety or maintenance of premises at all reasonable times
as tabulated in Table 4. As such, WM3 would give written notice to the tenants for
any repairment of the defects required as aligned with tenants’ obligation. If no action
is taken by the tenant within 10 days from the notice given, WM3 may enter and
proceed for repairment and all cost shall be claimed to the tenants. Also, it strongly
recommended being undertaken to check that no illegal and non-Sharia activity is
taking place on the premises.

Table 4: Periodical inspection (%) n=27
WM1
Focused coding
1 Inspection will be handled periodically by another department to WM2
have more effective management
2 Periodically inspection will be done at the premises with the WM3
Department of Engineering for five times per year to check any
problem including damages and cleanliness etc. WM4
3 It was not frequently since there were many premises to be All the
managed tenants
4 Once the report sent to us, then we proceed for site inspection TE4
5 Inspection done by WPM only if any complaint was reported.

6 Yes, but sometimes.

In a nutshell, the findings of this research revealed that waqf property
manager were not adopting a full Sharia Compliant tenancy management and
implementing different practices of tenancy management because they have their
own waqf enactments, State Islamic Religious Council’s policies and standard
operations procedure. The identified tenancy management issues were shown in the
following Table 5.

32

Table 5: WPM and tenant’s perspectives on tenancy management issues

Tenancy Management WPM’s Perspectives Tenant’s Perspectives
Attributes
A1:Tenant Criteria B3: Business Strategy
Tenant Selection Easy to deal with non-Muslim The sale of business is seasonal
previously rather than Muslim (C) especially during Friday prayer
Tenancy Businesses B2:Business Condition and festival of Hari Raya (B)
The tenant does not display their B3: Business Strategy
Rental Determination business license issued by CCM at The sale of business is seasonal
Tenancy Agreement the premises (A) especially during the school
holiday, and festival (Hari Raya)
B4: Businesses Location, (C)
Facilities and services
(Location) B4: Parking
A premise is not strategically located No available parking causes the
(A) difficulties of customers to come
(C)
D2: Responsibility B4: Building Services
Cleaning & Maintenance Passengers waiting time for lift
(correction of faults by tenant) services is too long (D)
Premises are not being managed by B5: Marketing
the tenant and are in bad condition No signboard provided before
(A) reaching the premises (B)
D2: Responsibility B5: Marketing
(Repair and maintenance by Many obstacles from local
authority as such cannot put the
signboard in front of the
premises (C)
C2: Rental Collection
The tenant paid the rental
through the system but as there
is a problem with the system, no
payment is recorded. Hence, it
had been recorded as rent
arrears (C)
C3: Rental Increment/ renew
Dissatisfaction towards the
rental increment (A) & (B)

D2: Responsibility
(Repair and maintenance by

33

WPM) WPM)
Leaking water pipes due to high The tenant carried out the repair
usage (D) either minor or major by
themselves (C)
D4: Sublet
The premises has been sublet D2: Responsibility
without permission(C) (response by WPM)
E1: Rental Default The tenant delivers their
The tenants will only take an action complaint through email.
by approaching the 3rd notice given However, it was a late response
(notice of termination). However, the from WM (C)
payment is not a lump sum basis.
Enforcement But the tenant will pay gradually (B)
E1: Rental Default
Waqf Property Monthly rental is not paid on time/
Manager consistently (A) & (B)
F1: Qualification
No experts in regards to
development (A)
F4: Waqf Disbursement
The manfaah from the rental
collection are not fairly distributed
(A)

The table above demonstrates that tenancy businesses are the most
important determinants of tenants and WPM satisfaction followed by tenancy
agreement, rental determination and enforcement. While, tenant selection and waqf
property manager attributes are less important. The solving of TM issues will be
discussed in the next section.

4.2 Proposed Framework of Integrating Sharia Compliant Tenancy
Management for Waqf Properties

This section has presented a sharia-compliant tenancy management
framework for waqf properties. The development of framework has been done
through several steps which were the integration of best practice with waqf needs
and sharia compliance and validation by the experts through FGD 3.

The researchers propose that the first step to select the tenants is by giving
the explanation about the nature of waqf philosophy in an understandable way. For
tenant selection’s attributes, the WPM shall provide clear information about the
tenant’s criteria and tenant screening needs to be done so that they know whether
they are qualified or otherwise. Hence, the market tenants are recommended for the
tenant’s criteria as the rental income must be sufficient to be distributed to
beneficiaries as well as to maintain and manage waqf properties (A1). Non-Muslims
are also qualified to rent out since it is permitted by Islamic law. However, priority is
given to Muslim tenants.

34

Also, this proposed framework will allocate the waqf properties for special
tenants who cannot afford to pay rent according to the market rental value including
of asnaf category to give them an opportunity to penetrate the market and compete
with other tenants. In this case, the zakat will give an incentive to the special tenants
by supporting them a portion of the rental payment. The tenant’s segregation
proposed to be 70% of Muslims and 30% of non-Muslims. Then, the tenant of
Muslim breaks further into 60% of the market tenant and 40% of the special tenant.
The non-Muslim’s tenants, however, are subject to the market rental value. All in all,
it has been subject to the type of business. Besides, the potential tenant also should
be screened concerning their attitude and awareness on the waqf (A2) instead of
background check, credit check and previous history of rent payments as proposed
in the previous framework. By having a good attitude and understanding the waqf
philosophy, it could encourage them to fulfill their responsibilities as tenants very
well.

In regards to tenancy businesses' attributes, the types of businesses,
business condition, and business strategy must be well planned and suit with the
current market need to ensure the waqf properties could compete with other
conventional properties. Besides of sharia compliance, best use, sustainability,
opportunities, marketability and profit-making for non-profit purposes for tenancy
businesses, this proposed framework outlined other significant types of businesses
should be considered. To select the special tenants as outlined in tenant’s selection
attributes, the consideration on types of business (B1) must be taken into account.
First, the WPM should differentiate the category of businesses or development such
as high (profit-commercial), medium or low-end building. This is because the tenant
for each category might be different. The high-end building which is profitable
commercial shall be rented to the regular market tenants. For medium-end building
might be of mixed tenants; market tenants and special tenants. Then, for a low-end
building like small retails farmers’ market and night market facilities should be rented
to the special tenants or the needy or known as the asnaf.

In addition, all the conditions set forth for waqf premises must conform to
sharia principles (B2). It does imply that the business conducted contradict to sharia
principles are considered forbidden (haram). As such there should be no elements of
forbidden uses include tobacco and alcohol, pork, interest-based banking, gambling
and weaponry. To strategized, this framework suggested that they shall have a good
tenant profile that could attract more crowds and promote the waqf building. If
possible, set up the main tenant or anchor tenant to attract more people to the waqf
building especially for a big commercial centre such as a bank, GLC company, EPF,
post office and others. Besides, an interesting event should be organized to attract
the crowd (B3). Importantly, the activities performed could reflect the waqf's good
image and expose the waqf's principles and benefits to society.

As previously suggested, the waqf istibdal could be carried out to combat the
unstrategic location of waqf premises (B4). However, istibdal issues must refer to
maslahah instead of the potential assets and the decision of the Fatwa Committee
by SIRC. Then, the researchers proposed that the services of the waqf properties
must be emphasized on the provision of ibadat purposes while adding sharia value
such as the location of musolla. By right, putting the sign of musolla could entice
more patrons or customers to business premises. However, every service to be

35

equipped at waqf premises must in line with the intention of waqif but depends on
the manager to most potential services. Also, in order to attract visitors and make
large sales, the framework proposed that an attractive signboard for the waqf
property is essential (B5). By doing this, visitors are aware of the existing waqf
properties and the product or services that the premise offered. Moreover, colour
scheme for waqf building as building identity could also be as the strategy of
marketing.

Concerning rental determination’s attributes, the researchers propose that the
rental charged (C1) should be based on market value. As mentioned earlier, the
incentive would be given by the zakat for special tenants who cannot afford to pay
rent according to the market value. Thus, this framework has proposed a discount of
5% of the market rental to the special tenants. 50% of the rental would be paid by
the special tenants and another 50% would be sponsored by the distribution of
zakat. However, this has to be subjected to the zakat calculation and regulation by
the respective states. Of note, this suggestion was more practicable for medium-end
building.

Furthermore, rental collection (C2) for waqf properties suggested that rental
payments should be made through a bank transfer (GIRO). A bank giro transfer is a
method of transferring money by instructing a bank to directly transfer funds from
one bank account to another without the use of physical checks. As the rental default
was the most challenging issue faced by WPM, the researchers propose that this
type of payment appears capable of disciplining tenants in fulfilling their obligations
as waqf tenants. Indeed, their monthly payment could make a huge contribution to
the beneficiaries. Hopefully, this alternative payment might decrease SIRC's default
tenant figures. Then, the rental increment (C3) should be implemented based on
market rental. But the full consideration must be given to the new facilities provided
by the landlord which was based on the tenant’s needs and performances of
businesses.

Basically, the tenancy agreement’s attributes concern for tenancy process
which tends to be most crucial in this development of the framework. To make it
flexible for both WPM and tenant, the framework has proposed that the duration of
the tenancy (D1) shall be (1+1+1). It does mean that the duration of one (1) year with
an option to renew for another one year and up to two years renewal at the same
monthly rental. The rental will be reviewed after three (3) years. This could provide
that the flexibility to terminate the tenancy by the tenant will be increased and WPM
may reduce the risk of default tenants. By this way, the chances of tenant retention
could be longer and the WPM could manage the tenant easily.

Moreover, the attributes of responsibility (D2) suggested that the process of
maintenance must be sharia compliance such as using halal and good cleaning
products. Lastly, for the responsiveness dimension proposed by WPM (D2), it shall
be done in a shorter time. For on-site WPM, it should be done within half an hour.
Then, it would be two hours of response time if in the case was off site but subjected
to the terms and condition. Thus, any complaints or request shall be voiced by any
medium and must be followed by the the filling up relevant form. However, other
suggestions made in security & utility deposit (D3) are proposed about two months'
rent as security deposit, and a half a month’s rent as utility deposit. Then, sublet (D4) not

36

allowed to be implemented since it is presumed risky.

In the case whereby the tenant wants to move out before the expiry of their
tenancy (D5), the tenant are obliged to pay full unexpired term with 6 months’ notice
in writing. It is based on Fiqh concept that the Muslims are bound to their covenants
(clauses), except the covenant (clause) which prohibits the lawful or permits the
illegal. However, if there is a new tenant, WPM shall return the payment made the
previous tenant. It was to prevent the action of taking double profit by the landlord.

Besides, rental default (E1) proposed as following; i) issuance of bill-triggered
to pay-(1st-7th of the month), (ii) after 7 days in rental arrears-(14th of the month)-
1st notice, (iii) if fail to pay within 14 days from the 1st notice-(28th of the month)-2nd
notice, (iv) Notice of expiry (after 30 days)- LOD-letter of demand. As waqf
emphasizes the social welfare, thus there is no harsh approach implemented in
enforcement’s attributes. The researchers propose that the penalty (E2) for the waqf
properties might be implementing through sharia compliant approach. It was based
on ta’widh (actual cost) and gharamah. Ta’widh may be charged on late payment of
financial obligations resulted from exchange contracts. Besides, ta’widh may only be
imposed after the settlement date of the financing became due as agreed between
both contracting parties. Islamic financial institution may recognise ta’widh as income
on the basis that it is charged as compensation for actual loss suffered by the
institution. The rate of charge was fixed at 1% which based on outstanding principal
balance.

However, gharamah is the penalty to avoid late payment but shall not be
recognised as income. Instead, it has to be channeled to certain charitable bodies.
For example, one percent from the rental (based on covenants and market-rate) will
pay to charity or baitulmal. The imposition of ta’widh and gharamah on delayed
payment of debt is an appropriate approach to mitigate the harm suffered by the
landlord, and at the same time instilled discipline on the tenant to make payment
according to the stipulated schedule. Therefore, the penalty adopted by BPTM was
not adopted since it was not sharia compliance. However, eviction (E3) could be
applied if the tenant fails to comply with any terms of the agreement (breach of
contract) and the tenant uses the premises for any unlawful purpose or any other
purpose which is otherwise agreed by the superintendents in writing.

For waqf property manager’s attributes, qualification (F1) suggested that the
tenants shall be a competent and professional, understanding of waqf and Sharia
(Islamic expertise/principle) and shall graduate in real estate and have an experience
in real estate. Then, property inspection shall be carried out to confirm that no illegal
and non-sharia activity is taking place (F2). Besides, property inspection could detect
any maintenance or repairs needed and ensure tenants are complying with the terms
of the tenancy. While, in regards to governance (F3), it is a good way to encourage
the tenants to participate any program in related to waqf as to ensure they really
understand the nature of waqf instead of increasing their awareness. Since
maintenance should be given priority for distribution, even if the waqif has stipulated
it or not, this distribution is proposed (F4). The allocation should be channeled to; (i)
management and maintenance, (ii) outgoings (quit rent, assessment rate, property
tax, fire insurance), (iii) sinking fund (upgrading/ major repair) and (iv) beneficiaries.
The proposed framework illustrates in Figure 5.

37

TENANCY A: Tenant Selection BEST PRACTICE TENANCY MANAGEMENT
MANAGEMENT A1: Tenant Criteria (BPTM)
A2: Tenant Screening
ATTRIBUTES B: Tenancy Businesses BPTM OF WAQF PROPERTIES
B1: Types of Business
B2: Business Condition
B3: Business Strategy
B4: Businesses Location, Facilities and Services

B5: Marketing
C: Rental Determination

C1: Rental Charged
C2: Rental Collection
C3: Rental Increment
D: Tenancy Agreement

D1: Duration
D2: Responsibility
D3: Security & Utility Deposit

D4: Sublet
D5: Early Termination

E: Enforcement
E1: Rental Default

E2: Penalty
E3: Eviction
F: Waqf Property Manager
F1: Qualification
F2: Property Inspection
F3: Governance
F4: Waqf Disbursement

Figure 5: Sharia Compliant Tenancy

38

 ShariaINTEGRATED SHARIA COMPLIANT AND BPTM FOR WAQF
CompliantPROPERTIES
Tenancy
Management

 Sustainable
income return

y Management Framework for Waqf Properties

8

With regards to the framework above, the results of the integration between
best practice, waqf needs and Sharia compliance are depicted in the following
diagram.

Figure 6: Integration of best practice, waqf needs and sharia compliance

Overall, three (3) groups of integration were discovered. Firstly, BPTM was
not adopted as it did not meet the waqf needs. It included of tenant selection (A1),
rental charged (C1), duration (D1), early termination (D5) and waqf disbursement
(F4). As far as waqf plays a major role in economic and social welfare of Ummah,
thus stipulation of tenant selection (A1) and rental charged (C1) must give the
consideration to the special tenant like asnaf for reducing the poverty rate in our
country. Similarly, the remedy intended to be implemented especially for the tenants
to move out (D5) before the expiry of their tenancy not too harsh and must in line
with waqf needs. Besides, by proposing the duration of one (1) year with an option to
renew another one (1) year up to two (2) years (D1) could provide the flexibility
termination for the special tenant. Moreover, waqf disbursement (F4) must be also
aligned with the intention stipulated in waqf deed. Instead, BPTM and sharia
principles have no clear rules mention the best policy for distribution. Hence, all the
TM attributes stated above should give special consideration in order to fullfill the
objective of waqf.

Secondly, BPTM was not adopted since it was not sharia compliant which was
penalty (E2). Thus, the penalty (E2) for default tenants was proposed based on
sharia compliance. Finally, the integration BPTM was adopted as it did apply waqf
and conforming sharia principles. The attributes embodied were tenant screening
(A2), types of business (B1), business condition (B2), business strategy (B3),
business location, facilities and services (B4), marketing (B5), rental collection (C2),
rental increment (C3), responsibility (D2), security and utility deposit (D3), sublet
(D4), rental default (E1), eviction (E3), qualification (F1), property inspection (F2) and
governance (F3).

39

In essence, the third group was to integrate the BPTM while adhering to waqf
needs and sharia compliance. However, the vulnerability has existed for those TM
attributes in group 1 and 2, thus BPTM could not be adopted.

5.0. Conclusion

This research has developed a framework that leads to better understanding
on the sharia compliance in waqf TM and provides better solution in sustaining
income of the waqf properties. It is imperative to note that there have been not many
studies conducted on TM of waqf properties. Therefore, by adopting the BPTM in the
developed framework, it is expected that this research would assist in innovating the
waqf management system so that it can be more effective and efficient.

The differences of conventional tenancy management and sharia compliant
tenancy management have been expanded through this research. Tenancy
management attributes is conceptualized as a composite of six attributes such as
tenant selection, tenancy businesses, rental determination, tenancy agreement,
enforcement and property manager. This framework can be regarded as the
important theoretical implication for research in related fields because it provides the
characteristics of tenancy management in three different viewpoints that can be
facilitated and improvised the waqf tenancy management.

A further significant methodological implication includes the selection of the
triangulation of data (FGD, semi-structured interview, observation and document
review) to counterbalance the weaknesses of each method. This research has
overcome the limitations and provides a better insight into sharia compliances in
waqf tenancy management practices.

This research will assist the researchers and waqf properties stakeholders to
address the issues in tenancy management of waqf properties. This research could
be a guideline among SIRCs to streamline and regulate income generating of waqf
properties. By adopting the BPTM, SIRC as the Mutawalli will be better able to
manage waqf properties and lead to waqf properties to be on par with other
properties eventually. On the other hand, this study provides guideline for the waqf
stakeholder to implement a sharia compliant tenancy management for waqf
properties. By right, it could be a guideline for the professional property managers if
they were to be appointed by SIRC to manage the waqf properties. Better managed
waqf properties will cause more assistance to Muslims. As a result, the investors
would be more confident in investing in waqf properties resulting from more
sustainable income will be generated.

40

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EXECUTIVE SUMMARY: PAPER 3
FOSTERING CUSTOMER SATISFACTION ON

THE ECO-BASED RESIDENTIAL
DEVELOPMENT IN MALAYSIA

PRESENTER: DR. HJ ABDUL SHUKOR BIN SHAMSUDIN, UUM
Dr Abdul Shukor Shamsudi, Mohd Sobri Minai, Ali Yusob Md Zain and Abd Rahim

Romle
School of Business Management

University of Utara Malaysia
Kedah

e-mail: [email protected]

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