An empirical study of co-ownership building management : a collective action perspective

Abstract

Residential buildings under co-ownership are properties governed by mixed systems of communal and individual property rights. Their management demands a high level of organized cooperation and coordination among them. However, owners’ collective actions are never straightforward owing to their temptation to free ride. Without owners’ collective actions, management works can be delayed or even cancelled, which results in deteriorating building conditions. With the increasing number of people living in co-owned residential buildings, whether they can overcome collective action problems and effectively manage their properties becomes important to long-term management of building stocks. Therefore, this study aims to assess management performance of co-owned residential buildings and to explore the variations of the management performance from a collective action perspective. A rigorous tool for assessing management performance of co-owned residential buildings was developed in this study. The tool consisted of a hierarchy of key performance indicators which evaluate the capability of an owners’ group to make collective decisions, enforce management rules, and monitor its buildings’ condition. The application of the tool on a co-owned residential building generates a performance profile representing its management performance. The proposed tool was used to assess the management performance of 74 sampled buildings in Hong Kong. The survey data was collected from the sampled buildings through desk studies, face-to-face interviews, questionnaires by post, and on- site inspections. Multiple regression analyses were applied to investigate the effects of the exogenous factors on building management performance. The empirical results showed that large-size owners groups were more likely to perform well in managing their properties. Homogeneous owners groups were associated with a greater likelihood to achieve high management performance. More importantly, the empirical results revealed that the owners group of a co-owned residential building were more likely obtain high performance in managing the communal properties under the following circumstances: 1) well-defined boundaries of the communal properties; 2) a fair distribution of their rights and responsibilities to management; 3) a presence of effective mechanism to regulate their use of the communal properties; and 4) a way to rapidly resolve their disputes over management. The major contribution of this study is to the field of building management. The proposed tool in this study can used by owners, property managers, investors, and policy-makers to access to management information on co-owned residential buildings, which helps them make better decisions on buildings. In addition, findings of this study provided an explanation of the variations in building management performance, which has great implications for government policies that aim to encourage owners to cooperate in management of their properties.