Property News

Weakness in recording, monitoring and enforcement cost Railway Assets Corp RM13m in rental revenue

KUALA LUMPUR (Oct 10): The Auditor General’s Report for 2022 has revealed that weaknesses in recording, monitoring, and enforcement have caused the Railway Assets Corp (RAC) to incur losses of RM12.84 million in rental revenue.
Audit checks revealed that as of Dec 31, 2022, RAC had not collected property rental income from 12 tenants, amounting to RM170,474, as stipulated in their agreements. The tenants of RAC properties comprised 10 sole proprietorships, one partnership, and one other agency and club.
Furthermore, audit checks uncovered that 54 rental offer letters (STS) had been returned by tenants, but rental agreements had not been prepared. As a result, based on the 54 STS returned up to Dec 31, 2022, RAC failed to collect property rental revenue of RM12.67 million. These STS had been issued to 25 sole proprietorships, 14 partnerships, 12 individuals, and three other agencies or clubs.
In addition, audit checks also revealed that RAC’s real estate rental income totalling RM11.61 million could not be charged to Keretapi Tanah Melayu Bhd (KTMB) subsidiary entities. This situation arose because KTMB did not agree to have its subsidiaries, operating on land owned by RAC, subject to rental charges.
To ensure that RAC can continue to generate income from its railway assets, auditors recommended that RAC enforce the terms of the rental agreements against 12 tenants in arrears, primarily the 10 sole proprietorships engaged in commercial activities.
The report also suggests that RAC should ensure that the 54 tenants and others who have returned STS are followed up with rental agreements to protect RAC’s interests. Additionally, it is important to promptly resolve the rental issue between RAC and KTMB’s subsidiary entities.
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Source: EdgeProp.my