Although the Singaporean concept of the 5Cs feels outdated today, one of the Cs is still very popular in Singapore. Condominium living is on the rise. In just 10 years, the percentage of condo residents rose from 11% in 2014 to almost 17% in 2024. That’s 1 out of 6 Singapore residents. Unfortunately, many condominiums in Singapore are now aging, with over 1,000 condo developments turning 30 years old within the next decade.
This means that buyers looking at older condominiums will need to consider several factors. The most obvious ones are the unit’s resale value, especially for leasehold properties, and the need to do significant renovations for the electrical and plumbing systems, which typically need to be replaced after 20 years. However, there may be other hidden costs, such as the need to pay higher maintenance fees and special levies.
Here’s an infographic outlining these fees:
Read on for a more detailed explanation of the types of fees condominium owners have to pay.
Condominium Maintenance Fees
Condominium maintenance fees are typically charged quarterly (though some condos still do monthly payments). Maintenance fees are divided into two components – a management fund and a sinking fund. Each fund serves a different purpose.
Management funds are for the day-to-day regular maintenance of the common areas, fixtures. and fittings. It covers operational expenses, including water and electricity charges for common areas such as the lifts, gym, and swimming pool. Management funds are also used to pay the common expenses of the management corporation, such as insurance premiums.
In older condominium developments, management costs tend to be understandably higher due to the higher frequency of repairs needed. Buyers should take note of how much the condo maintenance fees are and how often they need to be paid.
Read Also: Guide To MCST Condominium Maintenance Fees
Sinking Fund
The sinking fund is intended to cater to long-term future expenditure. These can include irregular work like repainting the estate or substantial costs like upgrading or buying major equipment. It also covers cyclical maintenance that only needs to be done every few years. Paying for major repairs and improvements to the common property and boundary wall also come from the sinking fund.
While a portion of the maintenance fees that condo owners pay goes into the sinking fund, it is important for potential buyers to check how much of the sinking fund is still available.
One notable aspect that buyers should pay attention to when buying a unit in an older condo is when the lifts were last replaced. Lift modernisation is not only important for safety but also improves performance by reducing breakdowns and operating costs. However, rejuvenating aging lifts are major costs that would undoubtedly affect a condo’s sinking fund. If the lifts in an older condo have not been replaced recently, then expect the costs to be passed on to you sooner than later.
Read Also: Is The Condo Dream Getting Increasingly Harder To Achieve For Singaporeans?
Special Levy
The management corporation of a condominium, also known as the MC or MCST, is made up of all the condo owners. They are represented by an elected management council that administers the day-to-day running of the estate.
If the sinking fund is insufficient to cover expenses, it is either because the costs are unforeseen or because the sinking fund is not managed well. In such a situation, the council may ask that all owners pay a special levy to cover the difference in costs.
The special levy is an additional one-off contribution from condo owners. The request for a special levy is raised at a general meeting, and approval must be sought from the condo owners. Unfortunately, because of this, owners may vote not to pay the special levy, perhaps because they disagree with the amount being raised. This simply delays any timely maintenance and may result in an increase in costs in the future.
Potential buyers of older condominiums in Singapore should always check the financial statements of the MCST to see how they manage their funds.
Read Also: The New Condo Launch Premium: How Much More Are Buyers Paying For The Chance Of An Upside?
