Owning a residential property in Singapore requires more than just servicing your monthly property loan and paying your property tax. There are recurring monthly fees to be paid for maintenance and up-keep of estates and communal spaces for strata property owners. These are the Maintenance Contributions (or more commonly known as maintenance fees) under the Building Maintenance and Strata Management Act.
What Are Maintenance Fees?
Maintenance contribution is a monthly fee each property owner must pay to the management corporation of a strata titled property, such as condominium or landed cluster. Typically, maintenance fees for strata-titled property owners can vary widely, ranging from $100 to $1,000 per month (depending on the size, age and type of estate).
The main purpose of the maintenance fees collected is to upkeep the estate. The model of maintenance contribution is very similar to HDB’s Service & Conservancy Charges (S&CC), with a couple of key differences.
While the government provides some subsidies to support town councils in the maintenance of public housing estates, strata property owners do not receive any government subsidies when it comes to maintaining their private compounds. Strata property owners also have the autonomy and responsibility to collectively make decisions on maintenance-related matters for their estate, such as to make repairs or enhancements to existing facilities. Lastly, instead of a town council, a management corporation (MCST) is engaged to ensure the effective and efficient allocation of funds.
The maintenance contribution can be split into two forms – management fund and sinking fund.
Read also: Singaporeans’ Guide To Understanding Town Councils And Their Service & Conservancy Charges
What Is The Management Fund Used For?
Management fund is used to pay for recurring expenses of the estate’s maintenance. These will include: –
– Security
– Communal utility bills
– Upkeep of communal amenities
– Lift repairs
– Mechanical car park repairs (if any)
– Other infrastructure wear and tear
– Payment of insurance premiums
– Audit fees and other professional services
– Any outstanding short-term liabilities (12-month period)
– Estate manager/facility manager
The list above is not exhaustive. A general principle to identify which expenses would fall under the management fund would be any regular expense that covers commonly used amenities, services and other costs that allow for a functioning estate.
What Is The Sinking Fund Used For?
The main difference between sinking funds and management funds is that management funds are made for regular and common expenses, while sinking funds are typically set aside for larger and longer-term expenses that are typically one-off cash outlays. These include: –
– Painting
– Replacement or abolishment of communal properties
– Purchasing new communal properties
– Other longer-term liabilities
– Other capital expenses
The sinking fund is not to be confused with an emergency fund or a form of insurance coverage as the sinking fund is not a protectionary budget but a known and necessary payment for the upkeep of an estate.
How Are These Funds Allocated?
The management and strategising of the funds would be budgeted annually by the management corporation of the estate for resolution approval. During the meeting, owners would be able to voice out any of their concerns about the allocation of maintenance contributions, including the weightage to be allocated to the maintenance and sinking fund. The final budget would then require more than 50% of the property owners at the meeting to approve.
Poor management or allocation of funds could potentially affect a property’s worth if some expenses that cover the essential areas of the overall state are skipped. It may also require homeowners to make a large one-off top-ups to the sinking fund, especially if a big-ticket expense, such as having to replace a lift system, arises.
