Untangling the Terms: Deciphering Property Maintenance Fees and Sinking Fund in Strata Properties

Property maintenance fees and sinking fund are two terms commonly associated with the ownership of strata properties in Malaysia. While they both contribute to the upkeep and maintenance of the property, there are distinct differences between the two. Let’s explore each one:

1. Property Maintenance Fees:

Property maintenance fees, also known as service charges or maintenance charges, are recurring fees that owners of strata properties are required to pay. These fees cover the regular maintenance and operation expenses of the common areas and facilities within the property. Common areas may include lobbies, corridors, elevators, swimming pools, gardens, security systems, and other shared amenities.

The property maintenance fees are typically determined based on the allocated share units or share value assigned to each individual unit in the property. The management committee or the joint management body is responsible for collecting and managing these fees. The fees are used to cover expenses such as cleaning services, security services, landscaping, repairs and maintenance, utilities, and general administration costs.

2. Sinking Fund:

The sinking fund, also known as the reserve fund or sinking fund contribution, is a separate fund created to ensure there are sufficient funds for major repairs, replacements, or renovations of the common property in the future. It serves as a reserve to cover unexpected or significant expenses that go beyond the regular maintenance covered by the maintenance fees.

The sinking fund is established based on a percentage of the property’s total share units or share value. The funds are accumulated over time, and the amount is determined by the management committee or joint management body in accordance with the Strata Management Act. The sinking fund is set aside to finance major works such as repainting the building, replacing roofing, refurbishing common areas, or upgrading facilities.

The key differences between property maintenance fees and sinking fund are as follows:

  • Purpose: Property maintenance fees cover the regular operational and maintenance expenses of the common areas and facilities, while the sinking fund is specifically allocated for future major repairs or renovations.
  • Usage: Property maintenance fees are used for ongoing maintenance, cleaning, utilities, and day-to-day management of the common property. The sinking fund is reserved for major works or unforeseen expenses that exceed the regular maintenance costs.
  • Collection: Property maintenance fees are collected regularly, usually on a monthly or quarterly basis, to cover the ongoing expenses. The sinking fund contributions are collected periodically, typically on an annual basis, to build up reserves over time.
  • Allocation: Property maintenance fees are allocated for immediate use in maintaining the property, while the sinking fund is accumulated and saved for future major works.
  • Control: The management committee or joint management body oversees the collection and management of both the maintenance fees and sinking fund.

Understanding the differences between property maintenance fees and sinking fund is essential for strata property owners to have a clear understanding of their financial obligations and the purposes for which these funds are allocated.

Join The Discussion

Compare listings