Often you will see the sinking fund and maintenance fee whenever you enquire about a property. However, many only know that it is an extra fee incurred in property expenses. Some who are unaware of these fees tend to categorise them as a hidden fee. Well, here is a guide to help you understand how sinking fund and maintenance fee work before purchasing a strata property.
Maintenance fee is a fee collected for paying ongoing costs. It is used for regular repairs and to upkeep the property. Maintaining the property includes security, common area repairs, gardening and cleaning the property. Nowadays, with the pandemic and all, properties may also need disinfectant services.
Managing a large property isn’t easy. The management and administration team working to keep the property in good shape needs to get paid too. So these are the usage of maintenance fee.
A sinking fund is like a fund saved for the rainy days. It is for future expenditures such as large scale repairs or major works. All residents of a strata property have to contribute to this fund. It is important and compulsory that everyone does their part.
What's the cost of maintenance fee and sinking fund?
Maintenance Fee Cost
The living density and the facilities are factors that determine the cost of the sinking fund. A residence that has a garden compared to an apartment with only a car park, the residence with a garden will cost more to maintain.
Generally speaking, a low-dense property may be more luxurious. Thus, the higher the maintenance cost. Apart from that, low dense also mean lesser people to share the cost. In other words, a high-dense property will mean more people sharing the cost, making it more economical.
The maintenance fee calculates in terms of the cost per square foot. So the final calculation of the maintenance fee cost includes a few factors relevant to your apartment. These factors include:
- Unit Type / Size of the unit.
- Total floor size of the apartment.
- Shared access points.
- Shared facilities you have access to.
Sinking Fund Cost
The sinking fund is set at 10% of the total maintenance cost. It is charged as a percentage of the overall service charges you pay. That means if your apartment has a higher maintenance fee, your sinking fund will be higher.