It is important for strata owners or potential property buyers to understand how a sinking fund and maintenance fees work, as they take all residents participation to ensure the property is well managed and maintained. Simply put, the resident’s unit is not the only space to be the perfect living space, but the whole surrounding building requires continuous spurcing as well for the owners’ benefit. It takes everyone in the community to take part - and that is where the fees come in to ensure your strata property gets the tender loving care it deserves.
What is Sinking Fund in Malaysia?
A sinking fund is reserved for large scale repairs or major works on a building.
Imagine sinking fund as the money everybody saved up in case of emergency. All residents in a strata property contribute into this fund, providing the financials in event of major works for ‘moveable property’. For example, the swimming pool (as common property) needed a new pump in order to be functioning and useable by residents. In this context, the pump is a moveable property for use in relation to the common property which is the swimming pool.
What is Maintenance Fee?
The maintenance fee is basically operating costs meant for everyday repairs and upkeep of a property.
While a sinking fund is a larger sum of money in case of expensive repairs, the maintenance fee is collected to pay for ongoing or operational costs. Running a huge strata property comes with costs; security often being the most viable cost to bear. Others include keeping the building surrounding top-notch, as well as amount payable for manpower maintaining the property.
Do you Really Have to Pay these Fees?
Yes. Collection of maintenance fees are bound under law, notably the Strata Management Act 2013 (SMA). SMA compels developers to set up a management company (JMB or MC) in order to provide ongoing management of a strata property. Since you are paying your part, you should be getting your money’s worth. The SMA allows owners to challenge the JMB or MC should there be any dispute, including:-
- The right to question the JMB about maintenance decisions
- Request to access and view JMB accounts
- Vote on issues in general meetings
- Apply for review of common charges with Commissioner of Buildings within your local state area
It is clear why sinking funds and maintenance fees are essential to communities, especially to a strata property with common facilities. While managing fees and collecting payment can be a challenge for JMBs and residents, lived-in has the right solution to ensure payment collection is tracked, and residents receive the bills promptly. Through lived-in, the management can easily customised the bills, send bills to all residents automatically and have visibility on residents payment behaviour. In a nutshell, the next time your maintenance fee payment is due, try not to think how it is costing you, but focus on the positive improvement you will see in your community.