Maintenance Fee vs Sinking Fund in Malaysia: What Condo Owners Pay
Property Lab editorial teamPublished 6 min read
Contents
Maintenance fee vs sinking fund in Malaysia: the maintenance fee (called "Charges" in the law) pays for the day-to-day running of a condo, such as cleaning, security and insurance. The sinking fund is a separate savings pot for big future works, such as repainting the building or replacing lifts. Under the Strata Management Act 2013, the sinking fund is at least 10% of your maintenance charges, and both are paid by the owner within 14 days of a notice.
Maintenance fee = running costs, set by share units. Sinking fund = at least 10% of the maintenance fee, kept in a separate account for major repairs and replacements.
Example: RM300 maintenance + RM30 sinking fund = RM330 a month.
What is the difference between maintenance fee and sinking fund?
Both are paid by owners of strata property to the body that manages the building: the developer at first, then the joint management body (JMB), and later the management corporation (MC). They go into two separate bank accounts.
| Maintenance fee | Sinking fund | |
|---|---|---|
| Name in the law | Charges | Contribution to sinking fund |
| Pays for | Day-to-day running | Major future works |
| How much | Set by share units | At least 10% of Charges |
| Kept in | Maintenance account | Sinking fund account |
| Payment due | Within 14 days of notice | Within 14 days of notice |
| Late interest | Up to 10% a year | Up to 10% a year |
Strata Management Act 2013, sections 12, 25, 50, 51, 60 and 61. Interest is exactly 10% a year during the developer's period, and up to 10% once a JMB or MC sets it.
How are maintenance fees calculated?
The law sets the method, not a fixed price. Charges are shared out in proportion to the share units of each parcel, which are allocated to every unit in the development.
- Developer's period: the developer sets the charges by share units. The developer must also pay for units it has not sold.
- JMB: the JMB decides the charges from time to time, by share units.
- MC: the MC decides at a general meeting how much to raise, and can set different rates for parcels used for very different purposes (for example, shops and homes in the same development).
So fees differ between developments, and can differ between units in the same development. Check the figure for your unit with the management office before you buy.
How much is the sinking fund in Malaysia?
The sinking fund is a percentage of the maintenance charges:
- During the developer's period: exactly 10% of the Charges (section 12).
- Under a JMB or MC: 10% of the Charges unless a general meeting decides otherwise, but never less than 10% (sections 25 and 61).
| Maintenance fee / month | Sinking fund (10%) | Total / month | Total / year |
|---|---|---|---|
| RM200 | 20 | 220 | 2,640 |
| RM300 | 30 | 330 | 3,960 |
| RM450 | 45 | 495 | 5,940 |
| RM600 | 60 | 660 | 7,920 |
Illustrative, in RM, at the 10% minimum. If a general meeting raises the sinking fund to 15%, a RM300 fee would carry RM45 of sinking fund, or RM345 a month in total.
What can each fund be used for?
The Act limits each account to specific purposes.
| Maintenance account (s50) | Sinking fund account (s51) |
|---|---|
| Day-to-day upkeep | Painting or repainting |
| Cleaning and security | Buying movable property |
| Building insurance | Replacing fixtures and fittings |
| Required inspections | Upgrading and refurbishment |
| Minor painting | Other capital spending |
Summarised from sections 50(3) and 51(2). The maintenance account covers regular expenditure; the sinking fund covers capital expenditure. A developer that misuses the sinking fund account commits an offence (fine up to RM250,000, jail up to three years, or both).
What happens if you don't pay?
You must pay within 14 days of receiving a notice. After that:
- Interest: up to 10% a year. For example, RM990 left unpaid for 90 days at 10% adds about RM24.41.
- Formal demand: the JMB or MC serves a written demand (Form 11 for a JMB, Form 20 for an MC). Ignoring it is an offence, with a fine of up to RM5,000, jail of up to three years, or both, according to one law firm's summary.
- Recovery: the management body can claim at the Strata Management Tribunal, sue in court, or apply through the Commissioner of Buildings to attach and auction your movable property.
For an MC, the Act also allows charges to be recovered from the person receiving rent for the unit, such as an agent, as well as from the owner.
How to question your charges
- During the developer's period: if you are unhappy with the charges or sinking fund set by the developer, you can apply to the Commissioner of Buildings for a review (section 12(7)). The Commissioner can set the amount or have a registered property manager recommend one.
- Under a JMB or MC: a JMB sets the charges itself, while an MC sets them at a general meeting. Any sinking fund above 10% must be decided at a general meeting. Attend, ask for the accounts and vote.
- Disputes: the Strata Management Tribunal hears claims listed in the Act's Fourth Schedule where the amount claimed is not more than RM250,000 (section 105). It cannot hear claims about title to land.
Checklist before you buy a condo
- Ask the management office for the monthly charges and sinking fund for the exact unit you are buying.
- Ask whether the unit has any unpaid charges. Under sections 60(4) and 61(4), an MC can recover unpaid charges and sinking fund from the owner's successor-in-title, so make sure your lawyer deals with any arrears before completion.
- Ask who manages the building now: the developer, a JMB or an MC.
- Ask for the latest accounts, including the sinking fund balance, and any major works planned.
- Check whether a general meeting has set the sinking fund above 10%.
- If you will rent the unit out, remember the charges are still your bills as owner.
FAQ
What is the difference between maintenance fee and sinking fund?
The maintenance fee pays for day-to-day running such as cleaning, security and insurance. The sinking fund is a separate fund, at least 10% of the maintenance fee, saved for major works such as repainting and replacing fixtures.
How much is the sinking fund in Malaysia?
At least 10% of your maintenance charges. It is exactly 10% during the developer's period; a JMB or MC can raise it at a general meeting, but not below 10%.
How is condo maintenance fee calculated in Malaysia?
The total is shared among owners in proportion to each unit's share units. The developer, JMB or MC decides the overall amount, so fees differ between buildings and between units.
What happens if I don't pay my maintenance fee?
After 14 days you can be charged interest of up to 10% a year. The management body can then issue a formal demand, claim at the Strata Management Tribunal, sue, or seek to attach and auction your movable property.
References
- Strata Management Act 2013 (Act 757), via LawPlayer (text from the Attorney General's Chambers)Used for sections 12, 25, 50, 51, 60, 61 and 105: who pays, share units, the 10% sinking fund rule, 14-day payment, the 10% interest cap, what each account can be used for, recovery from successors-in-title, the Commissioner review and the RM250,000 Tribunal limit.
- Low & Partners: How strata management bodies may recover outstanding maintenance chargesUsed for Forms 11 and 20, the penalty for ignoring a demand, the recovery routes and attachment through the Commissioner of Buildings.
The Malay text of the Act is authoritative. Check the official text on lom.agc.gov.my and your building's own house rules and AGM decisions.
This article is general information only, not legal advice. Examples are illustrative and based on the assumptions stated.
General information only, not legal, tax or investment advice. Rules and rates change; check the official source linked below before you act.
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