{"id":58390,"date":"2023-09-07T18:38:11","date_gmt":"2023-09-07T10:38:11","guid":{"rendered":"http:\/\/wordpress-my-161844363.ap-southeast-1.elb.amazonaws.com\/articles\/?p=58390"},"modified":"2023-09-07T18:38:11","modified_gmt":"2023-09-07T10:38:11","slug":"sinking-fund-maintenance-fee-difference","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/sinking-fund-maintenance-fee-difference","title":{"rendered":"What Is The Difference Between Sinking Fund And Maintenance Fees"},"content":{"rendered":"

Do you know the difference between a sinking fund and maintenance fees? For the average person, the two might as well be interchangeable. However, there is a pretty clear distinction between the two.\u00a0<\/span><\/p>\n

For those who own a strata property such as an apartment or condominium unit, knowing the difference is important so you know what you are paying for.<\/span><\/p>\n

<\/span>What are these fees for?<\/b><\/span><\/h2>\n

Both sinking funds and maintenance fees are shared fees that affect virtually all residents in strata housing. The collection of these fees are pivotal in providing the necessary financing to ensure vital property management and maintenance.\u00a0<\/span><\/p>\n

After all, you don\u2019t want to spend all your time and money buying your dream apartment, only to find the surrounding building is derelict and in disrepair. If you don\u2019t want this to happen, then you are going to have to pay your fees.<\/span><\/p>\n

<\/span>What is a sinking fund?<\/b><\/span><\/h2>\n

A sinking fund is kind of like your personal emergency fund, except on a larger and shared scale. Imagine a shared pot of funds that is filled with cash from all residents in your building. These funds will then be kept by management for future expenditure, such as large scale repairs or major works on a building. In simpler terms, it\u2019s a pot of cash that is kept for a rainy day.<\/span><\/p>\n

Residents in a strata building all pay into this fund. The aim is to provide financial security in the event of major works being undertaken such as renovating lobbies or refurbishing the public gym. It is of utmost importance that all residents contribute to this fund. This fund is a team effort as you really don\u2019t want to pay a big fee for some important building repairs, only to discover that Jeff, who is living down the hall in unit 10 isn\u2019t contributing a single sen.<\/span><\/p>\n

<\/span>What is a maintenance fee?<\/b><\/span><\/h2>\n

The maintenance fee on the other hand, provides for everyday repairs and upkeep around a property. It covers all kinds of elements with relation to property management. This can include things such as gardening, repairing common areas, security, and keeping the place tidy and clean.<\/span><\/p>\n

While this might sound somewhat similar to a sinking fund, there are a few subtle differences. For one, a sinking fund is a large pot of money designed to offer financial security in case of expensive repairs, renovations, or expansions. The maintenance fee is there to pay for ongoing and day-to-day costs (like salaries for guards and groundskeepers).<\/span><\/p>\n

<\/span>How much do maintenance fees cost?<\/b><\/span><\/h2>\n

When it comes to maintenance, total cost will vary from property to property as it is affected by a number of different factors. If you live in a high-end condo or apartment with luxurious public spaces, marble fittings, a water fountain, and well-maintained public amenities, you can bet that your wallet is going to feel a little sting every time you are required to fork out cash for maintenance fees. If your property only has the bare basics, then you can expect to pay much less.<\/span><\/p>\n

The density of living is also a big factor in total costs. Low-density properties also means that there are fewer people to pay maintenance fees. Depending on how luxurious a low-density property is, maintenance fees can vary wildly. It is basically an economy of scale applied to apartment living density.<\/span><\/p>\n

On the other hand, a property within a high-density development will see total costs split between more residents, often making for a more economical situation (Once again, also depending on how luxurious the property is).<\/span><\/p>\n

Typically, maintenance fees are calculated based on the floor size of your unit. However, there are a few other factors that may come into play as well. These can include:<\/span><\/p>\n