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What is Management Fee & Sinking Fund?

Management Fee and Sinking Fund are common terms associated with the maintenance and management of strata-titled properties, such as condominiums, apartment complexes, or mixed-use developments. These fees are charged to property owners or tenants to cover the costs of maintaining and managing shared spaces and facilities.

Management Fee

The management fee is a regular charge that property owners must pay to the management corporation (MC) or joint management body (JMB) for the ongoing management and maintenance of the common areas and facilities in the property.

Purpose of the Management Fee:
The funds collected from the management fee are used for day-to-day operations and maintenance of shared spaces and facilities, such as:

• Security services (e.g., guards, CCTV surveillance)
• Cleaning services (e.g., common area cleaning, garbage collection)
• Landscaping (e.g., garden maintenance, tree trimming)
• Repairs and maintenance (e.g., lifts, hallways, communal lighting)
• Staff wages (e.g., management office staff, Security Guards)
• Utilities (e.g., water, electricity, waste management for common areas)

How It’s Calculated:
The management fee is typically calculated based on the size of the property you own (e.g., per square foot) and the total number of units in the building. The fee structure is decided by the management corporation (MC) or joint management body (JMB), and the amount can vary depending on the property’s facilities and location.

Sinking Fund

The sinking fund is a separate fund that is collected alongside the management fee. It is intended for long-term maintenance and repairs of the property’s common areas and facilities, and for capital improvements that are needed in the future.

Purpose of the Sinking Fund:
The sinking fund is used to cover major repairs or replacements that may be required over time, such as:

• Major structural repairs (e.g., roof repairs, repainting of the building)
• Upgrades to facilities (e.g., upgrading the lifts, replacing old plumbing or wiring)
• Replacement of equipment (e.g., air-conditioning systems for common areas)
• Emergency repairs (e.g., major damage due to natural disasters or accidents)

How It’s Collected:
Like the management fee, the sinking fund is usually collected monthly from property owners. The amount may also be calculated based on the size of the unit owned, and the exact percentage or fixed amount is determined by the MC or JMB. Typically, a percentage of the management fee (10%) is allocated to the sinking fund.

Long-term Benefits:
The sinking fund ensures that sufficient funds are available when major repairs or replacements are needed, reducing the need for large, unexpected special assessments or levies that could financially burden owners. It’s a way of saving for future property expenses.

Summary