Property Investment? Maintenance fees are also forever…
There are reasons why people think staying in landed homes without any need to pay for maintenance fee is better than staying in condos where they have to pay maintenance fees. Ever since I bought my first apartment in Penang in 2003, I have been paying maintenance fees without fail since then until today. When I moved to my second home which was a condo, I continued paying maintenance fees.
This continued when I moved to my 3rd home, then my 4th home currently and it will continue even when I move to my 5th home in 1st quarter of 2023. Haha. So yea, I am quite qualified to write an article on maintenance fees since I have been paying it for the last 19 years.
#1 We cannot stop paying maintenance fees
Happy reading to understand.
Info source: propertyguru.com.my “If owner fails to pay the maintenance fees after a 14 days’ demand notice, the management body can SUE the owners.
This can take place in either the Court or Strata Management Tribunal (SMT) for recovery of the unpaid maintenance fees.
Besides that, the SMA also states that it’s a criminal offence if the owner (without reasonable excuse) fails to comply with the 14 days’ demand notice.
Upon conviction, the owner can be fined not more than RM5,000 or jailed not more than 3 years, or BOTH! Info source: propertyguru.com.my
#2 The amount to be paid is forever…
Typical charges these days can easily be 30 sen per sq ft. So, for a 1,000 sq ft condo, one may have to pay around RM300 for monthly maintenance fees. That’s RM3,600 per year or RM36,000 every 10 years. By the time the home loan ends, the total maintenance fee paid is already RM300 x 12 (months) x 30 (years) = RM108,000. 6-figure number, even if you are not using the facilities.
Have you ever imagined paying RM108,000 just for a 1,000 sq ft condo? As long as you still own that condo, you still have to continue paying the maintenance fees yeah. Now imagine what happens to those who are paying RM400 per month… Not easy financially speaking. No wonder people say it’s super tough to afford a home. By the way, this is also why there is no need to buy a condo with the MOST number of facilities as well… (unless we are using them)
#3 It can continue moving upwards
There is no guarantee that the maintenance fee will be the same forever. Anyway, salaries go up, prices of parts go up and technically everything will face the wrath of inflation. So, the maintenance fee which used to be RM300 per month could inch upwards. Say 10% increase every 3-4 years? It has to be agreed by the owners during the Annual General Meeting (AGM). Can all owners reject this increase then?
It can definitely be rejected but please remember that when the maintenance fee fails to keep up to the necessary funds needed, things will start to break down and when this happen, it will also be bad for all the existing owners over the long term. For example, from the usual 12 guards, this may be reduced to half the number… or from the usual 3 times pool cleaning, it may now be just once per week. Erm… it’s dirty yeah…
This is also why the maintenance fees for newer condos are higher in price per sq ft versus the older ones yeah.
#4 It is NOT whether you use or not use yeah
There are services which we pay when we use. Well, when it comes to maintenance fees, we pay for the convenience of using the facilities as and when we would use them. It’s not when we use them, then we pay yeah. This is also one reason many refuses to buy a condo because they say they never use the pool anyway, why pay?
Good points. Just remember yeah, it’s not just the pool but also the cleaning services… also the security guards… the security cameras… the continuous upkeep of all facilities, the electricity to switch on lights in the common area and even the repainting of the external walls every 10 years?
Maintenance fees is thus payable forever as long as you still own the unit and not whether you use the facilities every week or not.
Maintenance fees should still be affordable
I went to view a nice condo 3 years ago. I like it a lot. My wife too. The maintenance fee? RM950. Haha. That’s very hard to accept. Plus the fact that the facilities are no longer that new and the design is also not that contemporary too. Yeah, it’s one of those condos where the developer is cash-rich and has been keeping the condos and not selling the condos with a super heavy discount.
As a buyer, just remember this. When the maintenance fee is just too high, then it will be a major obstacle to sell that property in the future as well. So, sometimes, the property price is also affected because the potential buyer may prefer to use part of the maintenance fees for another small property to be rented out instead. Plus the fact that there are so many choices out there these days yeah.
All the best in choosing one with just enough facilities, quite affordable maintenance fees and not too low density or super high density. Cheers.
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