Ask a property agent about maintenance fees and you will get a number — RM 280/month, RM 350/month — delivered casually, as though it were a minor detail. It is not. Maintenance fees are the largest non-financing recurring cost for strata property owners in Malaysia. On a 1,000 sqft condo at RM 0.50/sqft, you are bleeding RM 6,000/year before you even think about vacancy, tax, or insurance. That single line item can be the difference between a property that pays you and one that drains you.
This post covers exactly how maintenance fees and sinking fund are structured under Malaysian law, what rates to expect by property type, and how to evaluate whether a development's fee structure will kill your cashflow.
What Maintenance Fees Actually Cover
Maintenance fees — sometimes called management fees or service charges — are the monthly charges paid by owners of strata-titled properties to the Joint Management Body (JMB) or Management Corporation (MC) responsible for upkeep of common areas.
Under the Strata Management Act 2013 (Act 757), every strata property owner is legally obligated to pay maintenance charges. These funds cover:
- Common area cleaning and landscaping
- Lift maintenance and servicing
- Swimming pool, gym, and facility upkeep
- 24-hour security and CCTV
- Common area electricity and water
- Pest control
- Minor repairs to shared infrastructure
- Management staff salaries and administration
The JMB manages the property from the time vacant possession is delivered until the MC is formed (typically within 12 months of the first AGM). After that, the MC takes over. Both have the legal authority to set and collect maintenance charges.
How Maintenance Fees Are Calculated
The formula is straightforward:
Monthly Maintenance Fee = Rate per sqft × Built-up Area (sqft)
The rate per sqft is determined by the MC or JMB based on the development's annual operating budget divided by the total share units (which correspond to unit sizes). A 1,200 sqft unit pays proportionally more than a 700 sqft unit in the same development.
The key variable is the per-sqft rate. This varies enormously depending on property type, facilities, management efficiency, and location.
Typical Maintenance Fee Rates by Property Type
| Property Type | Rate (RM/sqft/month) | 1,000 sqft Monthly (RM) | Annual Cost (RM) |
|---|---|---|---|
| Low-cost flat | 0.10 – 0.15 | 100 – 150 | 1,200 – 1,800 |
| Medium-cost apartment | 0.15 – 0.25 | 150 – 250 | 1,800 – 3,000 |
| Standard condominium | 0.25 – 0.40 | 250 – 400 | 3,000 – 4,800 |
| Luxury condominium | 0.40 – 0.60 | 400 – 600 | 4,800 – 7,200 |
| Serviced residence | 0.35 – 0.55 | 350 – 550 | 4,200 – 6,600 |
The spread between a medium-cost apartment at RM 0.18/sqft and a luxury condo at RM 0.55/sqft is RM 370/month on a 1,000 sqft unit. That RM 4,440/year difference does not translate into proportionally higher rent. The luxury condo might command 20-30% more rent, but its maintenance cost is 200% higher. This is the core problem: facilities-heavy developments cost more to maintain, but tenants do not pay proportionally more for them.
The Sinking Fund
The sinking fund is a separate reserve fund earmarked for major capital expenditure — roof replacement, lift overhaul, repainting of the building exterior, waterproofing, structural repairs, and replacement of major mechanical systems.
Under Section 52(3) of the Strata Management Act 2013, the sinking fund contribution is typically set at a minimum of 10% of the maintenance fee. So if your maintenance fee is RM 300/month, expect RM 30/month in sinking fund contributions.
Monthly Sinking Fund = Monthly Maintenance Fee × 10% (minimum)
Some developments set the sinking fund contribution higher — 15% or even 20% — particularly older buildings anticipating major repair cycles. This is actually a good sign: it means the MC is planning ahead rather than hitting owners with sudden special levies.
A healthy sinking fund balance for a 10-15 year old development should be at least 6-12 months of total maintenance fee collections. If it is below 3 months, the building is one major repair away from a special levy that hits every owner.
Why Maintenance Fees Vary So Much
Four factors drive the spread in maintenance rates across developments:
1. Facilities. An infinity pool costs more to maintain than a basic lap pool. A sky lounge on the 40th floor requires dedicated lift servicing, cleaning, and insurance. A concierge service means full-time staff salaries. Every facility adds to the operating budget — and that budget is divided among all unit owners.
2. Number of units sharing costs. A development with 800 units spreads the cost of security, lifts, and common area maintenance across more payers than a boutique development with 150 units. Fewer units per development = higher per-unit cost, all else being equal. This is why boutique condos frequently have maintenance fees of RM 0.40-0.60/sqft despite having fewer facilities than mass-market developments.
3. Age of building. Older buildings (15-25 years) often have established, efficient management corporations that have optimized costs over decades. But they also face rising repair bills as infrastructure ages. New developments may have subsidized rates for the first 1-2 years that jump 20-40% once the developer stops subsidizing.
4. Management efficiency. A well-run MC negotiates competitive contracts, avoids unnecessary spending, and maintains transparent accounts. A poorly-run MC overpays contractors, tolerates wastage, and runs deficits that eventually result in fee increases or special levies. Attend the AGM or request the annual financial statements — they reveal whether the management is competent.
The Cashflow Killer: A Worked Example
Consider two identical investment scenarios — same purchase price, same rent, same financing — differing only in maintenance fee rate.
Property A: RM 500,000 condo, 1,000 sqft, maintenance at RM 0.25/sqft Property B: RM 500,000 condo, 1,000 sqft, maintenance at RM 0.50/sqft
Both rent at RM 2,300/month. Financed at 90% LTV, Islamic financing at 4.00%, 35-year tenure. Monthly installment: approximately RM 1,930.
| Cost Item | Property A (RM/month) | Property B (RM/month) |
|---|---|---|
| Gross Rent | +2,300 | +2,300 |
| Financing | -1,930 | -1,930 |
| Maintenance Fee | -250 | -500 |
| Sinking Fund (10%) | -25 | -50 |
| Other costs (tax, vacancy, insurance, agent) | -310 | -310 |
| Net Monthly Cashflow | -215 | -490 |
Property A loses RM 215/month — tight, but recoverable with a modest rent increase. Property B loses RM 490/month — RM 5,880/year hemorrhaging from your account. The RM 275/month difference is entirely attributable to maintenance fees. Over a 10-year holding period, that is RM 33,000 in additional losses.
For cashflow-focused investors, target maintenance fees of RM 0.20-0.35/sqft. Below RM 0.20 and the building may be deferring essential maintenance. Above RM 0.35 and the fee becomes a significant drag on net yield — each additional RM 0.05/sqft costs RM 50/month on a 1,000 sqft unit.
Red Flags to Watch
Rapidly increasing fees. If maintenance fees have jumped 15%+ in the past 2 years, investigate why. Was there a special levy? Did a major contractor get replaced? Is the MC running a deficit?
Special levies. A one-time special levy for a major repair (lift replacement, facade repainting) is normal and occasional. Frequent special levies suggest the sinking fund is inadequate or mismanaged.
Poor maintenance despite high fees. Walk the common areas. If the pool is green, the gym equipment is broken, and the corridors are dirty despite RM 0.45/sqft fees — the money is going somewhere, but not into the building. This is a management red flag.
Large common area to unit ratio. Developments with expansive podium decks, multiple pools, sky gardens, and function halls on every third floor look impressive in brochures. But every square meter of common area requires maintenance, and the cost falls on unit owners. A high common-to-private ratio inflates maintenance costs without proportionally increasing rental attractiveness.
Subsidized rates on new launches. Developers often subsidize maintenance fees for the first 1-2 years to make their projects appear more investor-friendly. The actual rate kicks in once the developer hands over management to the JMB. Always ask for the projected unsubsidized rate — not the promotional one.
What Happens If You Don't Pay
Non-payment of maintenance fees is not a victimless decision. Under the Strata Management Act 2013:
-
Interest on arrears. The MC can charge interest of up to 10% per annum on outstanding maintenance fees.
-
Strata Management Tribunal. The MC can file a claim at the Strata Management Tribunal for recovery of unpaid charges. The Tribunal can order payment, and its orders are enforceable as court orders.
-
Prevention of property transfer. This is the one that catches sellers off guard. When you sell, the MC must issue a clearance letter confirming no outstanding charges. If there are arrears, the MC can withhold clearance — effectively blocking the property transfer until all outstanding fees (including interest) are settled.
-
Legal action. For persistent non-payment, the MC can pursue civil legal action through the courts.
For investors buying sub-sale properties: always check maintenance arrears before completing the purchase. Request a statement of account from the MC. Outstanding maintenance fees can be inherited by the buyer if not addressed in the SPA. Make it a condition of the SPA that the seller clears all arrears before completion.
Sinking Fund Adequacy: How to Check
Before buying into any strata development, request the following from the MC:
-
Audited financial statements — every MC is legally required to prepare annual audited accounts. These show income, expenditure, and the current balance of both the maintenance fund and sinking fund.
-
Sinking fund balance — compare the current balance against the age and condition of the building. A 20-year-old development with a sinking fund balance of RM 50,000 across 400 units is a disaster waiting to happen — that is RM 125 per unit, barely enough to repaint the lobby.
-
Planned capital expenditure — ask whether any major works are planned in the next 2-3 years. If the building needs RM 2 million in lift replacement and the sinking fund has RM 500,000, expect a special levy of RM 3,750 per unit (assuming 400 units).
-
Collection rate — what percentage of owners are paying on time? A collection rate below 80% signals financial stress. The MC may be unable to fund routine maintenance, let alone major repairs.
Tax Deductibility
Both maintenance fees and sinking fund contributions are fully deductible from rental income under Section 4(d) of the Income Tax Act 1967. This applies to both Malaysian tax residents and non-residents.
On a property with RM 350/month maintenance and RM 35/month sinking fund, the annual deduction is RM 4,620. For a resident landlord in the 19% marginal tax bracket, that translates to RM 878/year in tax savings. For a non-resident at the 30% flat rate, the saving is RM 1,386/year.
The deduction does not eliminate the cash cost — you still pay the maintenance fee out of your rental income. But it reduces the taxable portion, which partially offsets the cashflow drag.
For the full picture of how maintenance fees fit into the complete ownership cost stack, see our breakdown of all 12 recurring costs. And for a quick filter on whether a property's cost structure supports positive cashflow, see our guide on 5 signs of a cashflow-positive property.
The Maintenance Fee Ratio
Here is a simple metric to screen properties before doing a deep dive:
Maintenance Fee Ratio = Monthly Maintenance Fee ÷ Monthly Rent × 100
| Ratio | Assessment |
|---|---|
| Below 8% | Excellent — maintenance is a minor drag |
| 8% – 12% | Acceptable — within norms for standard condos |
| 12% – 18% | Cautionary — eating a significant share of rent |
| Above 18% | Dangerous — strongly consider alternatives |
A RM 350/month maintenance fee on RM 2,500/month rent gives a ratio of 14% — in the cautionary zone. The same RM 350/month against RM 4,000/month rent gives 8.75% — acceptable.
This ratio captures the relationship between what the building costs you and what a tenant pays you. High maintenance on low rent is the worst combination for cashflow.
Maintenance fees and sinking fund are fixed costs. Unlike vacancy, which you can mitigate with better marketing, or tax, which you can optimize with deductions, the maintenance fee is set by the MC and applied uniformly. You cannot negotiate it down. You cannot opt out of it. You can only choose to buy into a development where the rate is compatible with your cashflow model — or walk away. For investors targeting cashflow-positive outcomes, this line item deserves as much scrutiny as the financing rate. Run the numbers on our cashflow calculator with the actual maintenance fee — not the one from the brochure.