Condo maintenance fees and the true monthly cost of ownership

The cost that continues

Most buyers budget hard for the purchase and the mortgage, then underestimate what it costs to simply own a condo month after month. Maintenance fees are the most visible of these recurring costs - and they are only part of the picture.

What maintenance fees pay for

A condominium is a shared development. The pool, gym, gardens, lifts, security, common-area lighting, cleaning and general upkeep all cost money to run. Maintenance fees - often called service or conservancy charges - are how every owner contributes to those shared running costs.

Part of what you pay typically goes to a sinking fund: a reserve built up for larger, less frequent works such as repainting the development, major lift servicing or facility refurbishment. The sinking fund is why a well-run development can fund big works without a sudden special levy on owners.

How maintenance fees are set

Fees are usually charged by share value - units are assigned share values broadly reflecting size, and the charge is calculated against them, so a larger unit generally pays more. The total budget is proposed and approved by owners through the development's management, typically at general meetings. Fees are not fixed forever; they can be revised as running costs change.

Why fees differ between developments

Two condos can have very different maintenance fees. Common reasons:

• Facilities. More, and more elaborate, facilities - large pools, multiple pavilions, extensive landscaping - cost more to maintain.
• Size of the development. Costs spread across many units can lower the per-unit fee; a small development spreads fixed costs across fewer owners.
• Age and condition. Older developments may face higher upkeep.
• How it is run. Efficient management and a healthy sinking fund affect the long-run cost.

A high fee is not automatically bad - it may reflect genuine facilities and good upkeep. A very low fee is not automatically good - it may signal an underfunded sinking fund. Ask about both the fee and the sinking fund's health.

The full monthly cost of ownership

Maintenance fees are one line. The true monthly cost of owning a condo also includes:

• The mortgage instalment - and for a new launch under progressive payment, remember it rises over time to the full amount.
• Property tax - an annual tax on the property; the rate differs for owner-occupied versus let units. Check the current property tax rates with IRAS.
• Home insurance.
• Utilities and broadband.
• Upkeep of your own unit - repairs, servicing and eventual replacements.

Budgeting it properly

• Find out the actual maintenance fee for the specific unit, not a rough estimate.
• Ask about the sinking fund, and whether major works or a levy are anticipated.
• Add property tax, insurance and a realistic allowance for unit upkeep.
• For a new launch, budget the eventual full mortgage instalment, not the small early progressive one.

The takeaway

Maintenance fees fund the shared facilities and upkeep that make a condo a condo, and a sensible fee with a healthy sinking fund is a sign of a well-run development. But the fee is only one part of the recurring cost of ownership. Budget the full monthly picture - mortgage, maintenance, property tax, insurance, utilities and upkeep - so the home is comfortable to own, not just to buy.