Service Charges and Sinking Fund in Malaysia, Explained (2026)

What are service charges and the sinking fund? Every strata owner in a Malaysian condo pays two monthly amounts to the building's management body. Service charges (often called maintenance fees) cover day-to-day running costs such as security, cleaning, lifts and insurance. The sinking fund is a reserve for big future repairs, and by law it must be at least 10% of the service charges (Strata Management Act 2013, as of October 2026).

So a unit billed RM400 a month in service charges pays at least RM40 more into the sinking fund: RM440 in total. Here is how both amounts are set, what they can be spent on, and what happens if they go unpaid.

What do service charges pay for?

Service charges (the Act calls them "Charges") fund the upkeep of the common property: guards and access control, cleaning and landscaping, lifts, pools and gyms, electricity and water for common areas, the managing agent, and the building's insurance policy, which the management body is required to hold (EdgeProp). They are collected in advance and paid into a dedicated maintenance account.

What is the sinking fund for?

The sinking fund pays for capital spending rather than routine bills: repainting the building, renewing or replacing fixtures and fittings, buying movable equipment, and upgrading common property (Strata Management Act 2013 text via Low & Partners). It sits in a separate sinking fund account and may only be used for those purposes, which is why a well-funded sinking fund is a good sign when you buy into an older building.

How are service charges calculated?

Charges are split in proportion to each parcel's share units, not simply by square footage (as of October 2026). Share units are allocated when the strata titles are planned and take into account the size of your unit, any accessory parcels such as car parks, and how the parcel is used, so a commercial or SOHO unit can carry a different weighting from a residential one (EdgeProp). Ask the seller or the management office for your unit's monthly figure rather than estimating it from size.

Who sets the amounts?

It depends on the stage the building is at:

1. Developer during the preliminary management period, right after handover.
2. Joint management body (JMB), made up of the developer and owners, until strata titles are issued and the management corporation is formed.
3. Management corporation (MC), run by owners, which sets charges and any increase in the sinking fund rate at a general meeting.

At every stage the sinking fund contribution is at least 10% of the charges. A general meeting can vote for more, but not less (Act 757 via Low & Partners). Accounts must be audited every year, so owners can see how the money is spent.

What happens if you don't pay?

Late payment can be charged interest of up to 10% a year (as of October 2026). The management body can serve a written notice giving at least two weeks to pay, then file a claim in court or at the Strata Management Tribunal. An owner who ignores the notice without reasonable excuse commits an offence, punishable by a fine of up to RM5,000 or up to three years' jail, plus up to RM50 a day if the default continues (Act 757 via Low & Partners).

Fee disputes are the tribunal's most common case type: a tribunal deputy chairman said about 80% of claims involve fees, claims of up to RM250,000 can be filed and the filing fee is RM100 (EdgeProp, November 2022).

Who pays when the unit is rented out?

The owner is liable to the management body, whoever lives in the unit. Most tenancy agreements in KL leave service charges and the sinking fund with the landlord, but check the clause in yours; our renting guide covers what usually goes into a tenancy agreement. For landlords, Maybank lists service charges, maintenance fees and sinking fund among the expenses claimable against rental income, together with assessment, quit rent, fire insurance and home loan interest (Maybank, October 2024).

What should buyers check?

• The monthly total: service charges plus sinking fund, and whether an increase has been voted on.
• Arrears: when you buy a subsale unit, charges are normally apportioned to the completion date in the SPA, as explained in our SPA process guide. Ask for the latest statement so you do not inherit unpaid bills.
• Health of the sinking fund: a large planned repainting or lift replacement with a thin fund can mean a special levy later.
• Your yield: deduct both amounts when you compare rent against price; our rent-or-buy comparison for Solaris Parq shows how holding costs change the picture, and the cost calculator covers stamp duty and legal fees.

The rules above come from the Strata Management Act 2013, which applies in Peninsular Malaysia and Labuan; Sabah and Sarawak have their own strata laws. The housing ministry said in June 2026 that it is reviewing the Act, with no timeline yet for amendments (RTM).

Comparing buildings in Mont Kiara, Damansara Heights or Desa ParkCity? Browse our current listings and WhatsApp us for a unit's current service charge and sinking fund before you view.

FAQ

How much is the sinking fund in Malaysia?

At least 10% of the service charges, under the Strata Management Act 2013. Owners can vote at a general meeting to contribute more, but the rate cannot go below 10%.

Can a tenant be made to pay service charges?

The management body bills the owner, who stays legally liable. A tenancy agreement can shift the cost to the tenant by agreement, but most KL rentals keep service charges and the sinking fund with the landlord.

Can the JMB or MC charge interest on late service charges?

Yes. Late-payment interest is capped at 10% a year, and an owner who ignores a written demand can face a fine of up to RM5,000, a claim at the Strata Management Tribunal or court action.