Condo maintenance costs are set to go up as they rise
The Minton was built in Hougang with 1,145 apartments in 2015. The monthly MF charge ranged from S$215.60-S$282.80.
The MF monthly fee today is S$227.15 – S$297.95, while the SF portion ranges between S$53.90 – S$70.70. Homeowners are now charged maintenance fees between S$281.05 up to S$368.65 every month. This is an increase of approximately 30.4% over the initial costs.
Sceneca Residence has 268 apartments. Estimates range from S$293/month for a studio to S$560/month for a four bedroom penthouse.
In the next five years, wages for entry level workers are expected to grow by 48 percent from S$2,210 (in 2023) to S$3,260 (in 2028).
In October the National Wages Council announced a 5.5 % to 7.5 % pay hike to workers earning a gross salary of up S$2,500, which is the threshold of 20th percentile wages.
Increased electricity and Water Tariffs also have increased costs.
Water prices increased by 30 percent within two years of 2017. They are expected to increase another 18 percent in the following two years. In the fourth of 2023 the average electricity rate will increase by 3.7 % from the last quarter.
The fees are higher because the projects are new . Owners of 1,862 unit Normanton Park that received its temporary occupancy permit (TOP), this year paid a fee as high as S$333.75 each month.
The Business Times carried out checks that showed the estimated maintenance fee of some new condos introduced this year, was between S$270 – S$650 monthly. This is excluding the GST. This figure is subject to change. It will only be finalised when a project gets its TOP.
Market observers attribute the steady rise of fees to increasing manpower and material cost, as well higher priced contracts for security services, cleaning and landscaping. As a result of the implementation of the progressive wage (PWM), maintenance costs will continue to rise in the year ahead.
The model is an escalator for certain lower wage sectors – like cleaning, security or landscape. It also includes waste management. Starting this July, the base salaries of up-to 3,000 waste-management employees will be increased, increasing each year over six years.
Because of their location, fees for projects located in prime central areas may not be higher than those elsewhere.
Facilities that are expensive can increase fees. Think about a complex with less 100 units but high-end amenities such as a film theatre or a bowling hall. Such specialised amenities come with a high monthly cost.
United Engineers reduced its maintenance charges by 40% in November after the residents protested.
It is not uncommon that the actual fee exceeds the estimate. During pandemics, costs increased unexpectedly. And delays affected cost-provision estimates.
One of the projects launched this past year is the Grand Dunman with 1,008 apartments. Its estimated monthly fee for units smaller than 538 square ft (sqft) is S$270. For units over 2,691 sq ft, the fee rises to S$540. At the Tembusu, the monthly fees range from S$325/month for a one bedroom to S$585/month for a penthouse with five bedrooms.
Condo fees pay for a sinking-fund (SF), which pays for repairs and other capital expenses.
Owners will pay different fees depending on their ownership share, which is determined by the size of the unit. Size, age, amenities and other qualitative factors are also considered.
Contributions to sinking funds are bound to increase with the age of a particular project, in order to pay the costs associated with the replacement and enhancement of the facilities.
Over the last ten years, these fees have risen – some condos by up 30 per cent. Owners in some older, luxury condos pay as much S$2,000 every month.
Owners pay a fee for the upkeep and management of the common facilities and areas such as the pool, gym, landscaped gardens, and security.
As costs are distributed more evenly, fees for larger developments that have more units tend to be lower than those of smaller developments. Inflationary pressures and rising labour, utility, and business costs are driving up fees.
Even though the estimated amount may be a little lower than the actual cost, this will require the approval of the Building and Construction Authority, it shouldn’t be a major difference.
Residents complained recently that the maintenance fee for their newly constructed Dairy Farm Residences was up to 200% more than was originally estimated in the marketing materials.
According to media reports some residents who owned units with 2 to 3 bedrooms paid fees in excess of S$700 each month. Initially, this was advertised at up to S$350 monthly. More than 600 signatures were collected in October for a petition.
As labour, materials and utility prices continue to rise, the maintenance fees of private condominiums will also increase.