Can maintenance fees in high-rises continuously increase?

Don’t be surprised if a low-density high-rise project with less than 100 units in a quiet neighbourhood, has high maintenance fees.

For a unit of over 1,350 sq ft, the maintenance fee per square foot can be 65 sen. In other words, one would have to fork out RM900 per month on maintenance fees alone.

Another issue with low-density projects is that the number of facilities are likely to be limited as too few units will have to share the burden of maintaining the facilities.

Many Malaysians are not super-wealthy businessman who think of RM900 as spare change. RM900 is enough for monthly food expenses.

Perhaps the next question is this, “Will the 65 sen per sq ft get higher in the future?” The answer is definitely “Yes”.

What are the reasons for the maintenance fee increase? Let’s read what Chur Associates founder and managing partner Chris Tan has to say about this.

According to an article in edgeprop.my, the reason why maintenance fees increase in low-density developments is because fewer units share the responsibility to pay. Plus, the Defects and Liability Period is already over too.

Can maintenance fees be increased? Yes, developers may have underestimated the maintenance fees when they were marketing their properties.

Thus, when professional managers are appointed, they will recommend better security, and more maintenance and cleaning shifts for example.

Tan’s advice is: “If I am advising the person who is complaining about the steep hike in maintenance fee, I would want to know the easiest way to get everybody involved so they can all participate in the management of the place and therefore determine the charges.

“Once you get involved, then you’ll know whether the 35 cents or 65 cents per sq ft is justified and you will also know the nitty gritty details and be able to decide on the level of [maintenance] class you want.”

He was also asked what the next course of action should be if residents were unhappy with the new higher maintenance fee.

He said, “Then people will ask me, what do I do? Sell and exit. If you feel that this building’s maintenance cost is going up and will go up even further beyond what you think is reasonable and so forth, then the best thing to do is ask yourself whether you should dispose of this property, exit and go to another scheme? You bought it on your own, you can exit on your own.”

Remember, the cost of cleaning the swimming pool is the same whether it’s shared with 100 owners or 500 owners. Therefore, the maintenance fee per square foot will be different.

If one is truly unhappy with the increased maintenance fee, they should join the management committee.

If you know the actual reasons and are unwilling to accept it, perhaps it’s time to take a look at thousands of other potential high-rise choices.

Let’s also remember that the lower the density, the higher the maintenance fees. This is true even for stratified gated and guarded homes.

This article first appeared in kopiandproperty.com

Charles Tan blogs at property investment site kopiandproperty. He dislikes property speculators and disagrees that renting is better than buying. He thinks it’s either property or poverty. He is presently the CEO of an auction house auctioning assets beyond just properties.