Setting the charge too low starves the building; too high and owners revolt. Here is how a committee budgets, sets and revises the maintenance charge and sinking fund.
General guidance for 2026 — not legal advice. Strata management is governed by the Strata Management Act 2013 & Regulations 2015; confirm with your COB or a lawyer. JMB/MC needs maintenance or renovation works? Ask us →
The maintenance charge is the financial engine of the scheme. Setting it on guesswork is how buildings end up with broken lifts and painful special levies. The right way is budget-led and transparent. A charge that reflects the actual costs, set by a visible and defensible process, is far less likely to face owner resistance — and far more likely to be paid on time. Understanding how the charge is calculated also helps owners see the value in paying — and gives the committee a clear defence against challenges to increases.
List every recurring common-area cost: security, cleaning, lift and pump servicing, common utilities, insurance, management/staff, repairs and a contingency. Total it for the year — that is what the maintenance charge must cover. Begin drafting the budget two to three months before the AGM so there is time to gather quotes for service contracts and check insurance renewals before presenting the numbers to owners. For related compliance obligations see the JMB/MC compliance checklist →.
| Category | Examples | Frequency |
|---|---|---|
| Security | Guard services, CCTV maintenance, access system | Monthly |
| Cleaning | Common-area cleaning contractors, waste collection | Monthly |
| Utilities | Common electricity, water, lighting | Monthly |
| Insurance | Building reinstatement, public liability | Annual |
| Maintenance contracts | Lift, pump, genset, fire system servicing | Annual / periodic |
| Repairs & maintenance | Routine repairs to common property | As needed; budget an allowance |
| Management & admin | Managing agent fee, audit, stationery | Monthly / annual |
| Contingency | Unplanned emergency repairs | Reserve 5–10% of total budget |
Rate per share unit = annual budget ÷ total share units ÷ 12 (monthly)
Each owner’s monthly charge is then their parcel’s share units × that rate. This is why charges differ by unit size — see share units → and maintenance fee & sinking fund →.
Charges must be split by share units (proportionate to each parcel), not a flat fee — that is the legal basis and what keeps it fair between large and small units.
On top of the maintenance charge, collect the sinking fund (commonly at least 10% of the maintenance charge) to reserve for major future works — repainting, lift replacement, major repairs. Under-funding it leads to painful special levies later. A forward plan of expected capital works and their likely cost helps set the right contribution level. Most buildings can project their key capital needs three to five years ahead — the repainting cycle, the lift expected lifespan, the waterproofing warranty expiry — and work backwards to a monthly sinking-fund contribution that builds the reserve in time. See special levy → for what happens when reserves run short.
Present the budget and proposed charge at a general meeting → for owners to understand and approve. Transparency — showing the line-item numbers — is what gets buy-in and reduces arrears. Owners who understand what they are paying for are more likely to pay on time.
When costs rise or the budget no longer balances, the committee can revise the charge — but justify it with an updated budget and bring it to a general meeting. Sudden, unexplained hikes breed disputes; a clear budget defends the increase. Give owners sight of the revised numbers in advance, not on the day of the meeting. A good practice is to attach the draft budget and proposed charge to the AGM notice so owners come prepared to discuss, not surprised. Historical cost data — showing what services actually cost last year vs what is budgeted this year — makes any increase far easier to accept and pass by resolution.
The biggest cause of shortfall is non-payment. Pair a fair charge with active recovery — see service-charge defaulters →. A budget that assumes 100% collection when arrears are high will always fall short. Build a realistic collection assumption into the budget, then work to close the gap through active recovery. If a scheme has a persistent 15% arrears rate, budget accordingly: assume only 85% collection, not 100%, and then aggressively pursue the 15% to get the actual collection rate up over time. Pretending the problem does not exist until the bank account runs dry is the worst approach. Transparent reporting of collection rates at each AGM keeps the issue visible and holds the committee accountable for improvement.
Issue bills on time, offer easy payment channels (bank transfer, online payment), apply late interest consistently, and report collection at each AGM. Consider a managing agent → if collection and accounts are slipping beyond the committee’s capacity to manage. The most effective collection systems send bills early in the month, follow up non-payers by the 15th, and apply late interest automatically on a consistent basis. Inconsistent enforcement — chasing some owners but not others — breeds resentment and gives defaulters grounds to dispute the charge.
| Under-funded charge | Over-funded charge | |
|---|---|---|
| Cash flow | Shortfalls, inability to pay contractors | Growing surplus; questions about spending |
| Services | Reduced security, cleaning, maintenance | Good services but owner resentment |
| Risk | Deferred maintenance, safety issues | Owners vote to reduce charge; then shortfall |
| Outcome | Special levies or building deterioration | Pressure to refund or reduce future charge |
| Best practice | Budget-led charge, reviewed annually, transparent to owners | |
This guide cites Malaysian legislation and official bodies. Always confirm current rates and rules with the official source:
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