Condo Buying Guide: What You Must Know About Maintenance Fees
21 Sep 2023
living tips
Before investing in a condo, discover the essential details about maintenance fees. Learn how to budget for condominium upkeep expenses.
Owning a condo unit – whether it’s a family home, a bridal heaven for the newly wed, an investment, or for pure speculation – comes with an unavoidable recurring cost that you need to consider in addition to the usual expenses arising from a property purchase such as tax and the ownership transfer fee.
That incurred cost is referred to as a common area maintenance fee (maintenance or common fee for short) that is certain to emerge if you’re buying a condo unit.
But what is a maintenance fee and on what basis is the fee calculated and who’s liable for the fee? Let’s find out.
What is a maintenance fee?
A maintenance fee is a recurring expense that all residents in the development and owners of condo units are responsible for. It is paid to the condominium’s juristic person. The juristic person uses these funds (generated from the maintenance charges) for taking care of and managing the condominium’s common facilities.
Whether or not you’re planning to move in, or the unit is being occupied by a tenant, there’s no escaping the fact that all condo owners are liable for the maintenance fee.
Maintenance fees are set out clearly in section 18 of Thailand’s Condominium Act (1979) that stipulates that owners of condo units are legally bound to pay maintenance charges. Therefore, if a condo owner fails to pay the maintenance fee, the condominium juristic person has the right to suspend some of their rights and file a lawsuit to force them to pay.
Some of you might be wondering how the funds from these maintenance fees are spent.
Mostly 65 percent of the funds pays for the upkeep of the condo and the costs of hiring security guards and cleaners.
Another 20 percent covers the utility costs and another 10 percent is for financing the repairs and maintenance work. The remaining five percent covers the costs of activities and other miscellaneous expenses. As a condominium juristic person is regarded as a not-for-profit entity, it must not be run for profit as far as the collection of maintenance fees is concerned.
How much is the average condominium maintenance fee?
The maintenance fee is paid at an average rate, collected from all owners of condo units, and calculated on the basis of the size of each condo unit as follows:
- Suppose the maintenance fee of a condominium is Bt40 per square meter per month.
- The maintenance fee for a 30-square-meter unit is calculated at Bt1,200 per month. But the condominium juristic person usually collects one or two years’ worth of the monthly maintenance fee in advance that amounts to Bt14,400 per year.
The calculations of the maintenance fee are also based on the development’s number of condo units. As a high-rise property project has more units than a low-rise one, the maintenance fee is more likely to be calculated on the basis of the number of units rather than the size of the condo unit.
Another factor that determines a maintenance fee is the number of amenities provided in the common area. Premium developments usually have a range of fancy amenities, which results in costly maintenance.
The reputation and experience of the juristic person is one of the determining factors as to how a maintenance fee is calculated as well.
Furthermore, a maintenance fee can go up over time in accordance with the rate of inflation. It’s no surprise then that the maintenance fee is lower in the first year than it will be in the years that follow.
So, what’s the average maintenance fee for condominiums in Bangkok? Mostly it’s between Bt35-Bt45 per square meter and can go as high as Bt95-Bt150 per square meter for the ultra-luxury developments.
Now you probably have an idea about what a condominium maintenance fee is. Another thing worth knowing is the payment terms of the maintenance fee. Payment schedules vary from development to development. Some condominiums might have attractive offers such as waiving of the maintenance fee for the first year.
Other places might collect the fee from the first year right away and request an advance maintenance fee payment for the first three years all at once. After the 3-year period, the juristic person might request condo unit owners to make payments on different schedules: yearly, every six months, or every three months.
Therefore, when buying and taking ownership of a condominium unit, you need to set aside a budget for maintenance fees too. Anyone failing to pay the maintenance fee would be guilty of violating the law. The juristic person can impose a fine for late payment or even ask for a 12-20-percent surcharge as a result.
The juristic person can take legal action to execute a payment order to recover the debt. Besides, the debtor would have their voting rights suspended in condo meetings and cannot transfer property ownership until the outstanding debt is paid off.
Who is responsible for the maintenance fee?
One might wonder who is responsible for paying the maintenance fee when buying or owning a condominium unit. The maintenance fee is calculated on the basis of the unit’s size and the number of the development’s condo units.
Even though you’re not planning to move in or having trouble finding a tenant to occupy your unit, you’re still liable for the maintenance fee. In case of the development’s unsold condo units, the developer would be liable for the maintenance fees of the empty units.
However, there’s a growing trend toward tenants responsible for the maintenance fee, much like in South Korea. After paying the rent to their landlord, the tenant is increasingly willing to pay the maintenance fee separately to the condominium’s property management committee (instead of the landlord).
At some condominiums, landlords still stick to the old-school method: having the maintenance fee included in the rent.
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