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A sinking fund for property in Thailand are savings account used for big, unexpected repairs or renovations. Knowing about these funds is important for anyone buying into a property community because it helps them be better investors.
Here’s what you’ll need to know about a sinking fund.
What is a Sinking Fund?
A property sinking fund Thailand is a savings account set up to protect a property’s value. Investors use it to make sure their money isn’t lost or devalued over time.
Sinking funds can be used for:
- Covering repair and maintenance costs
- Replacing assets (like appliances)
The real estate sinking fund is a one-time payment made by every condo owner. It’s based on the size of each unit in square metres. This property fund covers the cost of major repairs and upgrades to the condo building and shared areas.
In Phuket, the property fee for condos is usually between 500 and 1,500 baht per square metre. For example, for a 60 square metre condo in Patong with a 500 baht per square metre fee, the payment would be: 60 square metres x 500 baht = 30,000 baht. Besides the common area fee, it is an extra payment needed when buying a condo.
Why is a Sinking Fund Needed?
A sinking fund covers the cost of major repairs and replacements, like fixing fences or replacing roofs. For example, if a roof tile falls off, the service charge pays for the repair. But, the fund pays for a full roof replacement when needed. It ensures that big repair costs are shared by all residents over time, so future residents aren’t left with huge bills. It helps maintain your home’s value because future buyers will check the fund before purchasing.
How is the Amount I Will Be Charged Calculated?
When a property is built, the builder gives a cost estimate for future repairs and replacements (like windows or roofs). Your housing provider uses this to make a schedule of work and estimate costs, which determines your monthly fund for property payment. This amount will be in your lease agreement, and your solicitor should explain it when you buy your home. Your housing provider can also answer any questions.
What if I Think the Monthly Payment Rates Are Too High?
If you’re unhappy with the required payment, you can contact your housing provider. They can have an independent surveyor reassess the charges, considering any evidence you provide. If repair costs are over THB 11, 676.80 per property and shared with other co-owners, you should be consulted before the work is done. If no agreement is reached, you can apply to the First-Tier Tribunal (Property Chamber) to resolve the issue.
Benefits of a Sinking Fund
Easier Budgeting
A sinking fund for property helps you budget for unpredictable expenses by including them in your regular budget. This way, you won’t have to change your spending habits when unexpected costs arise.
Avoid High-Interest Debt
Having a fund for property prevents you from needing loans with high interest rates to cover sudden bills. Planning ahead with a sinking fund is cheaper in the long run.
Targeted Savings
A sinking fund lets you save for specific expenses without affecting other savings. You can choose the best account for these funds without worrying about penalties or losing interest.
Protect Your Emergency Fund
Using a fund for property ensures you don’t dip into your emergency savings for routine expenses. This keeps your emergency fund intact for real emergencies, separating your short-term and long-term savings goals.
Sinking Funds in Properties
When investing in properties, it’s crucial to understand sinking funds for property. These funds are essential for maintaining the financial health of your investment. Knowing how they work helps you avoid risks that could harm the success and profitability of your property.
At ourvillas, we know how important a well-managed fund for property is for protecting your investment. With years of experience in properties, our team offers expert advice tailored to your needs. Whether you’re a seasoned investor or new to strata properties, our experience makes us a reliable partner. Contact one of our friendly team members today for more information.
Frequently Asked Questions
What is a sinking fund?
A sinking fund is a savings account used to pay for big repairs and replacements in a property, like fixing roofs or replacing old systems.
Why do I need to pay into a sinking fund?
Paying into a sinking fund helps spread the cost of major repairs over time. This way, all residents contribute, and no one gets hit with a huge bill later.
How is my payment amount decided?
Your payment is based on a cost estimate made when the property was built. This estimate helps your housing provider figure out how much you need to pay each month.
What if I think my sinking fund payments are too high?
If you think your payments are too high, you can talk to your housing provider. They can get an independent surveyor to check the charges. If needed, you can also go to the First-Tier Tribunal (Property Chamber) to settle any disputes.