What Is A Condominium Sinking Fund?

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Posted by Continent Property on September 23, 2022

Condominium Sinking Funds Explained

A condominium sinking fund in Thailand is a reserve fund used for brand-new condo and villa projects. All of the project’s or property’s new owners will be required to contribute to this common fund. The reserve sinking fund is often used for expensive once-in-a-while needs like structural repairs, major repairs, repainting, equipment replacement, and other substantial expenses.

The sinking fund is paid upfront during the purchase of a brand-new property and once more when the sinking fund requires replenishment. It is computed by the price per square meter of the living area of the property.

How Does A Sinking Fund Benefit You?

During your ownership of a Thailand property, there will always be wear and tear on the building itself which will need to be fixed, repaired or refurbished. Having a sinking fund ensures that this gets done as soon as needed without having to try and raise the necessary funds to do so.

How Is A Sinking Fund Calculated? - Sinking Funds Explained

How Is A Sinking Fund Contribution Calculated?

Sinking fund contributions are generally calculated by multiplying the unit size (in m2) by the fixed sinking fund rate. Although prices in Thailand can vary, a typical new construction will cost between 400 and 800 Baht per square meter. For premium condominium developments, this figure may be considerably higher.

Is The Sinking Fund A One Time Payment?

Depending on the scope of the repairs or refurbishment that your condo building requires, you may be required to add additional monies to the sinking fund. Generally speaking, your initial sinking fund contribution should be the only one.

What Is A Sinking Fund? - Sinking Funds Explained

Will I Get My Sinking Fund Contribution Back When I Sell?

Once you’ve made your initial contribution to the sinking fund, you can’t take that money back out, even if you sell your property. Thailand condominium buyers that are buying a pre-owned condo unit may also not be asked to contribute as the original owner has already paid into the fund. This is something to consider when enquiring about purchasing a condo in Thailand.

Sinking Fund Summary

While the initial sinking fund contribution may be considered an inconvenience, it does give you peace of mind that if any damage occurs to the building you stay in, or refurbishments are needed, they will get done. Keeping a condominium building in good shape costs money each year and the more well maintained it is, the better chance you have of being able to sell your property when the time arrives, and at a better profit.

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