CAN A MANAGEMENT CORPORATION (MC) IMPOSE DIFFERENT RATES OF MAINTENANCE CHARGES AND SINKING FUND FOR STRATIFIED DEVELOPMENTS?

Introduction

In strata and mixed-use developments, disputes often arise over when a management corporation can lawfully impose differential charges. While the Strata Management Act 2013 allows MCs to levy fees at different rates, courts stress that this power must be statutory, reasonable, and proportionate to the benefit from common facilities. Differential charges are generally upheld in mixed developments where parcels serve significantly different purposes, but in purely residential schemes, such charges face stricter scrutiny.

1. Recent Case Law on imposing different rates of maintenance charges and sinking fund on Stratified Mixed Development

Aikbee Timbers Sdn Bhd & Anor v Yii Sing Chiu & Anor and Another Appeal 2024 1 MLJ 948, Court of Appeal

1. The Court of Appeal addressed whether a developer and a management corporation (MC) could impose different rates of maintenance charges and sinking fund contributions on different types of parcels within a mixed development. The development in question, Pearl Suria, comprised residential units, a shopping mall and a car park, with the commercial parcels owned by the developer and a car park proprietor, and the residential parcels sold to individual owners.

2. During the preliminary management period (before the first Annual General Meeting), the developer imposed higher maintenance and sinking fund charges on residential parcel owners than on commercial parcel owners. After management was taken over by the MC, the MC maintained and further  differentiated the rates. A residential owner challenged this practice, and the High Court ruled that all parcels must be charged at a uniform rate.

3. On appeal, the Court of Appeal unanimously allowed the developer’s and MC’s appeals, overturning the High Court. It held that under Section 60(3)(b) of the     Strata Management Act 2013, differential rates are lawful for parcels “used for   significantly different purposes.” The court found the charges justified because residential parcels benefited from exclusive facilities like a swimming pool and gym, which were not used by commercial parcel owners.

1. Recent Case law on imposing different rates of maintenance charges and sinking fund on Pure Residential Development

Yong Kein Sin & Anor v Perbadanan Pengurusan Springtide Residences and other appeals 2025 MLJU 1469, Court of Appeal

1. The Court of Appeal considered whether a management corporation (MC) could lawfully impose different rates of maintenance charges within a    residential development where all parcels were used for the same purpose

2. The MC had charged higher maintenance fees on apartments compared to the villas on the basis that villa owners had more limited use of the shared facilities such as lifts, gym, swimming pool and security services, and maintained certain facilities privately.

3. The High Court initially upheld the differential rates. On appeal, however, the Court of Appeal reversed this decision. It held that under Section 60(3)(b) of the Strata Management Act 2013, a management corporation may only     impose different rates of charges on parcels “used for significantly different purposes.”The court emphasised that both apartments and villas in this development were used for the same purpose residential living and thus did not meet the statutory threshold of “significantly different purposes.”

iii.     Recent Case law on imposing different rates of maintenance charges and sinking fund on Commercial Stratified Development

Perbadanan Pengurusan PD1 v SCP Assets Sdn Bhd 2025 MLJU 2051

1. The Court of Appeal considered whether MC could lawfully impose different rates of maintenance charges within a purely commercial stratified development.

2. The High Court ruled that the management corporation’s differential charges were unlawful, a decision upheld by the Court of Appeal. The court clarified that under Section 60(3)(b) of the Strata Management Act 2013, different rates are only allowed for parcels used for “significantly different purposes.”

3. Since all parcels in PD1 were commercial, categorising offices, shops, and car parks differently did not meet this threshold. The court found the MC’s cost allocation arbitrary and unsupported by actual expenses, making the differential charges ultra vires and unlawful.

Key Takeaways from the Case Laws above

Under Section 60(3)(b) of the Strata Management Act 2013, a MC may impose different rates of maintenance charges and sinking fund contributions only on parcels “used for significantly different purposes.”

Mixed-Use Developments

In developments with both residential and commercial parcels, courts have upheld differential charges to be imposed.

Purely Residential Developments

Differential rates are not automatically lawful even if some residential units use fewer shared facilities.

Purely Commercial Developments

Different types of commercial parcels (offices, shops, car parks) cannot justify differential charges unless they serve significantly different purpose.

This Article is written by

Nahvinah Selvaraj
Principal Associate
Low & Partners