Management fee vs sinking fund: day-to-day upkeep versus the building reserve

A buyer usually sees a single line in the presentation — "building fees". In practice there are at least three lines, and they work differently: the regular charge for running the building, the savings for future major works, and the unbudgeted levy that arrives when those savings fall short. How they are set up in a particular building decides both your net yield and whether a bill you never planned for eventually lands.

Three different lines

Management fee: what you pay for every month

The management and service charge (in documents: management fee, service charge, condo fee, common area fee) covers what the building consumes right now. It typically includes security and reception, cleaning of common areas, servicing of lifts, pumps, the generator and common-area air conditioning, electricity and water for common areas, grounds and pool maintenance, waste collection, the managing agent's fee, and often building insurance.

It is most often calculated from unit area: a rate per square metre per month multiplied by your area. So buildings should be compared by the rate per square metre, not by the total on the invoice. And so it always pays to ask which area the rate applies to — internal area, or gross area including balconies. The difference shows up on the bill immediately.

The rate is set by the specific building rather than by the market: it depends on the service package, the class of the building, the number of lifts, whether there is a pool and a gym, and the occupancy rate. There are no "standard" Cambodia-wide figures here — take the number from your project's documents on the date of the deal.

Sinking fund: money for what happens later

The reserve fund (sinking fund, reserve fund, capital reserve) is savings for long-cycle major works: replacing or overhauling lifts, repairing the facade and the roof, replacing building systems, renewing pumps and the generator. Such works happen rarely but cost incomparably more than monthly upkeep.

The key rule: reserve fund money should not be spent on day-to-day costs. If a building plugs its operating deficit from the reserve, then by the time the lifts have to be replaced the reserve will not be there.

The fund is built up in different ways, and that is normal: in one project it is a one-off initial contribution at handover, in another an annual or monthly contribution on top of the management fee, in a third both — with a separate pot accumulating for a specific asset such as the lifts. Check the building's documents to see which scheme applies to you, and whether a balance has already been accumulated.

Almost everyone asks whether their share of the fund comes back on sale. The answer is set by the documents of the specific building: often the accumulated balance is treated as belonging to the building and is not refunded to the seller — but that has to be checked, not assumed.

Special assessment: the bill nobody expected

A special assessment is an unbudgeted payment from owners for a specific job or situation: major works beyond the reserve, an emergency, a safety requirement, legal costs, urgent equipment replacement.

It appears exactly where the reserve fund was never built up or is small relative to the cost of the works. The logic is simple: capital repair costs do not disappear, the only question is whether you pay them a little at a time in advance or all at once later. A building with a high rate but a well-funded reserve can work out cheaper than a building with a low rate and an empty fund.

The decision procedure — who initiates the levy, what majority approves it, how the sum is split between owners — is set by the building's internal documents. We are not asserting a single mandatory procedure for every project in Cambodia: read your own building's rules and the rights of co-owners.

The building budget: the document worth asking for

The annual building budget shows where the money comes from and where it goes. It reveals what a tour of the lobby does not:

• Planned costs by line item and how they have moved over past years.
• The accumulated reserve balance and the schedule for topping it up.
• The collection rate: if only a minority of owners pay, upkeep falls on those who do.
• The history of rate increases.
• The history of special assessments over recent years.
• Whether the building owes money to contractors.

One budget line deserves its own look: the master insurance policy, the building-wide policy covering the structure and common areas. It matters to understand its limits: such a policy relates to common property and usually does not cover the fit-out, contents and liability inside your apartment — that is separate owner's cover. More in our guide to property insurance.

How this affects the cost of ownership

Building fees are a standing cost deducted from the rent before anything else. Gross yield ignores them, net yield does not, and the gap between the two figures grows with the richness of the building's amenities. A pool, a gym, a lobby with round-the-clock security — all pleasant, and all on the invoice every month.

A practical approach when comparing properties: take the rate per square metre, multiply by the area, add the annual reserve-fund contribution, and deduct the result from the annual rent before calculating yield. Then ask about the history of increases and of special assessments — it tells you more about the future than the current rate does.

And two practical points at the deal itself: check whether any arrears are attached to your unit before the transfer of title, and clarify who pays the fees for the period between handover and moving in. Both are settled before signing and not after.

Frequently asked questions

What is the difference between a management fee and a sinking fund?

The management fee, also called the service charge, is the regular payment that keeps the building running today: security, cleaning, lift and pump servicing, electricity for common areas, the managing agent's work, usually building insurance. The money is spent in the same period it is collected. The sinking fund, also called the reserve fund, is savings for major works that happen once in many years: replacing lifts, repairing the facade and the roof, replacing building systems. That money should not be spent on day-to-day costs. The first payment keeps the building working; the second keeps a sudden bill from arriving ten years from now.

What is a special assessment and when does it appear?

A special assessment is an unbudgeted levy on owners for a specific job or situation: major works the reserve could not cover, an emergency, a safety requirement, legal costs. It appears where a reserve fund was never built up or turned out to be small compared with the cost of the works. For an owner it is the most unpleasant kind of expense, because the sum lands in one go and cannot be planned for. The decision procedure, the quorum and the way the sum is split between owners are set by the documents of the specific building — there is no universal rule covering every project in Cambodia.

How are these charges calculated, and why does my neighbour pay a different amount?

Most often the basis is unit area: a rate per square metre per month multiplied by your area. That is why a neighbour with a larger apartment pays more, and why buildings should be compared by the rate per square metre rather than by the total on the invoice. Check in the documents whether the rate applies to internal area or to the gross area including balconies; whether water, waste collection and insurance are included; whether a separate reserve-fund contribution is charged; and whether indexation is provided for. Actual rates are set by each building and change over time — confirm them against your project's documents on the date of the deal.

What should I ask the developer or the managing agent before buying?

The current management fee rate and what it includes; separately, the sinking fund contribution and any one-off initial contribution at handover. Then: the building budget for the current year, the accumulated reserve balance, the history of rate increases, the history of special assessments over recent years, the collection rate on contributions, whether a master insurance policy exists and what it covers, and any arrears attached to your unit. Not getting answers to these questions is itself a signal: in a building with no budget and no reserve the costs will still arrive, just later and all at once.

Sources

NovAsia corpus on ownership and running costs · practice supporting owners in Phnom Penh · checked July 2026. Management fee rates, reserve-fund contributions and initial contributions at handover are deliberately not quoted in this review: they are set by the documents of the specific building and change over time — confirm them against your project's documents on the date of the deal. Also not confirmed here and to be verified against the building's documents: a mandatory decision procedure and quorum for a special assessment, whether a share of the reserve fund is refunded on sale of a unit, and the scope of cover under the master insurance policy. This content is for general information only and is not legal, tax or investment advice.