Owning a condo has long been a dream for many people. But the reality is that owning a condo is an expensive endeavour that’s made worse by all the stealthy costs that will creep up on your bank account unexpectedly. We’re not even talking about maintenance fees—you should have them factored into your budget at the start of your home-buying process.
To help you understand what you’re getting into when you start shopping for a condo in Singapore, here are some hidden costs of owning a condo in Singapore that have been told to us by some homeowners who have paid the price, literally.
1. Having to pay sinking funds on top of maintenance fees
You don’t have to be a condo owner to know about the maintenance fees that these private properties command. But another fee that most homeowners don’t think about is the sinking fund.
For those who are a bit confused, a sinking fund is a pool of money managed by the strata to cover any spontaneous and large-scale expenditures. Think occasions like refurbishing the elevators, fixing leaks in the swimming pool, or other miscellaneous payments that usually only take place once in a blue moon. While different condos might have different balance levels for their sinking funds, most management corporations allocate it based on the monthly maintenance fee—a common allocation is about 10% of the maintenance fee.
When Jared’s condo had to replace their lift, the residents were given the option to vote between using the condo’s reserve pool of cash or to pay out of pocket into a sinking fund. Most of the residents chose the latter option, deciding that the reserve cash would be better off being used for another rainy day.
2. Home & fire insurance premiums
Image credit: Tom Goh
It’s natural to get caught up in the excitement of moving into your new condo and thinking only about how to renovate and furnish the space. But you don’t want all your effort and money to go to waste if there’s a break-in or worse, your home goes up in flames. This is where home and fire insurance comes into play, but not many homeowners are aware that it’s something they should’ve gotten the moment they moved in.
Some condo owners might also assume that their building’s Management Corporation would have insurance for the entire development. In most cases, the plan would only cover the building and common areas, not the hefty renovation costs that you paid for.
“I was only made aware that I needed fire insurance a few months after moving into my condo,” Bryan said. Being a new homeowner, he wasn’t too familiar with all the nitty gritty and was grateful to a friend for informing him. Thankfully, the premiums weren’t too expensive—Bryan only pays $84/year for fire insurance.
However, there is a difference between home insurance and fire insurance. Here’s a quick breakdown of their individual features:
| Home Insurance | Fire Insurance |
| Reimburses the costs to rebuild your home, including reno costs, as well as to replace your belongings. | Does not reimburse you for damaged furniture or your other belongings. |
| Covers many home-related incidents from break-ins to burst pipes and even falls. | Covers only structural damage from fires. |
| Can also cover damage to neighbouring homes. |
Note: There may be exceptions for what is covered under fire insurance.
3. Condos might incur higher utility bills than HDB flats
| Home Type | Jan 2024 | Feb 2024 | Mar 2024 | Apr 2024 | May 2024 | Jun 2024 |
| HDB (3-room) | $112.11 | $115.94 | $120.33 | $132.29 | $128.10 | $124.29 |
| HDB (5-room) | $136.79 | $144.16 | $151.97 | $165.19 | $156.27 | $156.27 |
| HDB (EA) | $153.21 | $160.98 | $168.72 | $184.59 | $180.19 | $172.48 |
| Condo | $156.19 | $163.04 | $179.66 | $198.71 | $191.52 | $184.01 |
One thing that we might take for granted as homeowners is the monthly utility bill. It’s more often a case of seeing the price on the bill and paying it. However, condo owners are statistically paying more on average for their utilities as compared to their HDB counterparts.
In data revealed by SP Group, condo owners paid an average of $184 in June 2024, while HDB owners only paid an average of $124.29 for 3-room flats and $156.27 for 5-room flats. It might not seem like much at a glance, but all the hours that the aircon is blasting your home with cool air will definitely add up.
4. Annual property tax payments
Another charge that you’d find yourself having to pay yearly is property tax. This shouldn’t come as a surprise as this has to be paid by all homeowners alike, but the fine print of property tax is where it might bite you—especially if you’re looking to acquire a condo as an investment property and not a home to occupy for yourself.
“I considered buying a second property to rent out last year,” Joyce said after hearing some of her friends talking about investment properties. However, when she ran the numbers, she realised that her finances would not be as flexible since the property tax rates for rented and vacant properties are significantly higher than those that are occupied by their owners. Investment properties like this are also not subject to property tax rebates.
5. Repairing defects for newer properties
When collecting the keys to your new condo, one of the most important steps to take before proceeding with renovations is to check for defects. All condos have a Defect Liability Period (DLP) which is usually 1 year, and you’d have to report any defects to the developers during this period in writing.
The slight problem with this is that some condos start the DLP the moment the Temporary Occupation Permit (TOP) is issued, which might be months or years before the entire development is completed. This also means that some defects won’t pop up till well after the DLP is over. If that happens, you might have to fix any defects on your own dime.
Hidden costs of owning a condo in Singapore
As exciting as the prospect of homeownership might be, you should always get into it with both eyes open—especially when it comes to the finances of your home. Whether you’re thinking of buying an investment condo to rent out or just wanting a piece of private property to call your own, these costs of owning a condo in Singapore are important to take note of.
Plus, since you’ve already spent so much to have a condo under your name, you may consider taking the necessary steps to ensure your property and worldly possessions under its roof are protected with a comprehensive insurance plan like Income’s Home Ultimate Protect.
Income’s Home Ultimate Protect
Buying home insurance can be quite intimidating, especially if you’ve never done it before. Thankfully, Income’s Home Ultimate Protect plan provides comprehensive all-risks coverage to insure your home contents, renovation works, as well as the structure of the building. This means that damages or losses that might arise from an accident that is not specifically excluded, such as fires, floods, and monkey raids, will be covered.
For example, if your condo is suddenly flooded due to a burst pipe, Home Ultimate Protect will reimburse you for the cost of repairing your apartment and reinstating and replacing any part of your home and contents that were lost or damaged. You’ll also be covered for:
- Your condo maintenance fees during the period of repair.*
- Cost of temporary accommodations.
- Emergency cash allowance to buy basic necessities like clothes.
- Losses of your domestic helper’s belongings.
- Replacement of the food in your refrigerator due to a power outage.
And since accidents can occur at any time of the day—including at 3am when you’re deep in an REM cycle—Income provides a complimentary 24/7 Emergency Home Assistance Service to assist you in the event of any emergency. This includes incidents like a clogged pipe in your bathroom, or if you are locked out of your home when your digital door lock fails.
Your belongings like your laptop, smartwatch, and accessories that you often carry out of your home can also be protected under the optional Worldwide Personal Belongings coverage, giving you greater peace of mind. Those who have precious jewellery and watches can also choose to get the optional coverage that protects them for their full value.
From now till 31st December 2024, Income is offering 20% off a 3-year plan for Home Ultimate Protect so you don’t feel the pinch, especially when all these hidden costs start to add up.
Find out more about Income’s Home Ultimate Protect plan
This post was brought to you by Income Insurance.
Cover image credit: Parc Esta, Playpoint
*Income Insurance will pay for the maintenance fees during the period of repair or reinstatement; up to 3 months or up to the benefit limit for any one incident, whichever is lower.
Promotion and policy terms and conditions apply. Please refer to the full promotion Ts&Cs here and policy Ts&Cs here.
All opinions expressed in this article are those of TheSmartLocal.com and not of Income Insurance Limited (“Income Insurance”). Uchify assumes full responsibility and control over the accuracy and completeness of all information provided in this article. Uchify is responsible for the accuracy and completeness of all information provided and intellectual property used in this article. Income Insurance is neither responsible nor liable to any party for the content of this article and intellectual property used in this article.
The information provided in this article is for general information only and does not constitute an offer, recommendation, solicitation or advice to buy any product(s). You should seek personalised financial advice before you purchase any insurance product. Purchasing an insurance product that is not suitable for you may impact your ability to finance your future insurance needs. Precise terms, conditions and exclusions of the insurance plan mentioned in this article are found in the policy contract which can be found at this link. This plan is underwritten and issued by Income Insurance.
Protected up to specified limits by SDIC.
Information is correct as at 18th September 2024.
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