Regulation 2 of the Act stipulates that this reserve fund must be equal to at least 25% of the scheme’s total annual levy budget,

  • If  < 25%, at the start of any new financial year, the owners in the scheme must add 15% to their total levy budget for the next year as a contribution to their reserve fund. This additional levy is only applicable until 25% criteria is met.
    • PMR Calculation: Contribution = 15% contribution increase + CY budget
  • if >25 %, the budgeted contribution to the reserve fund must be at least the amount budgeted to be spent from the administrative fund on repairs and maintenance to the common property in the financial year being budgeted for.
    • PMR Calculation:  Contribution = CY budget
  • = 100% of the scheme’s total levy budget, the owners will be free to decide themselves on what their annual contribution should be in order to maintain the fund at this level.
    • PMR Calculation: Contribution =  Optional contribution

The STSM Act was passed in 2011, its Regulations and annexures became applicable from October 2016.

  • The new Act replaces Sections 37 to 48 of the longstanding Sectional Titles Act of 1986, while the Prescribed Management Rules and Conduct Rules included in that legislation have now become annexures of the new Act.


Additional Implication

The impact of future cycle expenses  on Reserve fund 

  • If the non annual cost cycles such as periodic paint works or item replacements are not provisioned, with advance proportional provision, will it distort the ratio CY budget / reserve. Thus can the PMR rule be implicated.
    • <25%:  then levies will need to be increased to meet the current years budget (normal expense budget  + project cost  + an addition 15%
    • >25% will a special levy need to cover the CY budget which need to meet the normal expense budget + project cost
    • = 100% will require no additional provisions. This is only achieved through timely proportional provisions in years before./
    • This emphasize the importance of having a comprehensive LTMP that provisions for all cyclic costs