The basics of body corporate fees in strata properties
- Posted By Nikki Montaser
Body corporate fees - also called owner's corporation fees or levies – are vital for ensuring strata properties run smoothly.
While the fees can seem like a burden, having adequate funds available for the upkeep of common areas and more significant maintenance and repairs means the property will be in top shape for many years to come.
Different fees cover different areas of a property's maintenance. We outline here how body corporate fees are calculated, the different types and what they cover.
What do my levies cover?
Body corporate fees and levies cover payments for building insurance, maintenance of common property areas and amenities, contracted on-site staff (e.g., cleaners, gardeners and maintenance workers), utility bills for common areas, management fees for building managers and works and repairs to the building.
How are levies calculated and how do they work?
The administrative fund covers the regular operating expenses incurred for a building. These expenses may include insurance, minor repairs such as small water leaks and management fees.
The capital works fund (previously known as the "sinking fund" in NSW) pays for expected and unexpected works to the building. These works are usually large-scale projects, such as repainting the property or replacing balcony balustrades.
Levies are calculated using the annual budget for a property and the funds needed to build up the building's capital works and administrative funds each year.
Owners corporation committees use the expertise of strata professionals to ensure the fees cover the buildings ongoing expenses plus any larger-scale works.
Four key factors impact a building's budget:
- Amenities (e.g., pool, lift, gardens, gym and car parking)
- Size of the building structure
- Age of the building
- Management fees
The proposed fees are presented at a general meeting and need to be approved by the majority of property owners for the building.
Don't get caught out!
Paying body corporate fees are part of the package when purchasing a strata title property, and it's wise to be mindful that they may increase over time. It is all a balance. While the fees may seem steep when purchasing a strata property, detached residential homes have repairs and maintenance that may far outway these costs.
Further information can be found on the Office of Fair Trading website.