Strata fees and levies explained
If you have purchased an apartment or townhouse in the Northern Rivers and Tweed region, you probably have to pay strata fees. While at first, these might seem like an unnecessary additional expense on top of your property purchase, strata levies can actually offer plenty of benefits to property owners.
Here we offer a guide to strata levies, what they cover, and how to get the most out of them.
A strata scheme is a development where different people own different parts, such as an apartment building or townhouse development. The common areas — such as exterior walls, gardens, hallways, and staircases in an apartment block — are generally thought of as a shared responsibility between all the owners of the individual properties or “units” within the development.
To cover the maintenance and repairs of all these common areas, all unit owners within the development pay a fee to the body corporate, which is responsible for carrying out the maintenance. These fees are known as strata levies.
What does strata cover?
Although priorities can vary from strata to strata, generally your levies will be spent on three main areas:
1. Ongoing costs
These are the costs associated with maintaining the common areas of the property. They can include:
- Building maintenance costs
- Wages for a caretaker or cleaner
- Electricity and/or water for common areas
In addition, your building insurance is usually covered by your strata levies, which saves you money on your individual property.
2. Sinking fund
The sinking fund is there to cover any unexpected expenses. For example, the property may need a new roof right away, or the outside of the property may need to be painted. While it is impossible to predict emergencies, the sinking fund should have enough money in it at all times to cover most eventualities.
3. Admin fees
Admin fees cover the day-to-day expenditure of the body corporate. It includes insurance premiums, utility bills, management fees, bank charges, and a wide variety of other expenses associated with maintaining the property.
In some cases where a large expenditure is needed and there isn’t enough money to cover it, special levies may have to be imposed.
How to find out strata fees
You can generally find out everything you need to know about your strata levies at the body corporate annual general meeting. This meeting is held to decide a number of things, including:
- How much the fees should be for the year
- Whether they are payable monthly or quarterly
- What exactly the fees are going to cover
Your strata levies body corporate meeting is, therefore, an important event each year, enabling all unit owners to keep track of what the body corporate is actually doing with your money.
Strata fees are something you will have to take into account when budgeting for your property, and their costs vary widely from development to development. How much you have to pay will depend on several factors including the age, condition, and location of your building, along with how many properties are located within it.
Are strata fees tax-deductible?
If you want to know how to reduce body corporate fees, you will be pleased to know that they are tax-deductible against investments. This can potentially save you a significant amount of money.
Find out more about strata levies
Strata levies can be complicated to understand, especially if you are a first home buyer or first-time property investor. It can help to have a reputable property management company on your side, to act as a liaison contact with the body corporate. A good property manager will be highly experienced in this area and will know all the right questions to ask.
If you own an apartment or townhouse and would like more advice, please reach out to us. As a highly trusted property management company, we are always happy to help.