First, what are body corporate levies and what do they cover?
As a collective of unit owners, you are naturally responsible for the management, repair or replacement of the common property. Just like owners of a regular house, if something goes wrong you need to fix it. So, in order to fund the management of the building, the body corporate comes up with a projected budget for what they can foresee will need attention and charges each owner a proportional share. The amount of the levy you need to pay will usually depend on the size of your unit and what assets it includes. For example, the owners of a three-bedroom unit will pay more than the owners of a one-bedroom unit; and the owners of a penthouse unit will pay higher levies than the owners of a ground floor unit.
The total cost of the fees, exactly what they cover and when they are due will vary between properties, and will usually be determined at an annual general meeting of the body corporate. However, there are two main areas where your strata levies are being directed – the administrative fund and the sinking fund.
The administrative fund covers the day-to-day running of the body corporate, as well as general maintenance of common property and assets. The sinking fund is for the purpose of covering infrequent expenses of a capital nature, such as painting, security, electrical etc.
Why are body corporate levies important?
Though many strata property owners probably wish that they didn’t have to pay so much in levies, it is important to ensure that the administrative and sinking funds remain healthy. This helps to ensure that the building’s facilities and services are kept up to a high standard, and thus maintains the value of each property owner’s investment. Without proper upkeep, the property would quite quickly start to look unappealing, pose health risks to tenants and visitors alike and lose appeal to potential buyers.
Each building’s levies are highly individual, and there’s no point comparing even similar buildings to each other. Within identical unit developments, you could have owners with vastly different expectations of maintenance. If one building requires weekly visits from their gardener, and another building requires monthly visits, straight away the building with the weekly gardener will be paying higher levies. The key is to find that balance between expenditure and maintaining or improving the value of the building complex, and thus protecting your investment.
What benefits do body corporate levies provide?
When you look at what they cover, body corporate levies are a great investment in the quality and longevity of your property. Body corporate levies actually do provide you with many benefits, even if sometimes you can’t see them.
All the maintenance and upkeep on the building is done for you, meaning no effort is required on your part. The building management or strata management company will usually organise for all the work to be done – you won’t even have to think about it.
An investment in time
You are basically swapping maintenance and household chores for free time – at a price, of course. And while it’s hard to put a value on time, it’s something we definitely all want more of. Your time is valuable, and you have to weigh one up against the other. You might be spending money, but you’re gaining time, and that’s precious.
Insurance is usually cheaper when you purchase it in bulk as part of a group. In fact, for many things, once the cost is divided among a number of owners, you’ll find yourself paying less than if the cost had to be absorbed entirely by you.
You’re likely to be paying lower council rates than you would as the sole owner of a freestanding property.
You may get the use of facilities that you might not otherwise be able to access, such as pools or onsite gyms.
Strata security is likely to be stronger and the building will probably be equipped with more safety measures that you won’t find with freestanding properties.
Peace of mind
You will have peace of mind that in the event of an emergency, costs can likely be covered. There’ll be no scrambling around to come up with the necessary money for an urgent repair, as the money will already be there. It’s a bit like compulsory saving – you can’t touch it now, so you don’t spend it, meaning it’s there for a rainy day.
So, while no-one likes to pay fees unnecessarily, strata fees actually considerably help owners in many ways. As when tax time rolls around – no-one wants to pay the taxes, but everyone wants to drive on the roads, have a hospital to attend when they are sick etc. And of course, it’s only fair that each owner should contribute to the upkeep and running of the building as a whole. Rather than viewing body corporate levies as a bothersome drain on your precious financial resources, instead try and see them as something you’ll actually derive a lot of benefit from.