Strata Fees

At Strata One, we know that strata fees are an essential part of managing a strata-titled property. These regular financial contributions, made by lot owners, support the upkeep and operation of shared spaces and services. In New South Wales (NSW), these fees are mandatory under the Strata Schemes Management Act 2015. They ensure that common property areas such as gardens, hallways, lifts, and recreational facilities are maintained to a standard that benefits all occupants.

When reviewing strata fees in Sydney, it’s important to recognise that costs can vary significantly depending on the building size, amenities, and the age of the property. Strata fees (also known as levies) are set at the Annual General Meeting and are determined by the budget set for the building at this meeting  If you would like to gain a more in depth understanding of how the strata fees in your building are calculated it would be a good idea to attend the Annual General Meeting.

Types of Strata Fees Explained

When managing a strata-titled property, understanding the breakdown of fees is essential. Strata fees are not a single, uniform charge but are composed of multiple categories, each with its own purpose and financial implications. These categories ensure that both the day-to-day and long-term financial needs of the property are met effectively and sustainably. Broadly, these contributions fall into three main categories, with each one supporting a different area of property management and planning.

Administrative Fund Levies

Administrative fund levies cover routine operational expenses. These include costs related to cleaning services, gardening, minor repairs, insurance premiums, management fees, and general maintenance. The frequency and amount of these levies are guided by the building’s annual budget and are subject to approval by the owners’ corporation.

Capital Works Fund (Sinking Fund) Levies

The capital works fund—previously known as the sinking fund—is allocated for long-term expenses. This may include structural repairs, painting, roofing, or major upgrades to lifts and plumbing.  Specialised companies complete a capital works report for the building which sets out the funds required to be put aside for capital works requirements. The capital works  fund ensures that the building remains compliant with safety and maintenance standards without sudden financial burdens on owners. 

Special Levies

Special levies are charged when unforeseen or extraordinary expenses arise that are not covered by the administrative or capital works funds. Common triggers for special levies include urgent structural repairs, legal costs, or unexpected damage. These levies are generally decided through a majority vote in a special general meeting and are shared among owners in accordance with their unit entitlements.  On occasion when funds and budgets have not been managed well, special levies are required to be raised to get the building back into a financially sound position.

Paying Your Strata Fees

Paying strata fees is a key responsibility of all lot owners within a strata scheme in New South Wales. These financial contributions are not optional; they are an essential obligation under NSW legislation designed to ensure the ongoing viability and operation of the strata community. The fees collected are used to fund the wide range of services and maintenance activities required to uphold the building’s infrastructure, amenities, and safety standards. At Strata One, we support our clients with transparent systems and efficient levy collection to ensure smooth operations. From everyday upkeep to long-term planning, these contributions help maintain the property’s value and functionality, ultimately benefiting all current and future residents.

Payment Methods and Frequency

Strata fees are typically paid quarterly. Payment methods usually include direct debit, BPAY or, bank transfer, or credit card.  practices.

Consequences of Late Payments or Non-Payment

Non-payment or late payment of strata fees can lead to several consequences. Interest charges may be applied to overdue amounts, and persistent non-payment can result in legal action. The owners’ corporation has the authority to recover outstanding levies through the NSW Civil and Administrative Tribunal (NCAT), which may include debt recovery processes and legal fees charged to the non-compliant owner. At Strata One, we assist in managing these processes professionally and fairly.

Understanding Strata Fee Increases

Strata fees will be adjusted at the Annual General Meeting of the building and are determined from the approved budget. Changes from the previous year are often driven by both the operational requirements of the property and broader economic trends. As buildings age or as service demands shift, the costs associated with maintaining common areas and essential infrastructure may rise. Similarly, external economic influences such as inflation or market-driven increases in service and insurance costs can lead to necessary adjustments in the fee structure. Understanding why and how strata fees increase is essential for lot owners to prepare financially and participate effectively in their strata community.

Common Reasons for Fee Increases

Several elements can influence a rise in strata fees. These include:

• Inflation and general cost of living increases: Over time, the price of services and goods required for building maintenance tends to rise. This includes wages for cleaning staff, gardening services, and other operational costs. As these increases accumulate annually, the strata scheme must adjust the budget to reflect these higher expenses.
• Age-related maintenance and repairs: Older buildings often require more frequent and intensive upkeep. This can include addressing wear and tear, replacing outdated systems such as lifts or plumbing, and ensuring ongoing safety compliance. These increasing maintenance needs necessitate higher capital works contributions.
• Updated safety or fire compliance standards: Regulatory changes may require new safety systems or upgrades, such as fire door replacements, sprinkler systems, or smoke alarm integrations. Complying with these mandates incurs additional costs that must be spread across the owners.
• Insurance premium hikes: Insurance costs can fluctuate significantly based on market conditions, property claims history or valuation changes. Higher premiums directly affect administrative fund budgets and, subsequently, strata fees.
• Increased service charges or contractual updates: Contracts for essential services, such as strata management, maintenance, or security, are periodically reviewed and renewed. If rates increase or additional services are included, this can result in higher annual expenses.

How Owners Are Notified of Changes

Any proposed changes to strata fees are discussed and voted on during the annual general meeting (AGM). Lot owners receive formal notification in advance, including a copy of the proposed budget and explanatory notes. This ensures transparency and allows owners to voice concerns or suggest alternatives before changes are approved. Strata One facilitates these communications, ensuring clarity and compliance.

Reducing and Managing Strata Fees

Managing strata fees effectively is a crucial part of maintaining financial sustainability within any strata scheme. Although certain expenses, such as insurance and regulatory compliance, are unavoidable, many aspects of strata expenditure offer opportunities for control and optimisation. By implementing strategic management practices and making informed financial decisions, lot owners and committees can work collaboratively to reduce unnecessary costs while preserving the safety, functionality, and aesthetic quality of their property. This section explores practical approaches that can help limit fee increases and ensure a more balanced and efficient use of resources. At Strata One, we actively support our clients in applying these principles.

Effective Budgeting Practices

Strata schemes can benefit from proactive financial planning. This includes:

• Regular reviews of service contracts to ensure value: Periodically evaluating service providers ensures competitive pricing and helps identify opportunities for cost savings. Strata committees can request multiple quotes and conduct performance reviews to decide whether to continue, renegotiate, or terminate agreements.
• Preventative maintenance to reduce long-term costs: Implementing a maintenance schedule for common areas and building infrastructure reduces the likelihood of major repairs or system failures. Addressing minor issues early prevents them from becoming more expensive and disruptive in the future.
• Accurate forecasting of future expenses using historical data: Analysing past spending patterns allows strata schemes to predict and prepare for recurring or expected costs. Historical data helps create realistic budgets that align with actual financial needs.

Strategies to Minimise Levies Responsibly

Owners and committees can explore several strategies:

• Investing in energy-efficient infrastructure to lower utility bills: Installing LED lighting, solar panels, or energy-efficient heating and cooling systems reduces ongoing energy expenses. These savings can help offset annual levies while supporting sustainable practices.
• Implementing smart irrigation and lighting systems: Automated systems optimise water usage and electricity consumption, leading to lower operational costs. These systems also reduce manual labour, which decreases service contract expenses.
• Conducting competitive tendering for trades and services: Soliciting bids from multiple contractors promotes transparency and ensures fair pricing. Committees can compare scope, experience, and rates to make informed decisions that align with the scheme’s financial objectives.
• Encouraging voluntary participation to reduce reliance on contractors: Where appropriate, engaging owners in tasks such as committee work can reduce paid service needs. Active community involvement can contribute to cost containment while fostering collective responsibility.

These measures should be balanced with quality assurance to avoid compromising property value or safety.

Frequently Asked Questions About Strata Fees

Contact Strata One for Further Information

Contact us for comprehensive strata management services and expert guidance on your specific strata scheme. Our experienced team can assist with budgeting, compliance, and operational support to ensure your building functions efficiently.