Strata Fees

Strata Fees

One of the advantages of living in a property with a strata title is that you pay a fee to have all the common areas of the building maintained. This means that you can go on holiday and not have to worry about the garden becoming overgrown or taking out the bins.

Strata properties are more affordable than if you were living in a freestanding home in the same suburb. It can also allow you access to amenities you might otherwise not be able to afford such as a pool or gym for a fraction of the cost.

Whilst apartments offer affordable and easy living (or investing) in comparison to a house, the building and its surrounds still need to be maintained. This is where strata fee’s or levies come in.

Strata levies are mandatory contributions paid by owners of strata properties such as a unit, villa, townhouse or duplex. The amount paid can vary from building to building. Whilst a low levy may seem attractive when buying a property, it may mean that the building isn’t being maintained adequately or that there won’t be enough to cover future repairs.

Strata levies are ongoing expenses, so it is important to be well informed and factor costs into your budget.

A common misconception is that the levies paid by owners of apartments are going to the Strata Managing Agent.
In practice, the fee that the strata company takes is usually around 8-10% of the overall levy amount.

The fee paid to Strata One is paid for services such as; co-ordinating repairs and maintenance, facilitating building compliance and legal requirements, project management, managing and chairing the Annual General Meeting, collecting levies, issuing debt recovery notices, paying building bills, Accounting (tax returns & BAS), managing and issuing keys, secretarial tasks and being the communication point of contact.

Our role as the managing agent is to manage the money on behalf of the Owners Corporation, to ensure that the building is maintained adequately and meets compliance requirements to protect asset growth for all owners.

We break our fee’s down into three areas for greater transparency.

Standard Management Fee – This is the total fee for the agreed services and covers your basic elements such as preparing a chairing your Annual General Meeting and co-ordinating repairs and maintenance.

Disbursement fee – this is a fixed fee to cover everyday items such as issuing levies, scanning,

Schedule B fee – this is a time based charged for items that your strata manager assists with outside the day to day items such as assisting with remedial works, fire orders or renovations.

We also offer a Strata Essentials package for buildings that only want a basic level of service.

What are strata levies?

All owners contribute financially to the ongoing care and maintenance of their building.  Invoices are issued quarterly and paid into a bank account managed by Strata One.

There are three types of strata fees that you can expect to pay:

  • Administration fund levies – These fees cover the day-to-day management and expenses of the building such as cleaning, gardening, utilities such as electricity for common areas and building insurance premiums
  • Capital works levies (previously known as a sinking fund) – This pays for more costly repairs and maintenance such as roof restoration, replacing fittings and fixtures, painting, updating outdoor furniture and any other major works.
  • Special levies – These are only relevant when unexpected expenses arise and there aren’t enough funds available.

Who manages the strata levies?

Strata One manages the strata levies for all of the buildings that are managed on behalf of the Owners Corporation.

Our Accounting team includes CA qualified Accountants that hold Strata Licences and have police checks to ensure that your funds are being managed in the most transparent and effective way.

How are the strata fees calculated?

The strata fees are agreed upon at the Annual General Meeting of all owners.  While it may seem like a chore attending the Annual General Meeting, it is important to be involved and have a say in the future of your building.  This is also the best forum to gain an understanding of the components that make up the budget which determines the strata fees.  Whilst Strata One sets a proposed budget, the strata committee is engaged to provide feedback on the budget.

Why have my strata fees gone up significantly?

Whilst no-one likes the surprise of a significant increase in levies, it is really important to attend the Annual General Meeting to understand the reasons why.  The levies can’t be put up on a whim by the Strata company.  The levies are based on the budget which is approved by all owners at the AGM.  There are multitude of factors that may contribute to the increase such as planned major works, upgrades, defect rectification or fire compliance requirements.  It’s really best to not guess and get involved in the AGM.

Do all buildings pay the same strata fees?

The strata levies for every building will vary based on a multitude of factors such as the size, amenities or maintenance requirements of a property.   An older complex may have a higher levy to cover ongoing repairs. A newer development can also attract high strata fees if it has amenities such as a gym, swimming pool or lifts to maintain.

How much is paid is also dependent on how well funds are managed. So, when inspecting an apartment or townhouse, always take the time to check out the common areas too. If the building shows signs of neglect, then there could be some surprise costs ahead.

Always do a strata inspection before purchasing, as this will reveal whether the building is in a sound financial position, any legal disputes between neighbours or upcoming major repairs.

Do all owners within a building pay the same?

No, the amount that the individual owners within the building pay is determined by the ‘unit entitlements’.  The term ’unit entitlement’ refers to the amount assigned to individual units within a property based on its value in the strata scheme at registration.  Units with a higher ‘unit entitlement’ will pay higher levies than units with a lower ‘unit entitlement’.  Therefore, strata fee’s are likely to be higher for units with balconies, courtyards, storage cages or parking spaces in comparison to those without.  Larger units will also have higher ‘units of entitlement.’

How are strata fees calculated?

As a guide, expect to pay between 0.3 per cent to 1.2 per cent of a property’s value in strata fees. Those with more amenities will be in the upper end of this range.

Always do your homework on strata fees by looking at what is being charged by comparable buildings. Low levies can correlate with poor maintenance. This can not only be expensive to fix but can impact the long-term value of your property.

What happens if I can’t pay?

It is important to speak to someone from the strata committee or contact us if you are experiencing financial difficulties. In some circumstances a payment plan can be established if agreed to by the strata committee.

Legal action can be taken against unpaid strata fees and interests charged. It may be tempting to withhold a levy payment in protest if you are unhappy with the body corporate, however, this means that you lose the right to vote at meetings and have your say.

Do strata fees include Council rates?

Strata levies are based on unit entitlement and don’t include Council rates. So don’t forget to factor these into your quarterly budget.

Are strata fees tax-deductible?

Investors can claim contributions made into the strata administrative or capital work funds as a tax deduction. Like any claim, documentation of expenses is essential.  Costs which are deemed to be a ‘special purpose’, however, may not be deductible. Be sure to discuss this with your tax accountant.

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