What are strata fees or levies and what’s included?

Let’s face it – when we hear the words ‘strata levy’ or ‘strata fees,’ they often conjure up images of tedious financial matters—like what could be worse than sorting through a pile of paperwork on a Saturday afternoon? But while the topic of strata fees often gets a bad rap, they play a crucial role in maintaining the health and well-being of your strata property.

So what are strata fees? We’re going to explain the often misunderstood concept of strata fees (or strata levies), uncover what they include, and discuss why they’re an essential aspect of managing strata schemes.

What are strata fees?

Strata levies, also known as strata fees, are the financial pulse of your strata property. They’re recurring payments made by property owners within a strata scheme, but they’re far from the mundane fees you might associate with everyday expenses.

Think of strata levies as a collective investment by the owners’ corporation into the well-being of your shared or common property in your strata community.

Who pays a strata fee and how are strata fees calculated?

In a strata scheme, individual lot owners pay strata fees or levies to the body corporate.

The fee amount is often based on the value of each unit (aka unit entitlement), with larger units paying more. Each year, at the Annual General Meeting (AGM), the committee proposes a fee structure for the following year, which owners vote on.

Depending on the body corporate’s rules, levies can be due monthly, quarterly, or annually.

What is the average strata fee

If you’re in NSW and part of a small-scale body corporate, you might be looking at around $1,200 to $2,200 per year.

But if you’re living it up in a sprawling apartment complex with all the amenities you can dream of, then your annual levy could climb to a heftier $8,000 to $10,000 or even more. Think of it as the premium package with all the extras.

And if you’re in a townhouse? Your strata fees are often a bit easier on the wallet compared to those in apartments.

But what do average strata fees cover? Let’s break it down:

1. Management costs

A strata fee covers the cost of hiring a strata management company or strata manager.

A strata manager (or strata company) is responsible for overseeing daily operations, handling administrative tasks, and ensuring everyone in your strata scheme is adhering to the relevant strata management acts and regulations. This includes making sure the owners corporation pay strata fees and collecting unpaid strata fees.

2. Maintenance of common property

Strata fees cover the ongoing care and repair of common property in your strata plan.

Regular maintenance efforts to keep your shared amenities at the top of their game (and maintain the value of your strata building) can only happen with the payment of strata fees.

3. Sinking Fund for a Rainy Day

Life is unpredictable, much like the weather.

Just as we’d all like to set aside savings for unforeseen events, strata levies contribute to a capital works fund or sinking fund.

This financial cushion is ready to cover significant future expenses such as a roof replacement or a fresh coat of paint for your property’s exterior. A sinking fund is all about being prepared and planning for the future. It’s your safety net for future expenses that might pop up beyond the current financial year.

4. Strata Insurance

Think of strata insurance as the ultimate protection plan for your property.

A portion of your strata levies goes toward this insurance, which typically covers the building’s structure and common areas. It’s your safety net against damage or liability issues that may arise.

The best part? The insurance premium is distributed among all owners in the strata scheme, ensuring that it doesn’t strain anyone’s budget.

5. Emergency and special levies

Life sometimes throws curveballs. In such cases, additional levies might be imposed to cover sudden or emergency expenses that exceed the budgeted strata levies. Special levies can also be used to cover expenses for bigger dream projects like installing electric car charging stations or giving the pool a complete overhaul.

These levies are typically decided upon through a vote among the owners corporation, ensuring that everyone has a say in how costs are managed.