FAQ: Fees in Strata

SCA (NSW) have had a lot of questions lately regarding owners corporation fees While nobody likes parting with their hard-earned cash, the fees charged by owners corporations are absolutely vital in managing shared facilities.

The owners corporation is responsible for maintenance, repair, and overall management of the common property. This includes:

  • financial management
  • insurance
  • record keeping
  • repairs and maintenance of common property
  • by-laws
  • employment of a strata managing agent and/or a building manager (if they choose to do so)
  • keeping up to date with, and adhering to, all applicable laws. This includes planning; building; fire and safety inspections and work, health and safety laws.
  • Strata roll

The owners corporation must also prepare and keep a strata roll. Including information such as:

  • the owner’s name and address/email for service of notices
  • the owner’s agent and the agent’s Australian address/email for service of notices
  • the strata plan number and the address of the building
  • the name of the original owner and an Australian address for notices
  • the name of the managing agent (if there is one) and an Australian address for notices
  • the total unit entitlements for the scheme and each lot
  • insurance details
  • the by-laws for the strata scheme.
  • Details of any tenants (name and address/email) for service of notices.

Contributions and funds:

To manage these responsibilities, and to ensure that the building has adequate funds to maintain the building, owners are charged a fee/levy. These contributions are worked out in proportion to the unit entitlements of each lot.

The funds are kept in an administrative fund for day-to-day expenses and a capital works fund for major works, maintenance, or repairs.

Levies are a fee or ‘contribution’ paid by all lot owners in a scheme to cover any projected costs and expenses. All levies must be worked out in proportion to the unit entitlements of each lot. Strata fees are paid by lot owners and go towards paying for the expenses associated with all the common property in the strata scheme. This includes common driveways, gardens, hallways, external walls and roofs.

Setting levies:

Levies are calculated at the annual general meeting (AGM) by the owners corporation. To set the levies, a budget must be given which shows the current financial situation and any estimates of payments to be made and received. The budget must be:

  • distributed with the notice of the AGM, or
  • tabled at the meeting before voting on the levy motion.

The motion to set the levies must be approved by a majority vote.

Contributions can be paid by instalments, and the dates and amounts can vary.

What are fees used for?

Ongoing operational and maintenance costs can include the cost of a strata management service, cleaning and gardening contractors, shared utility bills, insurance, and regular plant and property maintenance.

Generally, the bigger the property, and the more amenities available for lot owners to use, the higher these costs will be.

Lot owners must also contribute an amount to cover future planned works, such as facility upgrades and renovations, and emergency repair and breakdown of property, plant, and equipment.

How are owners corporation fees calculated?

Each lot of an Owners Corporation (e.g. your apartment, your carpark, your storage area) has a stated ‘Lot Liability’ that is indicated on the Plan of Subdivision. The annual operating and Maintenance Fund budgets are divided by the lot liability for each apartment/carpark/store that you own, and a resultant annual levy is established.

For those considering buying a strata-titled property, a good guide on what owners corporation fees you should expect to pay can be found in the previous year’s strata report. These reports can be purchased online or obtained from your conveyancing lawyer. They contain information on the financial status of the owners corporation, pending and past building works, the cost of current levies and fees, the likelihood of extra levies, insurance costs and owners corporation building rules.

Fair Trading also have excellent resources and in-depth levy and capital work fund information here.