Strata Levies: What do they cover?

As more Australians embrace apartment, townhouse, community and unit living, understanding strata fees [also known as levies or body corporate fees] has become essential. These ongoing payments play a crucial role in maintaining shared spaces and managing the overall upkeep of strata-titled properties.

Whether you’re a first-time buyer or adding to your property portfolio, knowing how strata fees work can help you make better decisions and avoid financial surprises.

What Are Levies and How Are They Set?

The strata fees are regular contributions made by all owners in a scheme. They are used to manage the common property everything from lobbies and gardens, front doors and windows to shared facilities like pools or lifts.

Each year, the owners corporation (or body corporate) sets a budget at the Annual General Meeting (AGM). This budget covers both everyday costs and long-term maintenance plans. The amount each owner pays is determined by their unit entitlement a figure that reflects the size and value of their lot compared to others in the building.

Several factors influence how much strata fees can be:

• Building age and size: Older buildings or those with more units may require more frequent repairs and maintenance.

• Facilities and amenities: Buildings with pools, gyms, lifts, or security systems generally incur higher operating costs.

• Insurance: Comprehensive building insurance is a major line item in most budgets.

• Capital works planning: Funds are set aside for future major repairs such as replacing a roof or upgrading infrastructure.

Fees are usually invoiced quarterly, though some schemes do allow annual payments.

What Do Strata Fees Cover?

Strata fees typically fall into three categories:

1. Administrative Fund Levies
   These cover the day-to-day running costs like cleaning, gardening, general repairs, building insurance, and strata management services.

2. Capital Works (Sinking/Reserve) Fund Levies
   This fund is reserved for significant upgrades and repairs that arise over time such as painting the exterior, replacing lifts, or fixing the roof.

3. Special Levies
   Raised only when unexpected expenses occur that aren’t covered by the existing budget. For instance, urgent structural repairs or compliance upgrades.

Importantly, personal utility bills (like electricity, gas, and water for individual units) are usually not included in these fees.

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Managing and Reducing Strata Costs

With the rising cost of living, many owners are looking for ways to keep their strata fees manageable. Some practical steps include:

• Review the strata records before buying: Look at financial statements, maintenance plans, and past levy increases.

• Attend AGMs and join the strata committee: This gives you a say in how money is spent and helps ensure decisions are made transparently.

• Plan for long-term repairs: A healthy capital fund reduces the risk of sudden special levies. 

• Audit service contracts: You may find opportunities to renegotiate or eliminate unnecessary costs.

• Adopt sustainability upgrades: Solar panels, LED lighting, and energy-efficient systems can lower operational expenses over time.

Remember that the key is to spend wisely, cutting down on services and maintenance will have a long term, and expensive, impact down the line. Lower fees are usually associated with newer buildings or those with minimal shared amenities. Conversely, heritage properties, those subject to coastal conditions, high traffic or buildings with high-end facilities and complex set-ups will attract higher levies.

Final Thoughts

Strata living offers many benefits convenience, location, and community but it comes with shared financial responsibilities. By understanding how strata fees work and taking an active role in your building’s management, you can help keep costs fair and protect the value of your investment. The best way is to simply stay informed to ensure your strata journey is a smooth one.