Often referred to as sinking fund levies, the funds generated from this fee are used for longer-term maintenance. Collecting an annual maintenance levy allows the owners corporation to accumulate funds for major works to be done at a pre-determined time in the future. An example is the replacement of the lifts in a building which, typically, have a lifespan of 20 to 25 years. Replacement of the lifts in even a medium size tower will cost several hundred thousand dollars. In larger buildings, the cost could add up to millions of dollars.
Apart from the regular annual fees, there is also a provision to allow raising of special levies to take care of unplanned or emergency costs, like sudden repair work, legal costs and even for improvement work like upgrading of a security intercom system. These may also be raised if there are insufficient funds remaining in the administration or maintenance fund to cover unexpected costs.
As you will agree, these are necessary allocations to be able to maintain the property well. Having a reputable and experienced owners corporation manager will ensure the best utilization of these funds.
Having said this, it is also important to know that these fees are only used to cover costs related to shared areas and utilities, and cannot be used for any maintenance, repair or improvement of your private lot or personal property or belongings. Please also be aware that the strata insurance paid for as part of your owners corporation fees does not cover the public liability or contents insurance within your private lot. It is best to check with your owners corporation about which costs are covered and not covered, before you make your property purchase.
How are apartment body corporate fees calculated?
There are a number of factors that are considered before calculating the average body corporate fees. These can include the condition, size and structure of the strata scheme.
- Older properties might attract higher annual levies on account of an increased need for regular repairs. How much you pay will also depend on the facilities offered to owners by the owners corporation, such as lifts, pools, gymnasiums, BBQ areas, gardens and parking areas which require regular upkeep.
- Apart from these, body corporate fees would also be based on the size of the individual property, as decided by the units of liability for each lot at the time of plot subdivision. So those with larger property holdings will usually pay higher annual fees.
- The management charges by your owners corporation manager would also be a component of your fees. Also, if your body corporate is registered for GST, then this would also impact the body corporate fees, with additional GST charges.
Consumer Affairs Victoria also urges owners to be aware of some extra fees in the event that they require copies of older records from the body corporate, or if you require an owners corporation certificate at the time of selling off your property.
So in a nutshell, owners corporation fees can have a huge variance between different properties and can also change from year to year, and it makes sense to budget for these fees before committing to a purchase.
