Strata Levies Unveiled: How to Manage Costs and Avoid Surprises
Owning an apartment, townhouse or duplex can provide many lifestyle benefits, but there’s one cost that can sometimes surprise potential buyers: strata levies. Here at North Brisbane Home Loans we want to empower you to make informed home buying decisions. So, we’ve created this guide to help you understand strata levies and how to manage them effectively as a homeowner. If you need any mortgage advice or guidance around buying an attached dwelling that may attract strata levies, you can get in touch with us today for a free consultation.
What Are Strata Fees?
Strata levies (also known as strata fees or body corporate levies) are mandatory contributions all residents in a building complex pay to cover the upkeep and maintenance of the shared areas. This includes things like communal hallways, lobbies, lifts, pools, gardens and building insurance in apartment complexes. In duplex or townhouse properties, the strata levy provides peace of mind over the entire property.
Strata levies are typically divided into two main categories:
- Administrative Fund: This covers the day-to-day running of a property, including cleaning, gardening, utilities, building insurance and management fees.
- Sinking Fund (Capital Works Fund): This fund accumulates money for future major repairs and replacements, such as painting the building, fixing the roof or upgrading lifts/stairwells. A healthy Sinking Fund helps avoid special levies, which are one-off charges to cover unexpected expenses.
Why Are Strata Levies Important?
Strata levies ensure your building is well-maintained, which protects your investment and can even increase your property value in the long run. They also provide a sense of community by ensuring a clean and safe environment for everyone.
How are Levies Determined?
The total levy amount is divided amongst owners based on their lot entitlement. This is a percentage typically determined by the size and value of your property within the complex. Larger properties generally have higher levies.
Keeping Levy Costs Under Control
While you can’t directly control the amount you pay in strata levies, there are ways to be proactive:
Review the Disclosure Statement: Before buying a property, carefully review the disclosure statement, which outlines the building’s financial health and the current strata levy amount.
Attend Body Corporate Meetings: Stay informed and involved by attending Body Corporate meetings. This allows you to have a say in how levy funds are spent and potentially influence future costs.
Consider Long-Term Maintenance: Look for a building with a healthy Sinking Fund and a preventative maintenance plan. This can help avoid costly repairs down the road.
North Brisbane Home Loans can help! As your mortgage broker, we can help you factor strata levies into your budget when purchasing a property. We can also connect you with resources to learn more about strata schemes.
Buying a property with strata levies shouldn’t be a mystery. By understanding these costs and taking a proactive approach, you can ensure a smooth and financially secure future.
Patrick Cranshaw, a Certified Mortgage Professional for over 21 years, founded North Brisbane Home Loans in 2002. His career began with ANZ Bank in New Zealand, where he progressed over 16 years to a Business Banking role in Virginia. After moving to Brisbane in 2000, Patrick led the QLD market for a home loan agency, helped set up the REMAX Real Estate Finance division, and practiced as a broker.
