Understanding Strata Levies: What Every Apartment Owner Should Know

Strata levies are compulsory payments made by property owners to cover the ongoing costs of managing and maintaining a strata-titled building. Despite being a core component of strata living, levies are often misunderstood. Many apartment owners feel as though they’re being taxed for choosing apartment life — and considering that the word “levy” can imply a tax or fine, it’s easy to see why.

However, a more accurate way to describe a strata levy is as a contribution toward the shared costs of running the building. These contributions fund the upkeep of common property and shared amenities such as swimming pools, gyms, gardens, lifts, and security services — all the components that surround and support your apartment.

Even if your building doesn’t have luxury amenities, there are still considerable costs involved in maintaining the property. Factors such as building design, age, and construction quality can significantly influence the levies required and no two buildings are the same. This makes it difficult to compare whether strata levies are “fair” between buildings.

Are Low Strata Levies a Good Thing?

Low strata levies are often used as a selling point, especially for off-the-plan apartments. However, be cautious, if the initial budgets are underestimated or artificially lowered to attract buyers, you may face a shortfall later.

If you’re purchasing off the plan, always request to see the budget documentation the levies were based on. It’s essential to ensure the ongoing financial health of the building is accurately accounted for. Under current strata legislation, buyers do have avenues to address situations where levies are later found to be inadequate.

Frequently Asked Questions About Strata Levies

How is the strata budget set?

Each year, your owners corporation committee, in consultation with your strata manager, develops a budget covering administrative and capital works expenses. This draft budget is presented at the Annual General Meeting (AGM) for approval. Once ratified, levy contributions are formalised and issued to lot owners via a levy notice. During the AGM, owners can question and vote on proposed levies.

Where do levy payments go?

Your levy payments are deposited into the owners corporation’s trust account and used to fund the building’s ongoing operational and maintenance costs. While your strata committee approves invoices, your strata manager is responsible for managing the funds under the committee’s direction.

How are individual levy amounts determined?

Levies are calculated based on your property’s unit entitlement, as outlined in the registered plan of subdivision. This reflects your proportional share of the building’s overall expenses. The total levy amount may change annually depending on the evolving needs of the property, as discussed and approved during the AGM.

Who is responsible for unpaid levies?

The legal owner of a lot is responsible for any outstanding levy payments and charges.

What are special levies?

Special levies are additional charges raised outside the regular budget cycle to cover unexpected costs or major repairs. These are issued under direction from the strata committee when standard funds are insufficient.

What happens if levies aren’t paid on time?

Levies must be paid within one month of the due date. If they remain unpaid, interest of 10% per annum applies, as required by legislation. Strata managers and owners corporations cannot waive this interest individually, but the owners corporation may pass a general resolution to apply no interest across all owners. However, this should be considered carefully in the best interest of all owners.

If levies remain unpaid 30 days after the due date, the account enters a debt recovery phase, and a recovery fee is charged in addition to the interest.

Who receives the interest on unpaid levies?

All interest accrued is deposited into the owners corporation trust account, contributing back to the scheme’s operating budget.

How to Keep Strata Levies Under Control

There are several practical ways to manage and potentially reduce your strata levies without compromising the safety or value of your property.

1. Repairs and Maintenance

Routine costs may include plumbing, electrical systems, ventilation, lifts, intercoms, and more. Implementing a preventative maintenance plan with service agreements helps extend equipment life and avoid costly emergency repairs. A proactive approach also ensures greater safety and comfort for residents and visitors.

2. Cleaning and Waste Management

This includes cleaner wages, supplies, pest control, waste facility sanitation, and window cleaning. Periodically review contracts to ensure competitive pricing, and negotiate inclusions like equipment costs (e.g. car park scrubbers).

3. Administration Costs

These cover professional services such as strata management, accounting, auditing, postage, and meeting-related expenses. You can lower these by:

• Enabling electronic communication via your by-laws,
• Streamlining building processes, and
• Minimising the number of in-person meetings where practical.

4. Insurance

Insurance is typically one of the highest costs in your budget. It covers building reinstatement, public liability, machinery breakdown, and more. Ensure your strata manager works with a reputable insurance broker who goes to market each year to secure competitive premiums.

5. Onsite Services

These include building managers, concierge, security, and landscapers. While it’s tempting to cut costs, cheaper providers may reduce service quality or compliance. Choose providers who:

• Pay award wages,
• Hire trained, experienced staff, and
• Reflect positively on your building’s market value.

6. Compliance

This includes mandatory certifications for lifts, fire safety systems, pools, backflow devices, and car stackers. Start inspections early to allow time for any necessary repairs. If your lift is nearing the end of its service contract, consider hiring a lift consultant to assess value, compliance, and service quality.

7. Utilities

Common property usage of electricity, water, and communication services can add up. Investigate embedded networks to access wholesale energy rates, or renegotiate contracts with your utility providers for better deals.

8. Capital Works Fund

The Capital Works Fund (previously known as the sinking fund) covers long-term asset replacement. Regularly review:

• Warranty periods,
• Upcoming major works, and
• Your preventative maintenance plan.

Engaging a Quantity Surveyor to conduct a Capital Works Fund assessment ensures better forecasting and optimal fund usage.

While strata levies can feel like an additional burden, they are an essential part of maintaining the comfort, safety, and value of your apartment and building. With careful budgeting, strategic planning, and professional management, you can ensure levies remain fair and sustainable for everyone in your community.

For more insights or help managing your strata property, get in touch with the Strata Plus team.