Nobody likes receiving bills, particularly when the cost of living continues to place pressure on household budgets.
However, if you own a property within a strata scheme, paying your strata levies is a legal obligation and an important part of maintaining the financial health of your community.
While missing a levy payment may not seem significant at first, unpaid levies can have consequences for both the individual owner and the wider owners corporation. At the same time, recent changes to NSW strata legislation have introduced new protections for owners experiencing genuine financial hardship.
Here’s what every owner should know.
Why Do Strata Levies Matter?
Strata levies fund the day-to-day operation and long-term maintenance of your building. They help cover expenses such as:
- Building insurance
- Cleaning and gardening
- Common property utilities
- Repairs and maintenance
- Essential services
- Administrative expenses
- Contributions to the Capital Works Fund for future major works
Without these contributions, an owners corporation may struggle to meet its financial obligations, maintain common property, or plan for future repairs.
When levies go unpaid, the impact is often felt by every owner within the scheme.
What Happens When Levies Become Overdue?
If your levies are not paid by the due date shown on the levy notice, they become overdue.
In most cases, the owners corporation will first issue reminder notices and attempt to recover the outstanding amount. However, if the debt remains unpaid, additional steps may be taken.
The longer a debt remains outstanding, the more difficult and costly it can become to resolve.
You May Lose Your Voting Rights
One of the first consequences of unpaid levies is becoming what is known as a non-financial owner.
Under NSW strata legislation, owners with outstanding levy debts may lose the right to vote on most motions at a general meeting and may be unable to nominate for or serve on the strata committee.
For owners who want to have a say in decisions affecting their building, remaining financial is important.
Interest May Be Charged
Owners corporations can charge interest on overdue levies.
The current maximum rate is 10% per annum, calculated as simple interest from one month after the contribution becomes due unless the owners corporation determines otherwise.
While this may not seem significant initially, interest can add up over time and increase the overall debt owed.
Debt Recovery Action May Follow
If reminder notices are unsuccessful, the owners corporation may commence formal debt recovery action.
This can include:
- Letters of demand
- Debt recovery services
- Legal proceedings through the courts
- Tribunal or court orders for recovery of the debt
In some circumstances, owners may also become responsible for reasonable expenses incurred in recovering unpaid contributions, interest, and costs, subject to the requirements of the legislation.
Importantly, the owners corporation has a responsibility to recover unpaid levies on behalf of all owners. Failing to do so may place additional financial pressure on the scheme and other lot owners.
Can I Refuse to Pay Levies If I Have a Dispute?
This is one of the most common misconceptions in strata.
If you have a dispute with the owners corporation regarding maintenance, repairs, by-laws, noise complaints, or any other strata matter, you are still required to pay your levies.
Withholding levy payments is not an approved method of resolving a dispute and may result in the debt recovery processes outlined above.
Disputes and levy obligations are treated separately under the legislation.
New NSW Strata Debt Recovery Reforms
In 2025, the NSW Government introduced significant reforms to strata debt recovery through the Strata Schemes Legislation Amendment Act 2025.
The changes aim to create a fairer and more transparent process for both owners corporations and owners experiencing financial hardship.
Financial Hardship Information Must Be Provided
Since October 2025, levy notices must include a Financial Hardship Information Statement, or the information contained within that statement.
This ensures owners are aware of available support options and understand the steps they can take if they are struggling to meet their levy obligations.
Owners Can Request a Payment Plan
One of the most significant reforms is the introduction of a formal payment plan process.
Owners experiencing financial difficulty can submit a prescribed payment plan request to the owners corporation for consideration.
Payment plans can run for up to 12 months, with additional plans able to be agreed to if required. A payment plan only applies to overdue contributions and cannot cover future levies.
Importantly, owners corporations cannot adopt a blanket policy refusing payment plans. Each request must be assessed on its individual circumstances.
Owners Corporations Must Respond Within 28 Days
When a payment plan request is submitted, the owners corporation or strata committee must provide a written decision within 28 days.
If the request is refused, the owners corporation must provide written reasons explaining why the refusal is considered reasonable in that particular situation.
The legislation also prevents owners corporations from requesting additional financial information beyond what is contained in the prescribed payment plan form.
Debt Recovery Cannot Continue During a Compliant Payment Plan
Where a payment plan has been agreed and the owner is complying with its terms, the owners corporation cannot pursue recovery of the levies, interest, or recovery costs covered by that arrangement.
This provides certainty for owners who are actively working to address their arrears.
More Notice Before Recovery Proceedings
The reforms have also increased the notice period before debt recovery proceedings can commence.
Owners corporations must now provide at least 30 days’ notice before commencing recovery action, compared to the previous requirement of 21 days.
How Are Payments Applied?
The legislation now provides greater clarity around how payments are allocated.
Unless otherwise directed by the owner or ordered by a court or tribunal, payments must be applied in the following order:
- Outstanding levies (oldest first)
- Interest
- Recovery costs
This helps ensure owners are reducing the principal debt before interest and costs are applied.
What Should You Do If You’re Struggling to Pay?
If you’re experiencing financial hardship, the most important thing you can do is communicate early.
Ignoring levy notices or debt recovery correspondence rarely improves the situation and may result in additional interest and costs being incurred.
The recent legislative reforms recognise that financial hardship can happen to anyone and provide pathways for owners to seek assistance through payment plans.
If you’re concerned about your ability to pay, contact your strata manager or owners corporation as soon as possible to discuss your options.
Strata levies are essential to maintaining a financially healthy and well-maintained strata scheme.
While missing a payment won’t immediately result in legal action, unpaid levies can lead to loss of voting rights, interest charges, debt recovery costs, and legal proceedings if left unresolved.
The good news is that recent NSW legislative reforms have introduced greater protections for owners experiencing financial hardship, including formal payment plan processes and stronger procedural requirements before recovery action can commence.
At Strata Plus, we believe informed owners create stronger communities. Understanding your obligations, knowing your rights, and communicating early can help prevent a temporary financial challenge from becoming a much larger issue.
