For many lot owners, strata levies are among the highest ongoing costs of owning property. While most owners understand they need to pay them, levy notices can come with a number of questions.
Where does the money go? Why do I pay more than my neighbour? Why are the levies increasing? Where did that special levy come from? Why do I have to pay them in the first place?
Understanding the purpose of levies and how they are calculated can help owners make sense of their costs, take part in budget discussions with greater confidence, and plan ahead for future maintenance and expenses.
Levies are regular payments collected by the owners corporation or body corporate from each lot owner. You may also know them as fees or contributions.
Each year, the committee decides on the budget for the following year. They determine how much money the owners corporation or body corporate will need, and set levies to fund it.
These levies are then proposed at the annual general meeting (AGM) for all owners to vote on.
Levies are often due quarterly, although they may be more frequent, depending on the owners corporation or body corporate. More frequent fees do not mean owners are paying more; it means the total cost is divided into smaller portions.
These levies are not optional contributions. Owners corporations or body corporates are required by law to charge fees in order to run and maintain the property. Likewise, owners are required to pay these levies.
Strata communities in different states and territories are governed by different legislation, including the Unit Titles Act 1975 in the Northern Territory, the Strata Schemes Management Act 2015 in New South Wales, the Body Corporate and Community Management Act 1997 in Queensland, the Strata Titles Act 1998 in Tasmania, and the Owners Corporations Act 2006 in Victoria.
The funds from the levies are used by the owners corporation or body corporate to cover the expenses of running and maintaining the property.
In a strata community, some costs occur every week, while others may arise only every 10 or 15 years. To prepare for both, levies are paid into two different funds: the administrative fund and the sinking fund, also known as the capital works fund.
The administrative fund is used to pay for day-to-day expenses. Examples include:
The sinking or capital works fund is used to pay for major renovations or repairs. These may include:
This fund is part of the scheme’s long-term plan, and the legislation around it varies between states and territories.
There are times when an owners corporation or body corporate may issue a special levy.
Sometimes unexpected expenses arise that aren’t fully covered by the scheme’s existing funds. In these situations, the owners corporation or body corporate may need to raise a special levy to meet the cost.
For example, a storm may cause damage to a building’s roof. If the roof costs $100,000 to repair and the sinking or capital works fund has only $50,000 in it, the owners corporation or body corporate may need to raise a special levy so the work can be completed.
The cost of strata levies can vary significantly between communities. Just as each scheme varies in its location, size, age, and facilities, the costs needed to run and maintain it can also differ. Some common factors that may influence levy amounts include:
Shared facilities cost money to run, from power and water usage to maintenance, cleaning and repairs. If your scheme has a gym, pool, or security services, levies may be higher.
Older buildings may need more regular maintenance or repairs, which may contribute to higher levies.
When levies go unpaid, the scheme's expenses do not disappear. This can affect future budgeting decisions and may place additional pressure on other owners if costs still need to be met.
It is not just different schemes that may have different levy arrangements. Levy amounts can also vary between lots in the same scheme.
In many schemes, levies are calculated based on unit entitlements, also known as lot entitlements or lot liability. This represents the lot’s share of the overall scheme. Generally, the higher the unit entitlement, the greater the owner’s contribution levies. In some owners corporations or body corporates it may also influence voting rights.
After a lot is constructed, it is appraised by an expert and assigned a value based on its market value. Larger or more valuable lots have higher unit entitlements.
The Northern Territory separates entitlements schedules into the contribution schedule, which sets out the share of contribution the owner pays to the body corporate, and the interest schedule, which covers the owner’s share in body corporate land and assets. The Unit Title Schemes Act 2009 states that, to the extent that it is just and equitable, all contribution schedules in a scheme should be the same, while interest schedules should reflect the market value of the lot.
In New South Wales, unit entitlement is primarily used to determine a lot owner’s contribution to levies and the voting value of a lot when a poll vote is conducted. Unit entitlement also determines a lot owner’s proportional interest in the common property and may be relevant in the distribution of insurance proceeds, compensation payments and the distribution of assets or proceeds if the strata scheme is terminated.
In Queensland, lot entitlements are separated into the contribution schedule and the interest schedule. The contribution schedule determines the share of body corporate costs and the value of an owner’s vote if a poll vote is called, while the interest schedule determines the owner’s share of common property.
Under the Strata Titles Act 1998, lots are given a general unit entitlement which determines contributions to the body corporate, voting rights and interest in common property. The body corporate can also issue a special unit entitlement to fix the proportionate contribution to the body corporate, proportionate interest in common property, number of votes, or proportionate share of body corporate income to the owner of the lot.
In Victoria, lot entitlement and lot liability are related but serve different purposes. Lot entitlement represents a lot owner’s share of ownership in common property and generally determines voting rights. Lot liability determines the proportion of the owners corporation’s levies that the lot owner is required to contribute.
Although lot entitlement and lot liability may sometimes be allocated in the same proportions, they do not have to be identical.
In many schemes, each lot pays a share of the total levies. For example, if the levies for the year are $100,000 and your lot’s share is 10%, you would generally pay $10,000.
Levy amounts may change from year to year.
Setting the budget, including how much money the scheme needs and what each owner will contribute, is one of the committee’s key responsibilities.
Several factors can affect levy amounts, including:
While levies often increase because of rising costs, they may also decrease in some circumstances. For example, due to the completion of costly major works.
Decisions around the building and levies are not just made by the committee and the strata, owners corporation or body corporate manager. As an owner, being actively involved in your owners corporation or body corporate can help you see what’s ahead for the building and give you the chance to contribute to budget and levy discussions.
Most owners pay their levies on time, but situations may arise where payments are delayed.
Financial hardship, simple oversight, and disagreement with the owners corporation or body corporate may all contribute to levies becoming overdue.
The administrative fund helps cover the day-to-day costs of running the community. If levies are not paid on time, this can affect all owners. It may leave the scheme short of money, making it harder to pay contractors or keep up with maintenance work.
Because the scheme’s expenses still need to be met, unpaid levy contributions can place additional pressure on the wider community. If the owners corporation or body corporate has an urgent bill to pay, they may need to issue a special levy. This may put financial strain on owners who need to make up the shortfall, and, in turn, create frustration among owners.
Alternatively, the owners corporation or body corporate may decide to borrow money, which can result in debt and lead to increased or special levies.
If an owner does not pay their levies, there may be consequences if the overdue amount remains unresolved. The owner may be classified as unfinancial, which can affect certain voting rights.
Owners corporations and body corporates have legal options to recover unpaid levies, but most schemes will first try to resolve the matter through communication. This may include reminder notices or letters about the overdue amount. If the levies remain unpaid, the owners corporation or body corporate may engage a solicitor to issue a letter of demand. In some cases, the matter may then proceed to a court or tribunal.
Debts may also accrue interest, and owners may need to repay costs associated with recovery. This could mean owners paying more than they would have if the levy had been paid on time.
Early communication can often help prevent small issues from becoming larger ones.
In case of financial difficulty, it is often valuable to speak to the committee or to the strata, owners corporation, or body corporate manager early. If approved by the committee, debts can be paid via an instalment plan, and interest on debts may be waived.
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Strata levies can often feel like another bill, but they play an important role in maintaining common property and funding the services residents rely on every day.
The amount each owner pays is influenced by the scheme’s current and future needs, as well as the lot’s unit entitlement. Because these costs can change over time, levy amounts may rise or fall from year to year. By understanding how levies work, owners can feel more confident reviewing budgets, attending meetings, and planning for future costs. It also provides greater insight into how regular contributions help maintain and support its long-term condition and value.
This article is edited by Lauren Shaw Regional General Manager and Licensee-in-Charge on October 2026.
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