Strata levies: how much should I pay?

For many people, the major downside of living in an apartment or complex is paying strata levies or fees.

Knowing how much you should pay for strata levies depends on what you’re getting for your money. If you live in a small complex with no pool or other amenities and minimal gardens, then your levy payments should be relatively low. If you live in a high-rise apartment with elevators, on-site security, a gym, sauna, swimming pool, tennis court, and other facilities, then you can expect to pay more.

What’s the point of paying strata levies?

Strata levies are no one’s favourite bill to pay and owners often wonder what return they’re seeing for this investment.

This money should be put towards the upkeep and maintenance of common property, so you should see a return in terms of clean, safe common areas and fully-functioning amenities. If these things look like they’re in need of repair and you don’t see a fast response, then it’s understandable that you may be wondering where your money is going.

There are also less-visible costs. This includes things like ducted air conditioning, cleaners, the number of elevators, internal lighting, parking spaces, and how much water the building uses.

Then there’s the complex’s history. If it has been plagued by owners who haven’t paid their levies, or if it’s the subject of legal action, then your strata levies may go towards paying down debt instead of improving the complex.

Older buildings cost more to maintain, while newer buildings may have more technology and infrastructure to contend with.

Are lower levies always better?

While lower levies can seem attractive, it’s important to remember that those levies can make the difference between an investment that holds its value and one that quickly becomes run down. If the levies are too low in the early days of a development, they may need to be raised significantly as time goes by to contend with the repairs and ongoing maintenance required. This can be a shock to people who’ve budgeted according to the original cost of levies.

On the other hand, if levies seem too high, it could be because the strata committee isn’t budgeting or managing funds effectively.

How do I know if my levies are fair?

There are three main types of levies:

a) administrative fund levies for daily running expenses
b) capital works fund levies for long-term maintenance items
c) special levies for emergencies.

There is no one-size-fits-all approach for strata levies. The best way to know if the levies you pay are reasonable is to:

  1. Inspect the property carefully. Pay close attention to the condition of facilities such as pools and gyms.
  2. Ask other owners for information. If the strata committee are quick to respond to enquiries and safety or maintenance issues, then the property is likely to hold its value.
  3. Find out exactly what’s covered. Some complexes offer on-site security, gardening, cleaning, and even cinemas, but you get what you pay for.
  4. Do your due diligence. Find out what the levies are for comparable units in your complex as well as other, similar developments. If the levies seem unusually high or low, it’s important to ask questions so you can get a clear understanding of exactly what’s included and whether levies are likely to rise sharply to compensate for years of too-low levies.
  5. Be ready for increases. Remember that levies must go up periodically to account rises in market value.