So, you are either looking to purchase an apartment or recently have. You will know that your mortgage is but one component of your budget. Another component which you must account for are your strata levies. You are required to pay fees to the owners corporation to cover the cost of maintenance of common property. (for example, the lifts, pool, stairs, gardens, foyer, rooftops, laundry). These requirements are set out by strata schemes under the Strata Schemes Management Act 2015 (NSW). However, these vary from state to state. Find out more about strata law here.
Types of Levies
Depending on the structure of your owners corporation, there are a few different types of levies. Costs are generally divided up in the following ways:
- Firstly, the administrative fund covers general administration costs.
- Secondly, the sink fund outlays reserves to meet anticipated future expenditure.
- Lastly, special levies cover unexpected expense arises that the administrative or sink fund cannot cover.
How Are Strata Levies Calculated?
In many cases, strata levies will be the same for each owner. However, it is possible that you levies will differ from another owner in the building on the basis of size and amenity. The following factors play a role in determining overall strata levies:
- The size of the building
- The building’s age
- The types of common amenities such as pool facilities, other recreational outlets, gardens, and elevators
Strata levies are usually fixed at the start of every financial year at the annual general meeting (AGM) of the owners corporation. At the AGM, the owners corporation will typically decide the following:
- How much to put into the administrative fund sinking fund budget
- The amount each apartment owner will pay
- How many installments for payments
- The due date for each installment
What Happens If I Fail to Pay My Strata Levies?
Apartment owners are responsible for paying strata levies on a quarterly basis. If you do not pay, the owners corporation may recover the funds through legal action. They may also charge interest and costs for recovery or legal fees. If they start court proceedings to recover the payment, you may incur the costs of these. It is important to know your rights in terms of what the owners corporation can request from you.
If you are unsure of your rights and responsibilities regarding your strata payments, it might be worth contacting a property lawyer for advice.
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