What Will You Be Paying in Strata Fees?
Strata fees can vary enormously between different apartment blocks and unit complexes.
Multiple factors are taken into account when drawing up strata fees, and it’s important to know exactly what you get for your money.
Exceptionally high or low fees need to be investigated to ensure you’re getting value for money.
How you can get caught out on strata fees
Unscrupulous developers have been known to sell luxury units off the plan with extremely low strata fees and levies, according to Domain.com.au. It’s a real drawcard for buyers who want great facilities with minimal outgoings, but it’s unlikely the low fees will last.
Once owners have moved in and life is in full swing, the real problem arises – there’s not enough cash in the kitty to cover bills for maintenance and management.
In order to balance the books, levies will have to be raised in line with market value. Otherwise, the state of the apartment complex suffers, as essential maintenance is neglected.
If owners decide on self-management to save the cost of expert strata management services, vital legal requirements may be overlooked.
Recommended strata fees
When buying a strata apartment, it’s important to check out the range of fees you will be required to pay.
There are no specific legal requirements when setting fees and levies fair to everyone, but the Flat Chat strata forum online offers some guidelines.
These state that annual levies should fall between 0.8% and 1.2 % of a property’s value where the complex offers facilities, and between 0.3% and 0.7% where the units, townhouses or apartments have few or no facilities.
Mid to high-end apartments in NSW have been known to use lack of facilities as a selling point. This allows complexes with no pool, gym or concierge to offer low-end levies for quality apartments.
The deciding factors in strata fees
When comparing strata fees, it’s important to compare your block with its equivalent in terms of size, age and amenity.
Starting with the fundamentals, levies take into consideration the size and height of the building, lighting, parking security and water provision. Older buildings generally need more maintenance, meaning higher levies.
What services are offered? Gardening, cleaning, concierge and security systems all come with a premium, along with quality strata title management.
Facilities like gym, pool and spa may seem attractive, but you higher levies to cover them should be anticipated.
While strata management may seem expense, the outlay can save large amounts of money in terms of protecting your investment and provide you with invaluable advice on important matters.
Poor and chaotically managed complexes often charge higher levies due to wastage, uncollected levies and general mismanagement.
As reported on Domain.com.au, units in well-maintained complexes with comparatively high levies are likely to hold both rental and resale values much better than those in shabbier buildings with lower fees.
Levies are generally broken up into three categories:
- Administrative fund levies to cover daily running expenses.
- Capital Works Fund levies to cover longer-term maintenance and repairs.
- Special levies to cover emergencies or unexpected expenses.
If you’re buying a strata property, considering the factors above can assist you to decide whether the levies are fair, unrealistically cheap, or excessive.