When you buy a Strata titled property you are buying your own apartment, but you are also buying a piece of the entire complex itself, including a portion of the common property. The common property includes things that are common to all, and may include walls, external roof, foyers, pools, car parks and gardens depending on your specific strata type. Those areas are shared between all the owners of the strata company and are managed by the council of the strata company. A certain amount of money is required to look after the day to day running of the strata property, maintenance and special expenses and your strata fees are the amount collected by each owner to contribute to that pool.
A key advantage of strata living is access to premium amenities like a five-star swimming pool without the full financial burden. In a green title home, maintaining a private pool can cost between $1,500 and $2,000 annually for upkeep alone, not including initial installation costs that can exceed $50,000. In strata properties, these costs are shared among owners, meaning you enjoy resort-style facilities for a fraction of the price.
What are Strata Fees?
Strata fees or strata levies are contributions that are paid by the owners of lots in a strata scheme to help fund the costs of maintaining and managing the common areas of the building and the property. These costs can include things like administrative fees, insurance, repairs and maintenance, cleaning/gardening, and utilities for common areas such as hallways, elevators, and other shared facilities.
Strata levies are typically paid on a regular basis, such as monthly or quarterly, and are determined by the owner of the strata company (the governing body of the strata property) at each Annual General Meeting (AGM). The amount of the strata levies set, is usually based on the funding requirements for the Strata Company’s budget that is also set at the AGM. The levies are collected by the Strata Company and used to pay for the ongoing costs of running and maintaining the property.
Are all strata fees the same?
Strata Fees will vary from property to property and it is important if you are considering buying a Strata Titled Property to be aware of historical fees, amenities and upcoming items so you are comfortable. Strata Fees will vary because of a number of factors including:
- The number and types of amenities (eg pools, lifts, gyms, or BBQ areas often have higher maintenance costs)
- Building age and condition (older buildings may require more maintenance, leading to higher fees)
- Special amenities (some buildings have on-site property managers, or maintenance staff)
- Size of the complex (larger buildings with more units can often distribute costs more broadly lowering individual fees)
- Type of strata (different strata titles come with different common property definitions, and will therefore have different maintenance requirements owners contribute to)
So don’t be alarmed if your fees are different to those of other properties or complexes.
Who decides on Strata Fees?
Strata levies are set and agreed upon by the Strata Company owners at the Annual General Meeting (AGM). During the AGM a number of items will be discussed and prepared to set the levies for the upcoming year. These items are usually prepared by your Strata Manager and the Council of the Strata Company.
The total Strata budget is set at the AGM after a review of last year’s budget, discussion of likely outgoings and expenses for the upcoming year, and a review of the current reserve fund or sinking fund to cover any unexpected or major expenses.
In the meeting all owners have the opportunity to vote on the budget, as well as the appropriate levy contribution for the owners.
What makes up Strata Fees?
The Strata Fees or Levies issued contribute to the Total Strata Budget. This budget is usually made up of the
- Administrative Fund Budget
- Reserve Fund Budget
What is the Administrative Fund Budget
This Budget covers the day to day expenses in running the strata company. It includes things like maintenance, repairs, cleaning and insurance. Some things you may be paying for include:
1. Maintenance and repair: Strata fees cover the cost of maintaining and repairing common areas and facilities such as elevators, hallways, lobbies, and parking lots. This includes regular cleaning, painting, and upkeep to ensure that these areas are clean and safe for residents.
2. Utilities: Fees may also include the cost of utilities such as water, electricity, and gas for common areas. This can include lighting in shared spaces, heating and cooling systems, and water usage for communal areas such as swimming pools or gardens.
3. Insurance: Strata fees also cover the cost of insuring the building or complex, including liability insurance for common areas and public spaces. This provides protection in the event of any accidents or damage to the property.
4. Management fees: Part of the fees may be used to pay for the services of a property management company, which handles administrative tasks such as collecting fees, organizing repairs, and enforcing strata rules and bylaws.
Below is a sample breakdown of a building with 10 – 19 lots and how their Administrative Fund is broken up.
What is a reserve fund or sinking fund?
A reserve fund (or sinking fund) is a dedicated financial account used to cover major, long-term maintenance and capital expenses for shared property and common areas. It ensures funds are available for significant works like roof repairs, painting, or replacing facilities such as lifts or pools, without imposing sudden special levies on owners. The introduction of the mandatory 10-Year Maintenance Plan (for designated Strata plans) has improved financial planning by helping strata schemes anticipate future costs and collect contributions gradually. This ensures properties are well-maintained, owners avoid unexpected expenses, and property values are preserved over time. Each owner is required to contribute towards this budget regardless of how long they have been part of the Strata Company.
How are strata levies decided?
Strata levies are decided by a simple majority vote at an Annual General Meeting based on the current cash flow, budget for the upcoming year and any forecast extraordinary expenses. Your Strata Manager supports your Strata Company to set levies every year and can help you work through budgeting and forecasting during and prior to the meeting. If you were unable to attend your Annual General Meeting you will find all budgetary discussions captured in the meeting minutes or you can speak with your strata manager.
How much are my strata levies?
Strata Levies are made up of a number of items as mentioned above. The final dollar amount will depend on a variety of factors that are unique to your building, your strata company cash position and also your own unit entitlement.
Every building is unique, and therefore the strata levies for your building will be unique to cater for things like varying facilities and amenities, number of units, size of building and maintenance requirements for the future. The amount of strata fees can range from a few hundred to several thousand dollars per month, for example, small, self-managed strata with minimal common areas and services may have lower fees than a larger, professionally managed building with on-site amenities such as a pool, gym, or concierge.
What is my portion of the strata levies?
Every strata property comprises of many different lots. In order to determine each owner’s undivided share in the common property, voting rights, along with their share of outgoings, a unit entitlement is assigned to each unit. A unit entitlement represents each unit’s value as a percentage of the value of the whole development and your individual unit entitlement will govern how much you contribute financially to the running costs of your strata complex. For example, if your apartment is 50m2, your unit entitlement will be lower than a neighbor’s whose apartment is 95m2.
You can find your lot unit entitlement in your Strata Plan.
What if my levies have increased?
If you have received a quarterly levy notice which is higher than you were expecting, we would encourage you to refer to your minutes and its attached budget to learn more about the decisions made in an AGM or special meeting. You can also speak with your strata manager who can walk you through the budget. It is important to remember that as a lot owner, you have the right to vote in all budgetary decisions that impact your strata company and being involved is the best way to ensure you aren’t surprised by any changes.
Inflation on services is a common reason why your levies increase. The cost of utilities and services can drive up the Strata levies on your property. Inflation is usually taken into account in the budgeting process but there may be un-forecasted changes to prices when services are eventually rendered.
Who decides to increase the Strata Fees?
The decision to increase levies must be approved by a majority vote. It is important to note that your Strata Manager can not increase your Strata levies without authorisation, and any decisions to approve or increase Strata levies will be documented in the meeting minutes of the AGM.
What percentage of my strata levy fee is attributed to Strata Management?
Part of your strata fees may be used to pay for the services of a property management company such as ESM Strata, which handles administrative tasks such as collecting fees, organizing repairs, and enforcing strata rules and bylaws. This amount varies depending on the unique needs of your strata property, but a full list of common services can be found here. It is a common misconception that the entire levy amount you pay goes towards your strata manager. This misconception usually arrises because the payment slip you receive attached to your levy comes from your Strata Management Company, however all levies are payed into a fund held in individual accounts in the name of your Strata Company.
How do you pay for strata fees or levies?
At ESM Strata, all levies are paid via the DEFT payment service and funds are held in individual accounts in the name of the Strata Company. This account is managed by ESM Strata on behalf of the Council of the Strata Company and the Strata Company. The levies raised fund the approved expenditure of your Strata Company.
Are strata fees tax deductible?
Generally, strata fees are not tax deductible for most property owners. This is because they are considered personal expenses rather than business expenses. However, there are some circumstances in which strata fees may be tax deductible. For example, if you own a rental property and the strata fees are a cost associated with earning rental income, they may be tax deductible. Similarly, if you use your property for business purposes, such as running a home office, you may be able to claim a portion of your strata fees as a tax deduction.
It is important to note that claiming strata fees as a tax deduction can be complex, and it is recommended that you seek professional advice from a qualified accountant or tax advisor. They can help you determine whether you are eligible to claim strata fees as a deduction and assist you in calculating the amount you can claim.
How can we reduce our strata levies?
If your strata company is looking at ways to reduce levies, there are a number of things you may want to consider as a group and with your Strata Manager. Not all of these will be appropriate for your property, but reviewing service agreements, contracts, maintenance plans etc are always good practice and may save money quickly.
Review any service contracts you have
If you have cleaning, maintenance, landscaping or other services on your site regularly, reviewing their service contracts may be a great start to reviewing or reducing your costs. As a group you may consider getting more competitive quotes, changing the regularity of their visits, or even pitching in as an owners group to take over some of the services yourselves. You may be able to engage contractors that offer multiple services in one agreement which may reduce costs as well.
Invest in sustainability initiatives
There may be opportunities for sustainability initiatives and changes to lower the amount payable for the entire strata complex. Implementing sustainability changes to your complex is a lot easier now thanks to the amendments in the strata titles amendment act 2018. Some initiatives may include:
- Lowering energy costs by investing in energy-efficient upgrades and renewable energy systems, such as solar panels or the use of LED lights. These changes can significantly reduce its energy costs to common areas such as for lifts, lighting, pool heating and more.
- Water conservation through low-flow shower-heads, faucets, and toilets to common areas to reduce water bills. Collecting rainwater and using it for gardening can reduce utilities significantly for strata properties.
- Replacing plants with Waterwise plants that are self-maintainable can reduce the cost required for gardening and maintenance. Using native plants or slow growing plants keep the property looking nice with less gardening maintenance.
- Whilst owners pay for their own utilities in a strata building, creating an embedded network (combining all the utilities of the entire building, negotiating a better rate with utility company through purchasing power, and then dividing the electricity back up) will reduce levies by lowering the amount required to cover utility usage of common property areas such as pools, gyms, hallways, carparks, etc.
Reduce Amenity usage throughout the year
Some strata companies looking to save money in levies will decommission certain amenities in different times of the year. This could look like closing the pool during winter time, or limiting gym access and opening times. If you do close the pool during winter, you may consider providing passes to a local pool for that period for all owners, which may be a lot cheaper than pool maintenance during that period.
Increase owner participation in maintenance
As touched on earlier, some maintenance services such as gardening can be taken care of by the owners instead of by outside contractors. Consider things like community gardening days or rotating certain maintenance tasks like watering lobby plants to save on strata levies.
The Frequently Asked Questions we get about Strata Fees
How much are strata fees on average?
The amount of strata fees in Western Australia can vary significantly depending on the size of the property, the amenities provided, and the level of management required. On average, strata fees can range from $500 to $1,500 per quarter for residential properties. For larger or more complex developments with facilities like pools, gyms, or elevators, the fees can be higher, often reaching $3,000 or more per quarter.
When are the strata fees decided?
Strata fees, also known as strata levies, are typically decided at the Annual General Meeting (AGM) of the Strata Company. During the AGM, the council of the strata company, along with the owners, will approve the budget for the upcoming year. This budget outlines the expected expenses for maintaining the common areas, insurance, management fees, and any reserve funds needed for future repairs or upgrades. Based on this budget, the strata fees for each owner are calculated according to their unit entitlement.
What if I can’t afford to pay my strata fees?
If you are unable to pay your strata fees, it is important to act quickly and communicate with your strata manager or the council of the strata company. In some cases, you may be able to arrange a payment plan to spread out the cost. However, failing to pay strata fees can result in serious consequences, including late fees, interest charges, or legal action. The Strata Titles Act 1985 (WA) gives the Strata Company the right to recover unpaid levies, and it can also impact your ability to vote on decisions within the strata.
What if I don’t agree with where my strata fees are going?
If you disagree with how your strata fees are being allocated, the best course of action is to raise your concerns at the Annual General Meeting (AGM) or during any regular council meetings. All owners have the right to review the strata company’s budget, which should provide transparency on how fees are spent. You can also request detailed financial statements to better understand the expenses. If a majority of owners share your concern, changes can be proposed and voted on. If the dispute cannot be resolved internally, you may seek advice from the State Administrative Tribunal (SAT), which handles strata-related disputes in Western Australia.
Will strata fees go down or only up?
Strata fees typically fluctuate based on the needs of the property. While it’s more common for fees to increase over time due to inflation, rising maintenance costs, or unexpected repairs, they can potentially go down if the Strata Company reduces spending or if certain one-off expenses are no longer required. However, it’s important to note that ongoing maintenance, repairs, and future forecasting often mean fees are more likely to increase rather than decrease over time. The best way to ensure fees are kept manageable is through proper financial planning and maintaining a healthy reserve fund.
Where do I get a copy of our budget
Your strata company budget will have been issued prior to your AGM and circulated as part of the meeting minutes afterwards. You can contact your strata manager any time to request a copy of your financial statements and company budget.
If you have any questions at all about Strata Levies and Strata Fees please dont hesitate to contact your Strata Manager or ESM Strata on 08 9362 1166 or email us at [email protected].
