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What do my strata levies pay for?

As the owner of a strata-titled property, you are required to pay strata levies or strata fees each quarter. These pooled funds cover the cost of general building insurance, maintenance and repairs, plus cleaning of the common areas. As they’re dependent on the running costs and maintenance schedule of your building, these costs vary greatly. Owners can expect to pay anything between $550 and $2,500 per quarter in strata fees.

The Strata Manager calculates how much funding is needed to sustain ongoing running costs and fund a reserve fund for future maintenance. This is then brought to the owners corporation as a proposed budget for approval. Once the total budget is agreed on, the owners then decide how best to fund that budget. Often this will be funded by an admin levy that will raise an amount of money in the financial year that will fund the budget. This is often how the owner’s levies are determined. Depending on the terms of the strata, the levies may be divided in equal shares between all owners or by taking into account each owners’ gross floor area, subsidiaries (e.g. balconies, courtyards, storage cages and car parking) and building location (depending on how Units of Entitlement are distributed on the Strata Plan).

Broadly speaking, when compared to larger buildings with more than 50 lots, smaller buildings with less than 50 lots tend to see the owners pay a lower proportion in Building Operations, Capital Works and Utilities, but a higher proportion towards Repairs and Maintenance, Insurance and Strata administration costs.

Let’s break the typical costs associated with operating a strata company, that your strata levies fund and explain how the costs are typically divided to best manage and maintain the value of your strata property:

Building Operations

Building Operations consume the largest proportion of the funding provided by your strata levies, averaging from 30-40% of the total. They ensure the smooth running of the building by covering the cost of the building manager, cleaning, gardening and the running of amenities such as a pool, gym and lifts.

For any developers reading this, it’s interesting to note that a statewide survey by WA Apartment Advocacy indicated that 48% of apartment owners would prefer to have fewer amenities in their apartment and pay lower strata levies in return.

Repairs and Maintenance

Repairs and Maintenance tend to be the second largest expense, ranging from 10-25% of the total budget. Regardless of whether your property is in a strata scheme or not, every owner has to budget for maintenance and repairs around the home. One of the benefits of a strata scheme is that the strata levy you pay quarterly, goes towards covering the maintenance and repairs of the grounds and all common areas in the strata property.

Capital Works

Capital Works account for approximately 10-20% of strata company expenditure. Although occurring less frequently than regular maintenance works, strata funds cover major future planned works. These may include fixing the roof, windows, flooring and painting common property.

Utilities

Utilities can also account for approximately 10-20% of strata company expenditure. As opposed to paying monthly, bi-monthly or quarterly utility bills, your strata levies may go towards covering gas, electricity, water, and waste.

Insurance

Insurance expenses tend to consume between 10-20% of strata company expenditure. Another standard cost of owning a home, insurance keeps the strata property protected. Your strata levies will help cover building insurance, legal consultation, and legal representation, if necessary.

Strata

The final category that your strata levies help fund is the operation of the strata company itself. This expense accounts for approximately 5-10% of strata company expenditure, covering financial and budgeting items as well as statutory and compliance management.

Got more questions about strata levies? Give us a call on 08 9362 1166 or email us at info@esmstrata.com.au. You can also learn more about strata by visiting the News and Resources page on our website.