Body Corporate fees - what do they cover?

What are body corporate fees?

If you are buying an apartment or unit you will often be expected to pay body corporate fees. Body corporate fees (or levies) are an amount of money payable to the body corporate or strata company managing the property. They enable them to take care of things such as insurance and maintenance of common areas.

What are the different types of body corporate fees?

According to Strata United there are two main types of body corporate fees:

• Annual fees (also known as capital fund levies) that cover administration, insurance, maintenance and ongoing costs of communal areas.
• Special fees (also known as special levies) that cover unexpected costs, such as major repairs or legal costs.

The exact rules around body corporate fees can vary slightly across different states and territories, so it could be worth confirming these details with the appropriate government authority in your area. And whilst body corporate fees might be another expense homeowners need to budget for, they are necessary to maintain, repair and insure the property.

What do body corporate fees cover?

Body corporate fees and levies typically go towards the following:

• Regular maintenance and upkeep of common areas: For example, hiring a gardener to maintain a shared area, or a cleaner to take care of the lobby area and lifts.
• Repairs, as required: For example, fixing a remote-controlled gate into the parking area of an apartment complex or broken light fittings in a stairway.
• Insurance cover for buildings and common areas: This can be for purposes such as structural damage from natural events, as well as public liability insurance.
• Shared utilities (in some cases): For example, if there is only one water meter at the property rather than individual meters for each unit or apartment, this bill may be paid for through the body corporate.

A portion of the fees also contributes to a ‘sinking fund’, which is a pool of money the body corporate can use in the event of a large or unforeseen event such as urgent building repairs. Examples of these types of repairs could be replacing security gates or fixing structural defects in any part of the common property.

What costs are not covered by my body corporate fees?

Keep in mind that body corporate fees are used for the maintenance of shared areas. This means they typically do not cover:

• contents insurance for your belongings
• council rates.
• maintenance, repairs and improvements to your private-use property such as installing air conditioning or fixing a blocked toilet.
• utilities such as water, gas and electricity, unless there is a shared meter and this cost is covered by your body corporate fees.

What is the cost of body corporate fees?

How much you will pay for body corporate fees can vary widely between properties, so it’s generally a good idea to find out how much your fees are likely to be before you commit to purchasing a property. You can ask the selling agent for details of the fees to give you a rough idea, but do remember that body corporate fees can change significantly from year to year. You may be able to access the minutes of previous meetings to see how the body corporate has spent its budget in the past, or if any major projects are on the horizon.

Some body corporates or strata companies may offer discounts for prompt or upfront payment of fees and levies, and some may apply interest or late fees for levies that aren’t paid on time. Unused money in the annual budget may sometimes be redistributed back to individual lot owners, if the body corporate decides by unanimous vote that this money is not required to maintain or repair the property at the time.

How are body corporate fees calculated?

Body corporate fees are calculated by taking into account a number of factors, including:

• age, size, structure and condition of the building/s
• types of common areas and facilities that require maintenance
• kinds of repairs the property might require
• size of your particular property and whether you have access to additional facilities
• administration or management fees that the strata company or body corporate may charge for its services.

The body corporate will present these costs and the proposed budget at the Annual General Meeting (AGM) that all property owners within the strata can attend. If a majority of lot owners agree with these figures, the fees payable by each individual owner will then be calculated, to be paid usually on a quarterly or annual basis.

Special fees or levies

In terms of additional fees and sinking funds, legislation varies between states, so it’s best to check with the relevant Consumer Affairs or Fair Trading body in your state.

In general, any fees or charges required to cover unexpected expenditure, such as emergency repairs, must be approved by a set percentage of lot owners (in Victoria, for example, it is set at 75% of lot owners). But if it’s approved, you will be required to pay them.

Are there any other costs?

Some body corporates may charge a penalty rate for late payment of fees, and in some cases, a lot owner in this scenario could also lose their right to vote.

Owners should also be aware that there may be extra fees if:

• you request copies of registers and records from the body corporate or owners corporation
• you request an owners corporation certificate or body corporate information certificate, for example, when preparing to sell your property
• or the committee wishes to hold an additional meeting outside of the AGM.

Further information on how strata title and body corporate schemes work in your state or territory, including the fees and charges that may be payable and what these cover can be found via the following links:

• New South Wales
• Queensland
• Victoria
• Tasmania
• Northern Territory
• South Australia
• Western Australia
• Australian Capital Territory

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